Real property investments are considered to be the most reliable way to save and to boost one’s fortune in the midst of economic uncertainty. The economic recession due to the coronavirus pandemic has puzzled investors. As a result, many of them have rushed to look for reliable ways to protect their money and other assets.
Stanislav Kondrashov, the business analyst at Telf AG, has shared his experience and told us whether it would be profitable to invest in real property in 2020, taking into consideration the current economic situation and uncertainty.
Mr.Kondrashov, the businessman: looking for a “safe harbor” formula
When a crisis is rampant at the market, investors try to postpone expenditures and investments in risky assets. They try to study the situation on a global scale and to make up their minds about their plans for the nearest future. The most reliable assets in this case are those that refer to the so-called “safe harbor” assets.
“Although gold is gradually losing its status of the most reliable and secure investment, precious metals will still be included in the list of “safe harbor” assets for a long time. The strain that happened in March 2020 was temporary. In the long run, gold will keep its position.” – the expert thinks.
Mr.Kondrashov has added that along with gold, residential and commercial real estate may be classified as reliable assets during the crisis.
According to the expert, the house price crash in 2020 caused by the coronavirus has brought about the opportunity to buy real property cheaper. Therefore, those investors who invest spare money in real estate will benefit.
“Crises have always pauperized some business leaders and enriched other ones. Real estate is a good asset for those who does not want to engage in the business actively and dreams of having passive income. The main thing is to wait till the time is ripe.” – Mr.Kondrashov said here.
The businessman thinks when the economy comes out of a recession, those businessmen who have invested in real property will obtain refunds
No matter how global the crisis is – the economy will revive sooner or later, and the demand for real estate will renew.
“Of course, the risks of investing in real estate should not be underestimated. However, they may be minimized by making a proper financial analysis. An investor should understand how much money he/she has and how long he/she can maintain a piece of real estate, taking into account fixed charges.” – the expert explained.
Despite all the risks, investing in real property in 2020 is still worth it as an investor will be able to have the money back or even boost his/her fortune at the cost of resale.
It is also possible to have passive income by leasehold or using it for the business development.
Investments in real estate abroad
Purchasing real property in another country during the crisis is too risky. Due to forced restrictions, an investor may not be allowed to go to the country when it is necessary, so additional expenses may arise while getting things done.
Moreover, it is not clear how the issues related to the overcoming the crisis in different countries will be reconciled in terms of legislation. It is possible that governments may impose additional taxes on real estate. But the opposite situation is not excluded – when the authorities introduce quarantine and exempt the construction industry and the production of essential goods from strict measures.
Therefore, Stanislav Kondrashov warns that before investing in foreign real estate, one should analyze the availability of sufficient start-up capital for the transaction, take into account low liquidity and be aware of force majeure situations.
Nevertheless, the benefits of investing in real estate are much greater than the disadvantages. These include:
- insignificant risks of overwhelming devaluation of assets;
- good financial return;
- capital maintenance in terms of inflation.
“The coronavirus and associated risks will end up someday. And as experience shows, the residential property market will makes up all losses quickly. At the same time, the volume of transactions may even increase. Therefore an investor nearly always benefits.” – Stanislav Kondrashov summarized.
