A global economic recession is not unlikely given COVID-19’s impact on 213 countries, including the world’s largest economies. For Ali Ata, it’s better to be safe than sorry and get started with all preparations needed as early as now.
If you’re in real estate, that means you need to honestly assess the possible impact of a recession on the market. Doing so will help you restructure your business strategies accordingly.
To get you started, I’ve listed some possible problems one may encounter as well as how to resolve them.
Problem: The Housing Market Shortage Will Worsen
Lack of available labor, high-costing goods, social distancing guidelines, delayed shipments, and of course, lack of financial resources will all lead to unfinished real estate development projects. The shortage may not be immediate. However, it’s very likely that the market may be unable to provide the consumers’ housing needs up until 2021or so.
What you Can Do:
Be wiser with your properties. Don’t be too quick to liquidate asses because of the pandemic and recession.
For example, let’s say you have three properties on the market right now. Rather than selling all of them, take time to assess their potential. See if their value will appreciate or if you can lease the rooms out a fair rate.
Problem: Stricter Rent Control Laws May Be Implemented
A housing shortage will inevitably lead to more rental properties. This, in turn, may push various governing bodies across the country to review and revise existing rent control laws.
What You Can Do:
Abide by the law. Ali Ata explains that rent control is done to ensure landlords do not abuse their tenants by unfairly jacking up the rates.
Problem: Real Estate Property Values Will Drop
Ali Ata understands that with a market recession comes the fear of real estate prices tanking as well. Now, we don’t know exactly how the market will react. What most experts are certain of, however, is that it won’t be as bad as the 2008 real estate market crash.
What You Can Do:
Invest in real estate properties early! Ali Ata shares that if you have sufficient liquid funds, acquiring homes while they’re at an all-time low will be very beneficial. Then, once the shortage hits, you’ll have the luxury of leasing or selling your assets.
Conclusion
Overall, Ali Ata explains that the only way for any real estate developer, investor, agent, or flipper to survive the recession is to adapt and overhaul their business strategy to suit the current demands of the market.
Don’t be afraid to explore new ideas. Make the most out of the low prices, invest in good properties, wait for the economy to bounce back, and resell your assets at a higher price.