The COVID-19 pandemic has impacted lives and disrupted economic activities in the United States. The pandemic-induced changes in the US economy and volatility surging due to this novel coronavirus has affected businesses operating in different sectors, and commercial real estate (CRE) is no exception.
While some industry experts say that it’s time to wait and see, others believe that this isn’t the right approach to investing in CRE as investors who put things on hold might miss out on golden opportunities. No matter which school of thought you agree with, here are three things that you, as a commercial real estate investor, must do during the COVID-19 pandemic:
Think rationally and don’t make impulsive decisions
If you have negotiated an excellent commercial real estate deal, make sure you don’t bail out due to market uncertainty unless you’re confident that the investment won’t pay off.
During this testing time, commercial properties remain one of the safest investment choices due to lower risk and high-profit margins.
Therefore, you mustn’t make impulsive decisions based on speculations and take a practical approach when evaluating the feasibility of your CRE.
Sooner or later, things will get back to normal, so you should plan for the long-term. If the seller is desperate, they might offer you a discount to expedite the process.
Take a problem-solving approach to deal with tenants
Many non-essential businesses are shut down due to nationwide lockdown, which means that commercial tenants will experience difficulties in keeping up with the lease payments.
Therefore, if you decide to stay in the CRE industry, make sure to keep your expectations in check. Your tenants might also face problems in making their lease payments.
Discuss the options with tenants, help them explore options like obtaining an SBA disaster loan to work out an arrangement that’s favorable for both parties.
Once the threat of COVID-19 is controlled, the CRE will rebound, and the market will return to normal. Meanwhile, you’ll establish rapport and earn consistent lease income.
Find opportunities to diversify your portfolio
If your capital is tied in a single CRE, now is a good time for diversification. You can explore different investment and pick the one depending on your risk appetite.
Retail centers, logistics facilities, and even multi-family commercial properties are low-risk investments that will allow you to generate consistent income in the short-term.
On the other hand, hotels and hospitality businesses are high-risk investments that might not generate short-term profits but help you make a fortune in the long-run.
Hard money loans for CRE financing
While conventional banks and financial institutes have reduced their interest rates, they have become more hesitant in approving loan applications of CRE investors.
Due to uncertain and risky business conditions, lenders are taking a prudent approach and putting stringent conditions to ensure they can make their investment worthwhile.
Therefore, it’s better to opt for hard money loans, which offers excellent flexibility and doesn’t require you to comply with strict requirements.
More importantly, the fast processing time will enable you to close a lucrative CRE deal quickly and ensure your transaction goes swiftly.
About Global Capital Partners Fund
Global Capital Partners Fund is a reputable asset-based lender that helps investors in Charleston SC secure hard money loans to take advantage of lucrative investment opportunities in a highly-competitive CRE market. To find out more about their services, call at +1-800-514-7350, or visit their website.