With Coronavirus lockdowns starting to lift across the United States, many people are “wondering will the economy is going to “bounce back” after Coronavirus?” Sadly, the answer to this question is no.
Most economic analysts predict that the economy is just entering a recession that could last for 12-24 months.
In this article we will discuss the economy and provide you with insight into how you should be moving forward for the remainder of 2020 through 2022.
The Recession Is Just Getting Started
Even though many people within the Trump Administration have felt that the United States economy would bounce back quickly once businesses started to reopen, the reality is that the current economic recession is going to last a lot longer than many people think.
How long could this recession last? Some analysts have predicted that the 2020 recession could evolve into a “Greater Depression”, or long recession, that is far worse than what our great-grandparents saw in the 1930s.
Concern over the start of another depression was magnified recently when the International Monetary Fund (IMF) issued a warning last week stating that the world faces a Great Depression “the likes of which has never been seen before”.
It’s true that some economic analysts felt that the stimulus would keep the economy moving until people went back to work but with 22 million unemployed, and a majority of businesses permanently shut down (or facing bankruptcy) it’s easy to see why the country won’t just bounce back in the fall of 2020 as some predicted.
What Will the Recession Look Like After Coronavirus?
The most important thing that you need to know when reading this blog post is that the United States economy is only at the beginning stage of an economic recession.
What can you expect the timeline for this recession to look like? If you’re a multifamily real estate investor, you should be prepared to wrap up 2020 right now and wait out the next 8 months of the year while you build your cash reserves or “collect dry powder” as it’s also known among Real Estate Investors.
Keep in mind that 8 months is overly optimistic because most companies and organizations that analyse the economy, including Bank of America, feel that the economy hasn’t even hit rock bottom yet and there’s no knowing when that could occur.
One of the biggest factors that had a major impact on the economy is Coronavirus because, even though some states are in the process of reopening right now, there are other states where it’s not clear when they will reopen.
The same is also true with other countries around the world. Even though the world is overly optimistic about winning the war against coronavirus right now, the truth is that there is no way to know when the battle will be won against the virus, when the vaccine will be developed, or if we’re going to see a second wave of the virus in the fall of 2020.
Yes, the economic stimulus and PPP loans have played a major part in keeping the economy going over the last 30 days. It’s unlikely that we may see the government continue to put more money into the hands of the people since the Trump Admin has indicated that they will support payroll tax cuts first.
Time to Start Planning For 2021
By building your cash reserves, over the next 8 months, you will get yourself ready to be in an excellent position to buy real estate at the bottom of the market before the next economic recovery begins.
When should you specifically be looking forward to buying real estate again? Some analysts, including Ken McElroy, are predicting that sometime between 2021 and 2022 will be the right time to purchase real estate, especially multi-family properties.
Even if you currently have plenty of cash reserves right now, it’s a smart move to spend the rest of 2020 waiting for the real estate market to hit rock bottom so that you can get the best value on multifamily properties nationwide.
Could this economic recession last longer than 2 years? The answer to this question is anyone’s guess. The reality is that 2020 is far different than 1930 and this economy has a wide variety of other factors in play which will help it to recover from a protracted recession compared to what the country went through during the last recession.
Should you be wary of the country going into another Great Depression? The answer to this question is no. If you are an investor who studies history, you know that anytime there’s been a recession, this is typically a period in the world when millionaires are created because smart investors are ready to purchase assets when prices hit rock bottom, instead of hoarding cash, while they wait for the recession to be over.
Until the bottom hits, focus on building your cash reserves while cutting back on the expenses that your multifamily properties may have so that you can be “flush with cash” and ready to invest in real estate within the next 1-2 years.
Contact Trier Capital
At Trier Capital, we are a private equity firm that makes it easy for you to passively invest in lucrative commercial real estate syndications.
To learn more about the solutions that we can offer you, contact us today by calling (630) 229-2383 or click here to connect with us online.