At this point, we've been grappling with the COVID-19 pandemic for about two years. And while it's definitely too soon to say we're in a post-pandemic world, it is fair to say that things are looking different these days.
For one thing, the omicron surge seems to have calmed down, at least for now. Also, at this stage of the game, we have tools to fight COVID-19. Those include vaccines, therapies, and a more reasonable supply of masks and tests.
As such, a lot of people may be getting into a post-pandemic mindset. If that's where you're at, and you're also looking to dabble in the world of real estate investing, here are a couple of tips to keep in mind.
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1. If you're buying income properties, have a backup plan
During the pandemic, many landlords were dealt a tremendous financial blow when a federal plan was put into place that barred them from evicting tenants who failed to pay rent. A large number of mom-and-pop landlords who didn't have cash reserves struggled financially when they were unable to collect rent.
Let's hope we don't experience another crisis as extreme as the COVID-19 pandemic. But you still never know when a change might come that shuts off rent payments.
If a recession hits, for example, laws might be passed that offer tenants the kind of break they had during the eviction moratorium. Therefore, it's important to make sure you have a backup income source that's not limited to rent.
It's also important to not overextend yourself when buying income properties. Owing money on a series of mortgages could backfire on you even during normal periods.
You could run into a random tenant who doesn't pay and won't leave, regardless of whether there's a health or economic crisis. And so before you load up on income properties, make sure you have a plan for keeping up with your expenses in case your projected rental income stream runs dry.
2. Load 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 it was dealt in 2020, things could have gone very differently had vaccines not been rolled out so quickly.
That's why it's important to choose some investments that are virtually recession-proof. Healthcare REITs, or real estate investment trusts, are a good bet in that regard.
Even during the bleakest of 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 buy you some protection in case things take another drastic turn for the worse -- whether or not in conjunction with a health crisis.
Remember, REITs tend to pay larger-than-average dividends. And that income stream alone can help minimize losses in your portfolio if the stock market tumbles.
Learning from the past two years
A lot of people's lives have changed in the course of the pandemic -- some for better, some for worse, and some for a little 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 have in store.
