April 7, 2020
Now more than ever it is the question on every investor’s mind– where can I find safety and stability in the market?
According to Forbes Real Estate Investor Editor-In-Chief Brad Thomas, cash flowing multifamily may be one of your best bets.
The government announced that the first stimulus checks are expected to come in on April 9th. Thomas said with the stimulus money coming in within the next two weeks, people are going to be focused on making sure their housing is paid for first.
“I think the multifamily sector is going to be one of the safest property sectors. Given the fact that within the property sector it’s a critical mission that people are going to pay their rent first” Brad Thomas said in an exclusive interview.
“People are going to be utilizing these proceeds to make sure that they pay their landlord. So I think I think this is definitely one of the safest property sectors to be in right now of all sectors,” he said.
Because we are in the middle of an election year, Thomas also believes that it is likely that more stimulus packages are on the way.
“There has been one round of stimulus but the government has more levers to pull which I think they will.”
Clearly, there is still a lot of uncertainty that persists around how long the COVID-19 crisis will keep people out of work and the impact it will have on unemployment.
However, “it looks like it’s going to be a temporary event. So as long as this is temporary, I don’t think it should have any long lasting impacts whatsoever,” Thomas added.
The Forbes Real Estate expert said that probably the biggest negatives that the real estate and residential sector industry will endure will be on new development.
“Business is going to slow down because development is slowing down somewhat given recent events, but it’s not come to a screeching halt, it’s just harder to get transactions closed and banks and attorneys together, obviously, because everybody’s practicing social distancing.”
With people confined to their homes due to the stay-at-home measures in place, Thomas went as far as to say that it could potentially even be a benefit for the housing sector.
“It has potentially created even higher demand because people can’t do much outside of the house. So now a lot of the U.S. population is staying indoors in their house. You know that they are going to make sure they’ve got their shelter checked squared away first.”
Malls and Restaurants Likely To Suffer
According to Thomas, the sector of the industry that is likely to suffer and he is avoiding is malls and restaurants.
“Some restaurants that were not thriving to start with will go out of business. This situation has brought a lot of people to argue that the restaurant industry is saturated, and that there are too many malls.”
Despite record unemployment numbers, Thomas is confident that the economy will recover, potentially faster than anyone is currently expecting. Investors are increasingly looking to find safety and defensive sectors.
“I think the housing industry is one of the most defensive sectors you can be in, and is definitely one of the top asset classes for investing right now.”