Like many of you, I’ve been struck by the fragility of our everyday lives as the COVID-19 crisis plays out.
Until very recently, we’d anchored ourselves to steadfast, foundational elements. Events were cyclical and certain so we could plan our existence daily, weekly, monthly and yearly.
But of course, that’s all been turned on its head over the past four weeks.
We’re asking ourselves almost hourly “What next?” School closures, business shutdowns, social distancing – all while we watch with interest to see what the important metrics about infection and recovery tell us.
It’s within this environment that I’d like to offer you some inspirational insight about the real estate sector because, of late, a little good news goes a long way.
In our sphere, there are a couple of steadfast fundamentals we can be certain of.
For starters, this is not the first time we’ve had to deal with a dramatic economic shock.
It may be deep this time around, but it is not unprecedented.
While there is financial pain right now, past experience will help us manage our way beyond this crisis.
Secondly – shelter is a fundamental human need. This means, there’s always demand for what we, as property investors, provide… and that isn’t going away anytime soon.
Property is also illiquid. Unlike share market stocks, real estate is not traded in microseconds by unflinching algorithms. The distance between listing a sale and taking ownership is measured in weeks in real estate.
And the returns are still excellent. At our business, we’re still fielding calls from people who have got cash and access to capital. They’re attracted by the superior cash flow returns and future growth potential. You can invest now and get five-plus per cent gross yield, while with cash you’re lucky to get one percent at the bank.
Finally, real estate has always been a long-term play, and the current crisis is a short-term challenge by comparison. I concede, the ramifications may run for some time, but when smart property investors are looking to plan for their financial future over multiple price cycles – each being an eight-to-twelve-year period then, by comparison, the eventual and inevitable rebound will come to pass.
What I’ve discovered is how adaptive and creative many businesses have become despite the instability this outbreak has caused.
We have advanced to a point in technology where we are entirely capable of operating without the need to be physically ‘in place’, particularly in the property investment world.
For starters, today’s video conferencing platforms allow us to communicate with professional consultants in a simple, affordable way. You can screen-share charts and spreadsheet with your property advisor, or co-read reports with your accountant. You can even do virtual inspections of potential holdings from your home office.
Email and calls with legal authorisations allow you to receive, execute and send documents and leases from home as well.
You are also able to conduct a vast array of due diligence on investment opportunities from the comfort of the lounge. The amount of available online data – much of it free – is incredible.
In short, the world has never catered more effectively for the armchair investor, and COVID-19 is compelling us to take up this option sooner rather than later
It’s a big part of the way we at Aspire have established our business model. We help clients invest nationally from their home base by utilising technology to communicate with stakeholders and secure investments.
So, what now?
In closing, here are my thoughts of what you should do as our world potentially heads into a period of shutdown.
First up – stay calm. There are opportunities to invest now that will pay off into the future.
Next – use your available time wisely. Don’t sit stressed in the corner worried about tomorrow. How many times have you told yourself, ‘I’ll get my financial affairs in order when I have time.’ We’ll, guess what. You’ve been handed days to concentrate on you, and not your job. Treat it as an opportunity you weren’t expecting, rather than an inconvenience to be endured.
Lay out your strategy, concentrate on your end goals and consider your resources.
Also – do it under the guidance of your experienced investment provider. As I described above, a shutdown doesn’t mean they’ve stop working. In fact, they’ll be eager to stay on the case and keep productive as well.
Finally, put plans into action. There are ways to both grow and manage your portfolio from home. The moves you make now will look particularly savvy in no time at all.
In some ways, it’s never been a better time for parking money in property if you have the means. Interest rates are low, prices are competitive and there’s an improving market on the distant horizon. Don’t wait, because the best time to buy is when you’re ready.
Just make sure you focus on the future and walk calmly through the storm.
Richard Crabb, Aspire Network, 27 March 2020