How can property investors come out the other side of...

A property investment expert and well-regarded podcaster has offered some top advice to investors on how they can cope with, and come out the other side stronger from, the coronavirus outbreak.

Rob Bence, the chief executive of Property Hub and one part of the popular ‘two Robs’ podcasting duo along with Rob Dix, explains below the main challenges when it comes to coping with the pandemic and what investors can do to mitigate its impact.

Fight or flight

Coronavirus has plunged many businesses, the government, and indeed the economy as a whole into uncharted territory, with some businesses having had to shut their doors and continue to hope for the best, while others have continued their fight for survival.

“It’s basic fight or flight mode,” Bence says. “And the property industry aren’t ones to roll over, so we’ve seen more fight than flight. Doors to business premises have closed, but many are continuing business as usual in the comfort of their own homes.”

He believes that coronavirus has taught us that it’s important to be able to adapt. “The world has been temporarily paused, and for many, this is presenting a host of challenges. But for the few, it opens up a world of opportunities.”

How can we come out of the coronavirus pandemic stronger?

While it might seem tasteless to talk of opportunities at this juncture, it is also the case that proactivity will be needed to stimulate the economy once lockdown measures are lifted – and that, inevitably, out of crisis will come opportunity for some. Airbnb, for example, emerged out of the global financial crisis of 2008 – offering a solution to a rising need.

Bence believes investors need to operate with a positive mindset in the face of adversity.

“Some property investors will simply sit at home, thinking: ‘it’s game over’. They’ll sit there in a negative mindset, thinking: prices will plummet, rental demand will dive off a cliff and retreat away until confidence picks back up,” Bence explains.

“But educated property investors will be seizing this time to consider how they can take advantage of the situation. With challenges come opportunities - not for everyone, but certainly for someone. And if you’re in a position to invest, you could come out of this with some great deals and in a strong position.”

Evaluate the situation

Bence says existing investors will be keeping a close eye on costs right now. “If you haven’t done so already, you should be paying close attention to your expenses - both your personal and business costs,” he advises. “Now isn’t the time to be spending willy-nilly, all costs need to stack up. You need to make sure you can actually ‘cope’ with what’s going on right now - even if that means ‘just getting by’.”

He advises those with empty rental properties to consider dropping rental prices slightly. “Any income right now will be better than a complete void period. And if you have tenants who are struggling with the rent, weigh up the pros and cons of taking the buy-to-let mortgage breaks on offer. This will provide some relief and hopefully help those struggling to cope during this pandemic.”

Bence argues that, regardless of whether you’re an investor intending to move quickly on new deals or you’re sitting tight, now isn’t the time to do nothing.

“You won’t come out of this a stronger investor by staying stagnant,” he claims. “The property market is changing daily, so you should be using this time to double down on your knowledge. Research, research and research some more.”

He believes investors should invest time in their property education by listening to podcasts, reading books and following those who have a wealth of knowledge in the property and economic sectors to understand what’s going on so informed decisions can be made based on facts instead of media hype.

“If you don’t quite understand economics - now’s the time to learn,” he says. “If you aren’t clear on your goals - now’s the time to focus. If you aren’t sure of your strategy - now’s the time to nail it down.”

Now is also the time, he says, to be following the market incredibly carefully. “Pay attention to new listings and price movements which could be indications of those that need to sell.”

He adds: “Use this lockdown time as research time. Get clear on what you want and how you’re going to achieve it, all while scoping new opportunities at the same time.”

Don’t get blinded

Bence believes now isn’t the time to take advantage of every property deal ‘that comes your way just because you can. This won’t help you come out of this in a stronger position.’

He says investors can’t continue snapping up properties in the same way they did previously because we’re heading into the unknown. However, research will help investors make the right decisions as long as the deals align with their goals.

“If you’ve done your research and are of the mindset that the market is likely to drop, and investing for capital growth is one of your strategies, you might be hitting pause on your investment plans. But if you’re investing for the rental income and you think the market drop won’t be too bad, you could be ready to add to your portfolio and continue with reaching your goals right now. Particularly with Zoopla’s Rental Market Report highlighting a 30% rebound in rental demand over the past fortnight!”

It’s important not to rush, though. “Crunch your numbers, make sure your fundamentals boxes are ticked and you could ride the coronavirus storm with a few nice deals under your belt.”

Negotiation is key

“It might sound harsh, but it’s becoming a buyers’ market,” Bence claims. “Many investors made their money during the last crash. And although we haven’t crashed, there are likely to be many struggling to sell - from residential homeowners to large-scale developers.”

He says, while it’s tough to negotiate when confidence is high as offers are less likely to be accepted, when confidence is low, it’s likely that reasonable offers will at least be considered.

“The banks are also giving investors a helping hand by kick-starting their mortgage deals now they’ve had a chance to reassess their lending risks during the pandemic - so those who were stuck in lending limbo can now move forward and use this as a negotiation tactic to get deals done quickly,” he adds.

Be kind

“This is an obvious one, but kindness goes a long way, particularly with tenants,” Bence states. “We’ve had reports of landlords extending a helping hand to their tenants and utilising mortgage breaks, but we’ve also heard reports of landlords being unwilling to meet tenants halfway.”

He continues: “We have many people around the world experiencing severe financial hardship right now, and while landlords are operating a business, we need to remember we’re dealing with humans who have feelings, and we should be doing our bit to help wherever we can.”

He says you can either come out of the coronavirus crisis with a happy tenant who is grateful for the support you provided, or ‘you can be slapped with your notice and need to start the tenant finding process again which incurs additional time, effort and money’.

There’s a positive outcome to be had

All property investors can come out of the coronavirus pandemic with a positive mindset - whether that’s being fully armed with a plan of attack or taking advantage of the deals to be done, Bence says.

“Sitting tight and doing nothing is an option, but it certainly won’t be of benefit and it certainly won’t help you exit out of the coronavirus pandemic as a stronger property investor,” he concludes.