5 Ways Coronavirus Changed My Investing Plans

5 Ways Coronavirus Changed My Investing Plans

3 min read
Tamar Hermes

Tamar Hermes is a full-time real estate investor and educator. After building successful businesses in the retail and entertainment industries, she turned her attention to real estate with a mission to get more women to become investors and continue to build her portfolio. Tamar has been investing for over 20 years with a focus on appreciation with buy and hold single-family homes and duplexes in Los Angeles. In the past few years, she has expanded her portfolio to include passive multi-family investments across multiple states, private lending, and Airbnb properties. She bought her first duplex when she was 28.

Experience
As an educator and advocate for women to become educated and invest in real estate to grow wealth, Tamar focuses her time empowering and educating women across the country through her masterclass, The Real Deal Formula. She also coaches and consults women and couples privately about the opportunities to build their assets through real estate and supports them to connect with reliable partnerships through her Wealth Warrior Woman Alliance.

Tamar always had a knack for saving money, but it took her years to discover there were other ways to earn income besides working a 9-5 job. She now firmly believes financial freedom is possible through real estate and understands the importance of knowing how to allocate and invest your money and protect assets is a critical piece of sustaining financial independence and creating a legacy.

Tamar currently lives in Los Angeles with her husband of 18 years and her two children. They plan to relocate to Austin at the end of 2020. When she isn’t teaching, reading, or learning more about real estate investing and self-development, you can find her on a hiking trail with her rescue terrier Teena, listening to the BiggerPockets Podcast.

She also loves traveling, yoga, hosting dinner parties with friends, supporting her favorite non-profits, hanging out with her Gobundance Women’s’ Tribe, and binge-watching Curb Your Enthusiasm. She currently serves as the co-director of the Los Angeles Chapter of The Mona Foundation, which has worked for 20 years to alleviate poverty through gender equality and education around the world.

Tamar’s first book on real estate investing for women will be published this year.

Education
Before Tamar discovered real estate investing, she attended Pitzer College and the American Academy of Rome. She majored in communications and fine arts.

Accreditations
In addition to growing her portfolio in real estate, Tamar became a certified life coach, holds a real estate license in California, and studied finance so that she could master the knowledge she needed to own her financial destiny.

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Two months ago, I was flying high in real estate. I’ve always kept in mind that investing carries some risk, but it did not seem feasible that anything wildly significant would change anytime soon.

Enter COVID-19.

Overnight the world changed, and so did my investing plans. Here are some strategies that I’m considering for my investments in light of COVID-19.

Buying Section 8 Housing

This strategy has been interesting to me for a while. Section 8 is housing that is subsidized by the government. You need to get it approved and get paid by the room, so if you have a larger home, the potential to profit is excellent. This plan was laid out well in podcast episode 356 with Joe Asamoah, who talks about combining BRRRR and Section 8 in a pricey market.

When looking for a Section 8 property, you need to ensure the area is zoned for it and check to see how much the government pays, as it varies by county. I am looking for properties that already have Section 8 tenants under contract at the time of purchase.

Section 8 tenants generally stay for a long time. The tenants do need to pay a small portion of the rent, so you need to screen well to make sure they can cover that expense.

The bottom line is that even if a tenant loses their job and runs out of money during COVID-19, the government will not. So, rents come in consistently every month.

Related: The Pros and Cons of Accepting Section 8 Housing

Following Job Stability

While the unemployment rate was just 3.5% in February 2020 pre-COVID-19 outbreak, millions are now out of work, and businesses are closing. Most agree that for many of them, it will not be business as usual for the foreseeable future—if ever.

The good news is that once we get past this, new businesses will emerge. Anticipating which industries will develop and where those companies will set up shop could be a great indication of places to buy housing.

Large companies have already made commitments to areas, so we know jobs will be there. For example, Apple has announced its expansion into Austin. Netflix has a growing production hub in New Mexico. Amazon warehouses are in many states. Buying near warehouses for packages like UPS or FedEx or purchasing near healthcare facilities is a good bet, as well.

delivery, mail and people concept - smiling Asian woman opening cardboard box at home.

Heading to the Suburbs

With social distancing and working from home becoming more of a way of life, living in the city is not as exciting. Living in the suburbs saves money if you want a home office or more space at a much better price than a city. Plus, it offers more distance from your neighbors.

Prices are also a lot more reasonable for rentals in the suburbs. With people cutting back on expenses, many will be heading out of town. Picking up rentals in these areas should make for some decent cash flow.

Related: 7 Hard-Won Lessons From the Last Recession That Will Help You in 2020

Holding Money Tight

“Make more deals” was the theme of the year as 2020 began. But now with the anticipation of permanent job loss and businesses closing and transitioning, there is good reason to sit tight.

Some people have had government support to help them through these hard times and have gotten their mortgage payments deferred. The funds are temporary, and some will not be able to catch up. As the economy opens back up, and as evictions and foreclosures begin to be processed, we will see more vacancies and more opportunities for discounts.

Following Warren Buffet’s lead and hanging onto money now will put you in a great purchasing position with a bit more patience.

close up of hand stacking quarters in various piles

Buying Under Value

With the uncertainty in the economy, a good deal just is not good enough any longer. We have gone from a seller’s market to a buyer’s market overnight. Zillow predicts the dip will go on for about a year and recover. Still, others like Robert Kiyosaki and U.S. demographer and financial commentator Harry Dent believe we are months away from the biggest depression in our lifetime.

If Dent and Kiyosaki are correct, any investment needs to have a spread in the deal to adjust for a significant correction that is looming. If you used to calculate for a 10% vacancy, any deal should be made well below the market value to adjust for a potential 20-30% vacancy.

There is always a good deal out there, but it starts at the time of purchase.

Now more than ever, every investment needs to be made with the current calamities of the economy in mind. But to be sure, there are still opportunities to be found.

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Have your investing plans changed recently?

Let us know how you’re adapting in the comments.

Coronavirus has changed almost everything about life for everyone, including our investing strategies. Here are five tips for getting solid returns and focusing on undervalued deals in the real estate market during uncertain times.