Are you searching for information on multifamily outlook for 2020? If so, you’ve come to the right place!
There’s no doubt that the multifamily real estate market has changed in the last 60 days because of one primary thing, Coronavirus, the virus that originated in Asia and has since made its way around the world, affecting every country that it’s been found in.
A World Changed by Coronavirus
Before Coronavirus, we had a stable multifamily real estate market that was consistently growing year over year. This was thanks in large part to a strong economy which had continued to see excellent growth over the last three years.
Since Coronavirus, we’ve seen our economy take a major hit with consumer spending down by close to 8% and the economy shrinking by about 5% in the last quarter.
30 Million People Unemployed
What’s even worse is that we now have over 30 million people in the United States that are unemployed and most people who are unemployed may not be able to go back to their jobs because some companies that we’re open before the virus have since shut down.
What does this mean to you? Should you anticipate that there’s going to be some deals on multifamily outlook properties within the coming months across the United States or should you wait until 2021 to start buying?
Multifamily Outlook – Get Ready Now For 2021
Even though some economists and other multifamily Real Estate Investors may tell you that there are going to be a lot of great deals on the multifamily market within the coming months, the reality is that you should start looking towards buying multi-family properties in 2021, instead of thinking about buying properties towards the end of 2020.
Why? Even though most cities and states are in the process of reopening right now, the reality is that we’ve not seen the economy hit bottom yet.
The United States is only within the first two months of the current recession and there’s every economic indicator that this recession could be prolonged, and possibly develop into another depression, so you need to be prepared to wait until the economy hits the bottom and it’s a perfect time for multifamily outlook investors to buy.
When is it going to hit the bottom? The answer to this question is unclear because the federal government has been working hard to prop up the economy including pumping trillions of dollars into the stock market but there’s also the reality that the Government cannot continue pumping money forever.
A good example of this is the demand that many people have made for another economic stimulus payment. The President and many lawmakers in Washington are hesitant to approve another stimulus like the first one since the president has been openly talking about his desire to see the next stimulus be more along the lines of tax cuts and other incentives to have more infrastructure built across the United States.
Unless lawmakers on both sides of the aisle come together, in a consensus that the federal government needs to print more checks that we sent out to average Americans, we could likely see the economy hit bottom within the next 4-8 months.
Once the economy hits bottom in the United States, for multifamily outlook it’s likely that 2021 it’s going to be a great time for multifamily investors to start looking for wedge deals because there may be multiple investors ready to start selling their properties next year.
How to Get Ready to Buy Multifamily Properties In 2021?
Let’s say that you’re ready to write off 2020 and are looking at 2021 as being the year that you’re going to purchase more multifamily properties for your portfolio.
Over the next eight months, you should be primarily focusing on building your cash reserves because this is what’s going to need for you the opportunity to have the cash that you need to find great deals when they come to market.
How can you start building your cash reserves now? There are a wide variety of options available including refinancing your existing properties cash-out refinance mortgages, choosing a Home Equity Line of Credit (HELOC) loan or possibly selling off some of your assets to build your “war chest” of cash that you will use capitalize on opportunities when they become available in 2021.
You may be saying “well, the credit market is dried up right now”. Yes, this may be true in some cities but, the reality is that this is another reason why you want to have relationships with more than one lender across the United States because of the simple fact that if you approach one lender for a HELOC and they tell you no, you’re going to have a network of other lenders that you could turn towards to apply for another Home Equity Line of Credit.
Focus on Cutting Your Current Multifamily Expenses
Besides following some of the tips that I’ve offered so far, some of the easiest things that you can do to start building your cash for multifamily opportunities in 2021 is to focus on cutting your current multifamily expenses.
This is an important thing to do by default since your net operating income is always going to be directly impacted by your property’s expenses.
Some of the things that you should focus on doing to cut your properties expenses include the following:
Reduce Maintenance Costs – The best thing that you can do to cut your expenses now and save more cash for 2021 is to reduce your maintenance costs. If you’ve never focused on doing this before, the good news is that some of the ways you can do this include:
#1 – Implement a preventative maintenance program.
#2 – Hire an in-house maintenance team.
Invest in Online Service Portals – Another great way to reduce your costs while also increasing tenant retention is to invest in online service portals like Buildium.com or appfolio.com.
With these portals, your tenants will be able to communicate with you more efficiently and also have confidence that you are dealing with their maintenance requests promptly instead of having them report the maintenance issue and wondering if you’re going to resolve it quickly or not.
Besides reducing your maintenance costs and investing in online surface portals, some of the other solutions that you should consider include reducing your monthly water bill, trash bill, and if you are currently paying electricity for your attendance, you should focus on reducing your electricity costs.
Contact Trier Capital
At Trier Capital, we’re experts at sourcing, acquiring, and managing profitable multi-family investment properties across the United States.
If you’ve been thinking about working with a real estate syndication company so that you can save the time, money, and hassle of investing in and managing multi-family Investments yourself, give me a call today by calling (630) 229-2383 or click here to connect with me online.