Financial experts have been warning that the U.S. is headed for a recession due to the way the coronavirus pandemic has hit the business sector. Unfortunately, the recession has already begun. In fact, experts from S&P Global Economics say the U.S. will slip into a double-dip recession if Congress doesn’t pass another stimulus bill. A S&P company representative noted that in the absence of a new stimulus, the United States’ GPD would decline for two consecutive quarters, which would delay a full recovery until the second half of 2022.
That’s not good news for commercial real estate investors. If the economy gets worse, more businesses will need to close, which will significantly reduce commercial real estate income.
Although experts could be right about long-term economic damage, the devastating effects can be largely avoided with some careful planning.
If you’re a commercial real estate investor, here are some strategies to beat the negative effects of the recession.
1. Know where your properties stand financially
Knowing exactly where your properties stand financially is the first step to avoiding negative economic consequences. If you don’t know where you are, you won’t know when or how your finances are being affected.
Hopefully, you’ve got an accountant or property management company managing your financials, but if not, you need some industry-leading real estate tech tools. You need to see all of your investment properties at-a-glance to identify your profits, expenses, and to manage your tenants. Even if you only have one property, real estate management applications can help.
Keeping track of your tenants’ rent payments, due dates, leases, and maintenance history is critical for knowing the reality of your financial situation. You’ll know if you need to refinance to get a better interest rate or if you need to raise the rent.
2. Buy foreclosures and cheaper properties
If you’ve got the funds to carry you through at least a year or two, start buying foreclosures. Even if you’re mostly a commercial investor, consider buying residential properties, too.
When the recession hits its peak, there will be even more foreclosures and the banks will grab everything possible. If you start acquiring properties now, you’ll have income-generating assets once the recession is over. And, in the meantime, you could rent your properties for less than usual if that’s your only option.
3. Follow YouTube investment channels
There are plenty of investment channels on YouTube, some of which share incredibly valuable insights. Some of the top investment channels you need to follow include:
- Bigger Pockets. The folks at Bigger Pockets have been dominating the real estate advice industry for years through their blog, podcast, and their YouTube channel. They even have a video explaining how to invest in real estate during a recession.
- John Fedro. Fedro is one of the most well-spoken real estate investment advisors on YouTube and he gets right to the point. HIs videos are cut and edited to get his points across fast. His standard advice is still applicable during a recession, but he also posts pandemic-specific commentaries like the video where he discusses how mobile home investments are affected by the pandemic.
- Epic Real Estate Investing. Matt Theriault from Epic Real Estate Investing makes some amazing videos. He’s an experienced investor who knows what he’s talking about. For instance, while other investors are denying the reality of the recession, Matt published a video telling his audience to brace for a housing crash in the near future. His video acknowledges the inescapable reality of a crash along with advice for investors to avoid getting hit hard.
4. Create your own YouTube investment channel
When you’re not absorbing advice, the next best thing is to be sharing advice. Starting a YouTube channel to share your investing advice is a great way to help others and generate income by monetizing your channel.
The recession is here, but there are ways to ride it out and thrive
Nobody can stop what’s coming, but it’s still unclear how bad things will get. The only thing we know for sure is that the recession has already begun. As an investor, all you can do is take the necessary steps to protect your investments and secure your finances long enough to ride out whatever comes our way.