5 Challenges Real Estate Investors Must Overcome to Succeed in 2020

If 2020 has been defined by anything so far, it’s the unprecedented challenges we’re all facing. From the way we shop for new properties, to the way we invest in those properties, to the way we approach selling, nearly every component of real estate investing has been impacted by the Covid-19 pandemic and the need for social distancing.

As we move through the second half of the year, we all hope that the worst of this pandemic is behind us. The world is starting to reopen a little at a time, and many industries are doing their best to return back to some semblance of “business as usual.” 

For real estate investors, though, the path back to “normal” is only just beginning to take shape—depending on where you’re located and how cities in your area are approaching the pandemic, your ability to participate in your local real estate market might look vastly different than someone else’s. 

We can only make educated guesses about what the market will look like in the latter half of 2020 and beyond. However, whatever way the tides shift, it’s safe to say that there are at least a few challenges that all real estate investors will be forced to navigate. 

The 5 Challenges Real Estate Investors Must Overcome in 2020

Challenge #1: Securing Financing

For investors who need to access loans in order to purchase investment properties, securing traditional financing can be tough right now. (This article does a great job explaining WHY, if you’re interested in really digging in.)

Fortunately, this is one challenge we can help you overcome. At Hard Money Lenders, we understand the current volatile market and want to support real estate investors with tenacious, entrepreneurial spirits and the ability to see this difficult season as an opportunity. If you need help securing financing for an upcoming investment, you can learn more about our loan options here.

Challenge #2: Getting Good Deals on Investment Properties

This may or may not hold true depending on where you live and what your local market is like right now. For many real estate investors though, scoring a great deal on a great property will prove to be difficult this year. 

Despite market turbulency, sellers are likely to continue listing properties according to recent market highs—or even higher in areas where the pandemic has created increased demand or particularly high risk for sellers opening their doors to potential buyers. 

Challenge #3: Finding Quality Buyers/Tenants

Let’s face it—even the best investment property doesn’t do much for you if you can’t find a quality renter or buyer. Though spring and summer are usually boom times for real estate investors, this year’s season has been brutally interrupted by the coronavirus situation. 

In the face of the pandemic, most people are choosing to stay put wherever they are rather than venturing out to search for new properties or attend open houses. This means that real estate investors with empty properties (especially multi-family units) may need to get creative to find quality renters if they intend to keep their properties rented throughout summer, fall, and winter 2020.

Challenge #4: Renters’ Financial Uncertainty

The silver lining to the point above is that if you currently have tenants in your rented properties, they’re unlikely to be leaving any time soon.This could be great news for you . . . assuming, of course, that your tenants haven’t been financially impacted by the pandemic. 

Unfortunately, with the sky-high unemployment rate and some businesses taking longer to reopen than others, many tenants are experiencing severe financial uncertainty. Especially as the year progresses and unemployment benefits expire, landlords need to be prepared for the reality that their tenants may experience difficulty paying their bills from month to month.

Challenge #5: Dangers Around House Hacking

House Hacking is a well-known and commonly used strategy that aspiring investors use to start making money with their existing home. They simply rent out some extra space in the home—an unused bedroom or a mother-in-law suite, for example—to start earning additional income they can later use to invest in additional properties. 

This strategy may still work for homeowners who are willing to price their rental space competitively. However, it’s worth noting that choosing to house hack during the pandemic is not without its own risks. Choosing to allow other people into your home means that you’re inviting whatever pathogens they come into contact with into your home as well. It also means that if we end up seeing a virus spike and having to temporarily return to isolation procedures, you’ll be quarantining with tenants in your home. 

Making It Work

As trite as it may sound to some, the most important part of overcoming 2020’s challenges will be maintaining a positive attitude, remembering that the current state of the world is temporary, and looking for opportunities to succeed in spite of the challenges you’ll face.

If securing funds for an upcoming purchase or renovation is part of your success strategy this year, we’d love to talk with you! We provide a variety of loan options that empower real estate investors like you to stay engaged with your market even in turbulent times like these. Click here to learn more about who we are, what we do, and how we can help you.

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