Investors who have cash on hand are viewing opportunities brewing in the housing market amid the COVID-19 pandemic. Housing stock is very low in many markets as some sellers have pulled their homes off the market. But investors are still viewing potential growth areas and reportedly making purchases for home flipping and rentals.
Investors believe that people quarantined in their homes may start to feel like their current house is inadequate in some way. Some investors are seeing house flips as potentially lucrative moving forward. A house flip tends to be vacant for showings, an advantage in the current social distancing climate. Investors are targeting lower-end properties for their flips.
Investors are also reportedly eyeing opportunities in rentals. Rental stock in some markets is low.
“Between the low stock and the decreased amount of churn, investing in rentals right now would be a smart idea, especially since the federal stimulus and unemployment packages should allow some people affected by the crisis to continue to pay rent,” notes Christopher Long in a column for Forbes’ Real Estate Council. “Whether you decide to flip properties or rent them, between the depleted stock and the number of institutions exiting the market, the current unfortunate situation does present an opportunity for real estate investors.”
Investors are viewing opportunities in the single-family rental market for long-term growth. While housing rental defaults and tenants not paying rent will likely hit the sector initially hard, the low supply of newly built rental homes in many markets could help it recover earlier than other residential real estate asset classes, notes a report from John Burns Real Estate Consulting. Also, as more people’s employment situation changes, they may turn to other forms of temporary housing, like rentals.
Source: “Is There a Real Estate Silver Lining in This Crisis?” Forbes.com (April 21, 2020) and “Single-Family Rental Sector Poised for Strong Rebound,” The National Real Estate Investor (April 20, 2020)
