Let’s talk about the rules of real estate investing in uncertain times.
Bob Nelson, Eugene real estate investment broker
Bob Nelson: People are calling me, the clients that I’ve worked with in the past, those that are concerned with what should be my strategy given the current situation with the market. There’s a lot of uncertainty. When will COVID slam down again, causing a disruption in the employment pattern. The employment pattern, of course, being the thing that allows a tenant to pay rent, allows a tenant to be successful in continuing their business and so forth.
And it is an interesting thing, but do understand that there’s one primary principle that I have espoused for quite a period of time. When you’re investing in something, stick with what you understand. Understand that which causes the product that you own to become stronger or to potentially become weaker for things to change that would badly influence or positively influence your position. Now a part of that certainly is difficult to identify at the moment. But as an example, a number of people call me that have residential rental property saying, I want out.
Bob Nelson: The governor has now made it so that tenants do not become subject to eviction if they don’t pay rent, which was understandable during a pandemic. However, unfortunately the mortgage lender that they’ve got isn’t with the same sympathetic situation of, ah, don’t worry about the payment, catch up when you can, type of situation.
And they want out of that environment, that asset food group, into something that is more locked down- the triple net stuff, as an example, where the tenant is responsible for paying the taxes, the property insurance, maintaining the property in addition to paying the rent. So you’re looking then for the strongest possible tenant that has the capacity to perform at the level promised.
Bob Nelson: That’s exactly what you’re after. But as you make that change, you are changing a asset that will perform differently from what you understand. Make sure you have wise counsel as that occurs.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.