Don’t Succumb To Panic As A Result Of The Pandemic—
It’s Never An Investor’s Friend
The pandemic has investors panicking.
Many are concerned because real estate investments they hold aren’t paying out as expected and wanting to sell.
Others are worried that they are going to miss out on opportunities being created by those panic sellers because they can’t travel to put boots on the ground so they can scoop up the deals.
Both sides need to relax… at least a little.
The pandemic has gone on longer than anyone hoped, and, still, no one can say with any certainty when things will return to normal in any particular corner of our world.
Nothing any of us can do about those realities.
Tourism has returned in some parts of the world, at least regionally. In-country travel has been possible in most of Europe, for example, and our kids both were able to take vacations this summer. Our son traveled from Paris to Marseilles to visit a friend… and our daughter and her family, also living in Paris, spent a week lakeside in Annecy.
Still, travel in general remains very limited, creating cash flow predicaments for short-term rental owners, especially if the rental has a mortgage.
Some countries have put moratoriums in place, giving both renters and mortgage-holders a break from payments. Panama, for example, has allowed property owners to defer mortgage payments through December. Portugal’s deferral runs until March.
These are timelines to watch, as, the expiration of these rent and financing payments will result in a rush of inventory coming onto specific markets. Both owners who can’t make their mortgage payments and investors whose tenants can’t pay their rent will be forced to sell and will be motivated to sell quickly. I’m paying particular attention to Portugal, where I’m keen to take advantage of the emerging buyer’s market to reinvest the proceeds of the property I sold in that country prior to the pandemic. I remain all-in on Portugal big picture and long-term.
Big Investment Opportunities
In addition, 2021 is going to bring big opportunities in general, including beyond markets where this Payment Deferral Factor is playing a role. In this context, Kathleen and I are interested specifically in Ireland, where our contacts tell us we should wait until January to get serious about shopping.
Agricultural investment projects of the kind I’ve been recommending for the past decade are a different animal with different dynamics in play as a result of the global pandemic. In some cases, the produce is growing but can’t all be harvested because of quarantines that mean farmhands can’t come to work. In other cases, where harvest have been possible, the produce can’t all be exported because of transportation restrictions.
Again, these are realities of the times that none of us can control.
The important thing to remember is that real estate and agriculture are long-term investments. Panicking during a pandemic isn’t long-term thinking.
Investors are looking for deals. Sell now and you’ll need to be ready to sell at a big discount to attract a buyer.
I say wait out the situation if at all possible. I believe we will see a sharp recovery—both for rentals and for agriculture projects—when the pandemic subsides.
Panic is never an investor’s friend. Stay focused. If you have an investment that’s not performing as expected in the current climate, evaluate whether to sell or not as you would at any other time.
What could you reinvest those funds into right now that would perform better? The answer is probably not much.
If you’re sitting on cash, focus on markets you’re interested in and stay as up to date as you can remotely. Then be ready to hop on a plane when those markets become accessible again.