The 2020 market crash has brought complete chaos to US markets. It is too early to know what the impact from the coronavirus pandemic will be on the real estate market. However, it should be obvious that the domino effect from people not working will result in mortgage defaults and will likely culminate in a large number of foreclosures. Amid economic chaos, keen investors may find amazing real estate investing opportunities after the 2020 market crash. Learn why and where investors may be able to find such opportunities.

In this article:

Investing opportunities after the 2020 market crash

The dangers of an evolving entitlement culture

Property owners are not the bad guys

The domino effect – from defaulting tenants to defaulting business owners

The baby boomer factor

Where to look for real estate investing opportunities after the 2020 market crash

Investing Opportunities After the 2020 Market Crash

During a summer vacation, when I was about 15 years old, my dad offered me money to read a book of my choice. I suppose I had been a little too idle and he wanted to encourage me to make better use of my time.

I stood in front of my dad’s humble library and picked the fattest book I could find. “This one”, I proudly said. He gave me an approving smile.

The book was “Gone With the Wind” by Margaret Mitchell. Little did I know I had picked a great classic.

I devoured the book! There are two things that I remember the most. The first is that I fell in love with Scarlett O’Hara. The second was that people can loose much and some can gain much during a market crisis.

Despite Scarlett’s questionable moral integrity, I remember being inspired by how Scarlett overcame struggle and thrived during a very difficult time. In some ways, I learned to look for opportunities when others run away.

Indeed, the 2020 market crash will be a very unfortunate development for a large majority of people. But, there will be a few that will not only overcome, but will thrive coming out of this crisis.

In fact, this is the fourth article I’ve written about investment opportunities after the 2020 market crash. Previous articles touched mostly on investing in gold, silver, and certain Real Estate Investment Trusts (REITs). But, as I’ve been reading and learning more about the ongoing market chaos, I can’t help but to expect upcoming opportunities in the real estate market.

The Dangers of An Evolving Entitlement Culture

In an attempt to save the economy from the 2020 market crash, the US government is engaging in unprecedented forms of economic and even social intervention. Indeed, the US government is seemingly attempting to bail everybody out.

In fact, the federal government and numerous agencies are broadcasting their intent to protect Americans by temporarily suspending evictions and foreclosures.

Unfortunately, well meaning government intervention of this magnitude is more likely to result in long term negative impacts to the economy and arguably society.

Already, there is a new rallying cry among America’s working class: No one should pay rent until the coronavirus pandemic ends.

NO ONE!! That means, even those individuals that still have a job and can afford to pay rent are being called to refrain from paying rent. Clearly, things are really starting to get out of control, as some people are plainly abusing all good intentions.

For example, take a look at some of the tweets below, which illustrate the widespread abuse taking place right now.

I am afraid this evolving entitlement mentality will cause a lot of harm. If people were thinking through this they would quickly recognize that if they don’t pay rent, property owners won’t be able to pay their mortgages, and in some cases utility bills, in which case all parties will be worse off.

It is my opinion that those that can afford to pay rent should continue to do so. And those that truly can’t pay rent should work with their property owners to find solutions.

I am a property owner and I don’t intend to miss any payments, even if tenants fail to pay rent. However, I am also hoping my residents will also pay what they can. And I am more than willing to help find solutions for those who can’t.

Property Owners Are Not The Bad Guys

I did come across a refreshing tweet, where a resident provided a response as to why rent strikes are a bad idea.

The truth is most property owners are not bad people. They are entrepreneurs that provide value to their customers and to the US economy. Ganging up against these small business owners will only aggravate the crisis.

In researching this evolving problem, I came across an excellent article titled ‘Halting evictions during the coronavirus crisis isn’t as good as it sounds‘. In this article, the author notes that “rent checks don’t just line the pockets of fat cat landlords – they also contribute to essential government services and other workers’ wages.” The article also provides a very informative table to help illustrate the point.

The Domino Effect: From Defaulting Tenants to Defaulting Business Owners

Unfortunately unemployment combined with a misguided entitlement mentality will ultimately lead to many property owners defaulting on their loans. All of which will lead to financial institutions dealing with a new wave of foreclosures.

As many as 30% of Americans with home loans – about 15 million households –- could stop paying if the U.S. economy remains closed through the summer or beyond

Mark Zandi – Chief Economist for Moody’s Analytics

The video below touches on this very issue. The point is that despite all good intentions by the government and other agencies, mortgage defaults are likely to become a big problem.

In addition, mortgage defaults are likely to be experienced in all other types of real estate and not only in the residential real estate market.

Pick a neighborhood strip mall for example. The tenants of such properties include businesses such as hair salons, small stores, small restaurants, etc. Some of these businesses have been shutdown and won’t have sufficient income to pay rent. And ultimately this means some small strip owners won’t be able to pay their mortgages.

Although in some instances government programs may throw property owners and lenders a lifeline, the situation may prove to be too stressful and taxing for some.

The Baby Boomer Factor

On top of all of this, consider that a large number of businesses and properties are owned by baby boomers. In fact, it is estimated that baby boomers own 2.34 million small businesses in the U.S.

As can be imagined, owning a business or rental property is great when things go well. But it can be extremely aggravating when things go bad. And as described above, things are already getting really ugly for business and property owners.

Although, some of these baby boomers have been planning their exit strategies for a few years now, it won’t surprise me to see a large number of boomers accelerating their exit strategies. And let’s not forget that many of these boomers just saw their retirement accounts take a huge hit.

It is easy to see that when things are bad, people want hard cold cash. I’ve written about the very fact that, in the current market crash, people sold stocks, gold, bonds, and weren’t buying anything else. People simply wanted cash.

I suspect a similar situation could very well evolve in the commercial real estate market. Some of those baby boomers may want out of the stressful business environment. In addition, they may also have a growing preference for cash, rather than real estate.

Where to Look for Real Estate Investing Opportunities After the 2020 market Crash?

As much as the real estate market may present some opportunities for certain investors, the best opportunities are always reserved for keen investors.

First, keen investors are prepared for down markets through proper diversification and through either having sufficient capital and/or through utilizing financing leverage in a prudent manner.

Second, keen investors have the knowledge, network, resources and/or drive to find the best deals.

In my opinion, the best deals will be found by knocking on doors, sending mailers, and calling business and property owners. More specifically contacting baby boomers.

Yes, that is definitely more work than browsing a website looking for properties, but hard work always pays.

Is it wrong to call those baby boomers in pursuit of an opportunity? Not at all. After all, you won’t be forcing anyone to sell. Your offer to buy from someone else is also an opportunity for a seller.

So, start paying attention to all businesses and consider the impact to the property owners. Some of those property owners may soon be wiling to accept an offer that they would not have considered just two months ago.

If you want to thrive in this chaotic environment it is time to also network with lenders, brokers, realtors, property owners, business owners, tenants, and even other investors.

Moving Forward

I plan to continue looking for opportunities in gold, silver, and real estate. I also have my eye out for investments in oil, and even airlines. But, out of all of these, I am mostly interested in real estate.

And when it comes to real estate, my preference is in low income housing, but more specifically mobile home parks. There is no more affordable housing than mobile home housing. So, demand will always be there.

But regardless, the important thing is to be creative enough to look for, and find the best opportunities. One article I highly recommend, as you pursue real estate investing opportunities after the 2020 market crash is the article below.

How to Improve Creative Thinking in Business to Get Win-Win Deals

In this article I share some ideas that I think can help the average person begin to think differently and to find the best deals.

Stay hungry my friends!