Have you suffered loss of income on investment rental property due to COVID-19? Or, are you hesitant to invest in rentals until the pandemic is more under control? The personal and professional impact the coronavirus pandemic has caused is undeniable. However, there are strategies you can use to regain investment income on existing property and to help you identify worthwhile rental markets during this time.
Two Strategies to Maximize Earnings on Existing Rental Property Investments
1. Turn your short-term rental into a long-term rental property.
Perhaps the hardest hit sector has been short-term rentals, such as VRBOs or Airbnbs. Whether these units are in prime vacation spots or quieter destinations, U.S. stay-at-home and safer-at-home mandates discouraged unnecessary travel for months at the outset of the pandemic. Those regulations are now relaxed, but many Americans are opting not to take vacations yet. Obviously, if you or your IRA owns this type of rental asset, you’re not realizing the returns you were before COVID—and it may be some time before you do.
This strategy extends the lease period on the property to attract long-term renters (think six months to a year). Regardless of any situation, people always need places to live. And for those who are downsizing and moving out of their own homes due to economic hardships—the ability to rent a house, condo, or apartment in their community is a blessing. You may have to charge less for rent than you would during pre-COVID times, but some consistent monthly income is better than none to help you weather this storm.
2. Sell your rental property
Depending on your situation, selling can provide a way to recoup lost income and perhaps gain a tidy sum to reinvest elsewhere or sock away in your savings account.
If you have a rental house, you may find that selling it is a better strategy for you than renting it. This especially deserves consideration if your renters fall into an at-risk category for COVID-related financial hardship that may, in turn, impact you financially. There are investors out there who can afford to offer lower leases. And they are investing in rental property even in the midst of the pandemic.
Additionally, mortgage rates are at an all-time low. And, there are plenty of people who have not been financially impacted by COVID. People are still buying homes to live in, whether they are upgrading or downgrading.
Want to Invest in Rentals Now? Take a Look at Multifamily Properties
According to a recent article in Multi-Housing News, “While some real estate sectors took hard hits, like retail and hospitality, multifamily has proved to be resilient.”
The article further states positive findings in a study performed by multifamily investment firm Middleburg Communities—that on average, monthly rental prices for apartments in the U.S. only fell by $1 from the first to second quarter in 2020. Additionally, within the same timeframe, the number of people renting apartments rose by 60k.
Multifamily investment syndications are a great way to passively invest in real estate. You have the potential gain a decent ROI, while mitigating your risk at the same time.
You can also research the current hot-spot markets for rentals. Yes, they do exist, in spite of the pandemic. Forbes recently published an excellent article with statistics and lists of favorable rental markets. You should check it out.
Learn More About How You Can Profit from Investment Property during COVID
The coronavirus pandemic has upended our personal lives, our professional lives, and our economy. But there are still investment opportunities available even during these tough times. If you are searching for the best strategy for your existing investment rental property or considering investing in rentals—lean on the experts for advice. Investment clubs offer webinars on different assets. Other investors are a terrific resource for advice, tips, and tricks to help you reach your goals. Your CPA and realtor can help guide you through the decision-making process.
And, if you’re interested in learning how you can mitigate risk on your current IRA real estate assets or want to know how real estate in an IRA works, contact Advanta IRA today. We don’t sell investments or give investing advice, but we can explain how real estate IRAs help you build retirement income. We also host weekly, complimentary real estate investing webinars that feature guest experts who share real estate investment tips and strategies.
