Well hell. 2020 is behind us, but there are still so many uncertainties in the U.S. and worldwide in 2021. How does someone who is new to real estate begin with all this looming? Or do you even start right now? Should you become a real estate investor during a pandemic? Smart – or oh so dumb?
I hear ya! There are a lot of unknowns out there in the world right now…. and it can be terrifying to think about. It could drive a girl crazy.
But when is the best time to plant a tree? Oh yeah – 20 years ago. The second best time to plant one? TODAY!
Here is where my head is at at the moment…
You are not the only one who is unsure of the world right now. I’m right there with ya.
Why would someone want to become a landlord right now with the rent memorandums being extended yet again, while people are being laid off, and when family members are getting sick?
Well, right now a lot of people who would normally be getting into real estate investing, aren’t.
Why?
Because of all the uncertainties that life is throwing at us all right now.
So when everyone is waiting, I am moving forward even if I am a little unsure….. change that.
…..even when I am really unsure.
Yes, some of it is newbie jitters. Yet some has got to be all of 2021’s issues.
Here are some of the uncertainties I have and what I am looking at to make myself feel more confident while jumping in to rental home investing.
Current Real Estate Uncertainties:
- Tenants not paying rent: Yes, there are eviction memorandums right now. So what I am doing to decrease the changes of my tenant not paying rent? I am doing a deep dive into their background when screening my tenants. I am checking their credit score, their references (I need 3 references!), their rental history, and that they make 3 times rent from a reliable job.
- Market Crashes: If the market crashes, I will hold on to my properties as best as I can. Historically, most real estate investors who held on to their properties during financial downturns turned out all right….. as eventually the market creeps back up and prices balance out or increase. Those who sold their real estate investments during the downturn lost a ton of their money.
- Unexpected Expenses: I will have an emergency fund at all times that I can draw from. In fact, for each single family home and for each duplex under my portfolio, I will have a $10,000 emergency fund to draw from in case something big happens. If I need to draw from it at any time, I will refill this emergency fund with profits from the property for every month’s income, until the $10,000 is back in full into my emergency fund account. This fund can also help me if I need money to fall back on if tenants stop paying rent.
- Juggling Property Management and Your W-2: I am already a multi-tasker at heart. So what’s one more thing, right? I kid. But I love to be on the move and am constantly doing something. My plan is to self-manage my first couple of properties. After I have a few properties under my belt, I will think about bringing on a property manager if I am not enjoying the managing aspect of landlording. Time will tell.
- Networking During the Pandemic: I will continue to join in on virtual meetups and a few in-person meetups with social distancing of course. I have found an awesome community of real estate newbies who are extremely positive and supportive online,Facebook and Instagram on top of mind. So I will continue to share my story in those spaces. I have met some incredible individuals who I hope to work with in the future and clever individuals who I have learned so much from. COVID won’t stop my networking mojo one bit.
- Finding Quality Work: Yes, I have found that many of the “good ol’ guys“, the stellar contractors that everyone loves, are hard to reach right now. Contractors, especially the really good contractors, are incredibly busy right now. Homeowners are stuck at home and thinking that now is the best time to get home improvement projects done while in quarantine. Such a great idea! However, it may make it harder to get on their schedule. Oh yeah, and with increased demand, may mean a higher price tag. Lucky for me, I have a contractor crew that is excellent and is reachable. I will continue to treat them well, pay them on time (including tipping them for a job well done), and refer refer refer them to others, so that when I need them again, they are there with a smile on their face.
So do me a newbie solid – what else should I be worried about right now, while I become a landlord for the first time during a pandemic?