CrowdStreet’s Darren Powderly recently sat down with renowned real estate expert Dr. Peter Linneman. Their 40+ minute conversation covered a lot of topics including:
- Why Dr. Linneman believes that some sectors, like non-essential medical services, will come “roaring back” sooner than others.
- How high the unemployment rate could still get
- The impact a COVID-19 vaccine (or lack thereof) will have on a recovery
But Dr. Linneman had three key pieces of advice for individual investors looking at commercial real estate right now:
Watch the REITs
While investing in REITs is another matter, watching REITs can be valuable for two reasons. First off, there is daily pricing information available for various portfolios, which can be used as a guidepost. REITs also report on useful real-time information–like the percentage of rent collected versus the asset class benchmark–that investors can’t always get from the private side.
Don’t just play defense.
Anybody who owns real estate right now is playing defense. Are my tenants paying rent? Are they paying enough to cover my debt? What about the developments I’ve got underway? However, the investors who become successful in times of uncertainty find a way to emotionally get out of the defensive mindset and focus on the offensive. Dr. Linneman argues that the best offensive move for the remainder of this year is to consider Opportunity Zone projects, where investors can protect any capital gains and focus on long-term returns.
Focus on the long-term.
Even during the financial crisis of 1889, the Great Depression, the dotcom bubble, and the Great Recession, betting against the U.S. economy over any prolonged period of time has been a losing bet, and Dr. Linneman believes that’s still true. After every downturn there comes a recovery.