No matter your political affiliation or belief in news outlets, we are living through an historic time to be sure. The COVID-19 virus has upset financial markets and lives all over the world. Our government is taking unprecedented action to curtail the spread of the disease in both physically (travel bans) and financially.
Besides being proactive to protect yourself from the virus, what can you do financially? The President announced a number of measures last night in his address aimed at helping the investor, but is particularly advantageous to the real estate market. Let’s examine a few.
US Stock Market
As of this am the market has entered in bear market territory (down 20%+). Certain industries are getting hammered but overall values are down. Money that only a few months ago was racing skyward is now falling hard. Is real estate a good alternative?
Interest Rates
The Fed cut their rate by 50 basis points last week and is now eyeing another cut to zero. Rates were already low but are now going to be even more attractive. Even if you do nothing more than refinance your portfolio you can be saving a lot of money. However, if you are looking for another investment vehicle, this may be an opportunity of a lifetime to move into a real estate portfolio. Rates of return (cash-on-cash) will jump due to the drop in the cost of money.
SBA Lending
Another measure taken by the Administration was to provide the SBA with a large influx of cash to help small business owners. If you qualify, or if you’re looking to obtain a business, this could make a huge difference. Again, the cost and availability of money will make even a marginal deal look great now.
I think everyone knows this will pass, hopefully quickly. However, the reaction to the recent events presents an opportunity, unlike any other time, to position yourself well for the future with the steady, strong, time-tested growth provided by real estate.
