Skip to Content

Get a FREE assessment of your rental property. Start here!

Get a FREE assessment of your rental property. Start here!

Real Estate Investing in a Tumultuous Market: What You Need to Know

Graph on chalkboard depicting increased income from real estate investmentThe current coronavirus pandemic has changed the world and our country. Drastic measures have been put into place that affects how we live, conduct business, and travel. These societal changes are creating doubt and confusion among investors as well.

Should you invest in real estate during a tumultuous market? If yes, how would you go about it to maximize the return on your investment? These are the questions that a lot of both beginner and expert investors are pondering. In the following article, we’ll take a closer look at real estate investing during uncertain times and rough market situations. Every crisis delivers an opportunity to those who can spot these options and you’ll learn what these are in the real estate market.

#1: Raise enough capital

Stack of $20 bills next to calculatorThe uncertainty taking hold in the market leads to lenders restricting their requirements. That means the overall lending activity will start slowing down. As this happens, you are likely to see better and better deals staying on the market.

That’s why it’s important to raise enough capital. Or at least ensure that you will meet the stricter requirements set by the lenders. Otherwise, you may find it difficult to benefit from the developing market situation.

#2: Real estate is less volatile than the stock market

You’ll find the real estate market to be less volatile compared to the extreme swings seen in the stock market. Even though the times are tumultuous, people are still going to need a place to live in. In other words, the real estate market isn’t going anywhere during a recession.

When you have a nicely diversified investment portfolio, you could use the steady nature of real estate investments to hedge over the relative volatility of your purchased stocks and other assets.

Finding the right properties and having a bit of luck could even rack you up to considerable profits in the long run. Once the downturn has ended, your property investments in a quickly developing and highly desirable area may start bringing in a lot of cash.

#3: Real estate is a tangible asset

Real estate is an asset that you have direct control over. As a property owner, you can renovate, maintain, update, and repair it as you please. The marketing and advertising efforts are all yours to deliver as well.

During uncertain times, having tangible investments is a big plus. When the stock markets are behaving erratically, you’ll benefit from having more control over your invested dollars. This is a value that many other assets are unable to provide.

#4: Real estate helps you outlast downturns

The changing market sentiments are unlikely to affect real estate as deeply and quickly compared to equities. There isn’t a solid correlation between real estate investments and public market behavior, which makes these investments a great bet for outliving an economic slowdown.

As an investor, you’ll find that real estate investing helps you meet basic needs during these tumultuous times. Making the right choices means that you’ll be able to generate monthly income and diversify the assets in your portfolio.

#5: Have enough reserves

A pink piggy bank with coins scattered around itYou should aim to have enough cash reserves even if you have invested only in real estate. This is not only important for making further investments, but it’s also necessary to hedge yourself against longer tenant turnover periods.

Overleveraging is always a risk that you should mitigate well before it happens. Try to have your cash reserves in a readily accessible form. You don’t want to discover that your money is tied down when you need it the most.

#6: Refrain from panic selling

If you don’t panic sell in the stock market, then prevent any panic selling from taking place in the real estate market too. While real estate tends to be more stable than stocks, there can be unexpected changes in this market.

Whenever you see the real estate market undergoing important changes, take care to stop and assess the developments. Property value fluctuations are normal, which means that there is no need for panic selling.

Investing during a tumultuous market

Person fiddling with keys before opening up doorUncertain times have made markets tumultuous, resulting in a more erratic behavior among investors. However, real estate as an asset has a different character compared to stocks and bonds.

These are the top things to remember when real estate investing during stormier times:

  • You have more control over real estate investments and property markets are less volatile than stock markets
  • Raise enough capital for investments and ensure that you have solid reserves for unexpected developments
  • Do without panic selling as the property values have normal ebbs and flow based on economic cycles

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.