Commercial Real Estate Investing From A-Z Is Now a Good Time to Buy Commercial Real Estate?
Today I am covering what I think is going to happen to the economy, which will inevitably affect real estate prices.
You can read this entire episode here: https://montecarlorei.com/is-now-a-good-time-to-buy-commercial-real-estate/
If you are a listener of this podcast, you know that common sense is not common. And up until now I am not seeing a lot of common sense thinking out there. Starting with how the stock market is doing. Stocks are very high given what is happening in the world. On top of that, I don’t see too many people talking about the consequences of how everything is interconnected. And they’re not talking about how, in my opinion, this will trickle down to what I think will be a very bad recession.
For all of you who have been taking the time to hone your skills, to learn, to make connections in the real estate world, to build your reputation: congratulations, our time has finally arrived. Why? It pretty much consists of four factors that are all correlated: rents going down, vacancy going up, cap rates going up and lending getting tight – which is exactly what is happening right now, and will continue to happen.
So why do I think things will get bad because of the Coronavirus / Covid-19? It’s simple, everything is interconnected, let’s take just one example: if people cannot hold large events for at least one year, that alone is already a huge portion of our economy, so how can that be? It’s simple, it trickles down to everything else. Let’s take some industries that are connected to holding large events: the music industry with concerts, sporting events, conferences, the entire economy of Las Vegas, and every company that depends on holding live events, for example Tony Robbins. Most of the employees that work for these industries, will be let go or furloughed. These employees all have bills to pay, food to buy, they have kids, mortgages, rent, etc. Even with unemployment checks, they won’t be splurging, going to restaurants, or going on trips. And with that, the restaurant business gets hurt, the travel industry, and that is obviously already happening, (Airbnb just got $2 billion dollars in loans at half of their last valuation, and they’re paying 10% in interest on that money!), the clothing industry also goes down, and every industry that is related to disposable income: nail salons, massages, buying new cars, etc. And now all of the employees in these industries get hurt: they are let go, or get furloughed. And these companies not only let go of employees, but they also cut their costs, they won’t be investing much in new technology, in advertising, etc,
That trickles down to the tech industry. I get a daily digest of what’s going on in the tech world, and today alone, the digest had the following news: Netflix sales are up, another tech company is cutting the salary of all staff by 25%, another tech company furloughs 600 people, another let go of 13% of its workforce.
This is how everything is interconnected.
Listen to our How You Can Lose 50% of Your Property Value in One Downturn episode: https://podcasts.apple.com/us/podcast/how-you-can-lose-50-your-property-value-in-one-downturn/id1451874700?i=1000454715311
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