Investors are understandably cautious right now and unsure of what course of action to take with their portfolios in the midst of a global pandemic that threatens to send the economy spiraling into a recession; or worse.
The stock market is nearly 20% off its all-time highs, which presents a possible opportunity, but expert investor and entrepreneur Randal Gindi believes stocks are priced to perfection and don’t accurately represent the current state of the market.
He points out that the stock market is currently priced at about the same levels it was at in March 2019, when employment and corporate earnings were at record levels and we weren’t in the midst of a global pandemic of unknown length and various uncertain factors, including the length or ultimate effectiveness of COVID-19 immunity.
Given that, Randal Gindi believes the stock market is on the brink of a deep chasm into which it may plunge if the economy doesn’t recover as quickly as hoped, or if second waves of the coronavirus are too widespread to contain without further lockdowns.
Current Investment Opportunities
The experienced investor is instead focusing on real estate, in which some intriguing opportunities are becoming available by the day. With millions of families struggling to get by or unsure about their future economic status, homes that have been on the market for months are starting to noticeably fall in price after home prices continued to rise throughout January and February.
The same is true of rental properties, which are increasingly being put on the market as owners balk at the uncertainty of dealing with tenants who may have trouble paying their rent in the coming months.
However, as some segments of the market become more willing to sell, buyers are drying up. The National Association of Realtors noted that its members reported a nearly 50% dip in buyer interest in the middle of March, with buyers harboring many of the same fears and financial uncertainty that sellers have.
That provides an intriguing opportunity for bold buyers to take advantage of some of the benefits of buying property now, including less competition for the relatively tight amount of inventory available and record-low mortgage rates.
What to Avoid
Randal Gindi does caution against purchasing real estate along the coasts and especially in California, New York, and Washington, where property prices remain elevated and landlords tend to have far less power than their tenants. Instead, he recommends looking in states like Louisiana, Arkansas, and Texas, which have more relaxed landlord/tenant laws and more favorable property taxes.
Randal Gindi notes that not all areas of the real estate market are created equal. While homes or rental properties look like a good investment right now, he expects the commercial real estate market to suffer dearly.
It’s expected that thousands of restaurants, retailers, and other businesses will be impacted by the coronavirus, flooding the commercial real estate market with an amount of inventory that demand may never again reach. Some of those properties could eventually be converted into residential dwellings, but the majority of them are likely to remain abandoned relics of a bygone commercial era for years to come.
Changing work culture could also make office space a far less attractive investment, with more companies operating largely or entirely in a work-from-home capacity. Some governments, including Germany’s, are also pushing legislation that would henceforth require employers to allow their workers to ply their trade from home if they so choose.
Unlike the 2008 financial crisis, which was largely housing-related and resulted in a severe downturn for the market, Randal Gindi is confident that housing will largely withstand the coronavirus intact and provide valuable long-term investment opportunities for those willing to take the plunge.