Six months ago we thought the pandemic would be mostly gone. Summer weather would mean we’re outside and not spreading the virus, medical research would produce a remedy, and we would all have changed our behaviors to prevent the spread. State and local governments restricted evictions but Fannie and Freddie offered borrowers forbearance. Once we looked that new word up, we decided maybe it wasn’t such a great offer.
Today the picture continues to be muddy. The short term mortgage relief offered in forbearance will come due shortly, the CDC stepped up restrictions on evictions at a national level, and the pandemic is a major political issue.
One of my favorite people on TV was Louis Rukeyser back in the 80s and 90s. He hosted a financial show on PBS, Wall Street Week, with terrific guests but shared an extraordinary wit. I watched him with my nerdy friends who couldn’t get dates on Friday night. Lou was as relentlessly positive about our future prospects as he was disdainful of politicians. This was a refreshing perspective whenever disaster struck
and our investments were in the toilet.
Let’s look a little bit into the future.
A famous Warren Buffet quote was “it’s only when the tide goes out that you learn who’s been swimming naked”. The tide is out. Our properties are doing better than surviving, they are making good money but decisions we could have made earlier to prevent issues have become clear. Other properties and owners may not be as fortunate. If your properties are struggling, by now you know what you should have
done differently, earlier. Learn from that.
We will start seeing owners who cut margins too thin, took unreasonable risks, didn’t capitalize sufficiently, can’t hold on until they can replace non-paying tenants with paying tenants, bring their properties to market. None of us want to see real estate investors take a bath but there are buyers with money who will take the problem off their hands.
Election – who will be better for real estate investors? Who knows, but what we do know is that the difference in how the economy performs after the election of the candidate from one party is not much different than how it performs after the election of a candidate from the other party. Again, back to Louis Rukeyser, “no politician anywhere on the planet has ever actually created a rupee’s worth of prosperity.” So get out and do your thing based on what you think is right, not what you think the politicians are going to do.
Covid – death rate is down, vaccines are close to final testing, more proven treatments are available, and masks, distancing are now the norm. Still too many crazy college kids parties, political events, and biker rallies but they too will subside. The light at the end of the tunnel will be bright by the end of the year. If you’re buying, now might be the time. If you’re selling, buyers won’t want to be left out of the good times coming.