AAt this point, we’ve been dealing with the COVID-19 pandemic for about two years. And while it is certainly too early to say that we are in a post-pandemic world, it East fair to say things look different these days.
For one thing, the omicron push seems to have subsided, at least for now. Also, at this stage of the game, we have tools to fight against COVID-19. These include vaccines, therapies and a more reasonable supply of masks and tests.
As such, many people may enter a post-pandemic mindset. If that’s where you’re at and you’re also looking to get started in the world of real estate investing, here are some tips to keep in mind.
1. If you buy income properties, have a backup plan
During the pandemic, many landlords took a financial hit when a federal plan was put in place that prevented them from evicting tenants who didn’t pay their rent. A large number of family landlords who did not have cash reserves had financial difficulties when they could not collect the rent.
Hopefully, we won’t experience another crisis as extreme as the COVID-19 pandemic. But you still don’t know when a change might come in and stop paying rent.
If a recession hits, for example, laws could be passed that offer tenants the kind of respite they got during the eviction moratorium. Therefore, it is important to ensure that you have an emergency source of income that is not limited to rent.
It is also important not to overwork yourself when buying income properties. Owing money on a series of mortgages could backfire even during normal times.
You might come across a random tenant who doesn’t pay and won’t leave, whether there’s a health or economic crisis. So, before you stock up on income properties, make sure you have a plan to meet your expenses in case your expected rental income stream runs out.
2. Stock up on recession-proof REITs
The pandemic has taught us that economic conditions can change on a whim. While the economy has largely recovered from the blow in 2020, things could have turned out very differently had vaccines not been rolled out so quickly.
That’s why it’s important to choose investments that are virtually recession proof. Healthcare REITs, or real estate investment trusts, are a good bet in this regard.
Even during the darkest economic times, there will always be a need for hospitals, skilled nursing facilities, and urgent care centers. That means putting money into healthcare REITs could give you some protection in case things get worse, whether or not in conjunction with a health crisis.
Remember that REITs tend to pay above-average dividends. And this income stream alone can help minimize losses to your portfolio if the stock market drops.
Learning from the past two years
Many people’s lives have changed during the pandemic – some for the better, some for the worse, and some for a bit of both. If you’re getting into real estate, it’s important to learn from the events of the past two years to set yourself up for success. And so, as you embark on your investing career, be sure to take these points to heart, because you never know what the future might hold.
10 stocks we like better than Walmart
When our award-winning team of analysts have investment advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*
They have just revealed what they believe to be the ten best stocks for investors to buy now…and Walmart wasn’t one of them! That’s right – they think these 10 stocks are even better buys.
View all 10 stocks
Equity Advisor Returns 2/14/21
The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.