I Bet On Real Estate During The Pandemic, And Won. Here Is How I Did It!
All you need the right relationship-building strategy and an exit plan.
At the beginning of the pandemic, I enjoyed all of the perks of a highly paid professional speaker and author, while traveling the world, keynoting for some of the most prestigious conventions and conferences. I had normalized the demand for my advice and expertise in media and at large-scale events as a leading advocate for women.
However, the pandemic put in-person events on hold. In March 2020, I came home after giving a speech at Harvard Business School, and was immediately notified that schools across the state were closing and my son would be home for at least one month. At that moment, I decided to make a major pivot into real estate investing. I had invested in small commercial properties in the past, but investing in rental real estate during a pandemic was going to be a new venture during a time of overwhelming uncertainty.
Although there were talks of another housing crash, and an eviction moratorium, I was determined to take the risk. I decided to start building a rental portfolio of two to four-unit family properties nationwide, where I could generate consistent cash flow and build an equitable portfolio. Most of my colleagues and family thought I was crazy to go into the real estate market at a time when there was a federal eviction moratorium, which could impact my ability to earn rental income, but I have built all of my businesses during times of economic distress and won. Besides, in the words of Baron Rothschild, “the time to buy is when there’s blood in the streets.”
I took a mini-sabbatical from social media and stopped accepting speaking gigs, to focus on buying rental properties — some of them sight unseen. Within a matter of months, the gamble was starting to pay off. I managed to buy seven properties below market value, while there was a housing shortage and people were overpaying to leverage the market.
Here is how you can do the same and pivot into real estate investing without overpaying for investment properties.
Build your network
This may sound cliche, but you cannot build a real estate portfolio without shaking hands and conversing with the right people, especially sellers and investors. No app can replace personal interactions. Rather than spending your days on websites such as Zillow and Realtor.com, while window shopping with Realtors, the best thing you can do is to network your way into the off-market property scene.
I began to commence conversations with other investors, and private lenders and they forwarded leads that they had passed on, either due to funding or out of their investment criteria. I conducted my due diligence and moved forward.
The name of the game is networking.
- Attend real estate meetings, either virtually or in-person
- Lookup public records of investors who have previously purchased properties in your markets of interest
- Drive around. Look for construction sites and shake hands with contractors and investors
- Start calling local lenders and brokers to tap into their networks. Lenders always have connections with off-market properties. Don’t waste their time.
- Build your network(s). Don’t just contact them as a resource. Stay in consistent contact
Active investors are not just sitting in social media groups and sending out direct messages all day. If you want to get in this game, especially with off-market properties, you have to network your way into the room.
Buy occupied properties
This is the best strategy to obtain a loan/mortgage to secure the property. Lenders look at the performance history of the property, rather than just the borrower. If a property has a performance history, lenders are likely to lend on the property, particularly private lenders. If you structure the deal correctly, the performance is all you will need.
Look for properties that are currently rented, even if it’s rented under market value for the area. It will give a strong indication to a lender that the property can pay for itself and is a strong investment. You will have room for improvements, by way of small renovations if needed, which will improve the value of your investment. All the properties I have purchased during the pandemic have all been occupied, and I have not had one late payment or eviction. I have also managed to increase rents incrementally to cover the inflated costs of utilities and maintenance. Lenders have funded all of my deals strictly based on performance without the need to look at traditional income verification statements because the property produces its own income.
There are several private money lenders in every local market, who are willing to lend on properties that have a performance history, and although it may cost you more in interest to leverage their capital, it’s less restrictive than seeking traditional financing which may require a substantial down payment and a fully vetted background check at a time when your income may have been unstable due to the pandemic. You can always refinance out of private money based on the terms between you and the lender, but it’s a great way to get the property off the market.
Think outside of your local market.
One of my mentors told me that “if you babysit your investments, you’ll never make money.” The trick to real estate investing is that you have to invest where it makes financial sense for you. For example, if you live in New York City, and you cannot afford a rental unit in the city, then look Upstate New York or in parts of rural Pennsylvania. You don’t have to live there to invest there. You are looking for a stable rental income to add to your portfolio and increase your net worth, not to micromanage the property by passing by every day to manage tenants.
Think beyond your backyard. I’ve leveraged properties in other markets, which have paid off and subsequently availed me the opportunity to invest in my market, where the prices are spiking due to a housing shortage. This also allowed me to speak directly with sellers and learn why they were skeptical about listing their properties with a traditional Realtor. Many of them did not have the 6% listing fee and needed every dime they could get, which placed me, as an investor, in a position to close the property at a discount. By leveraging private money, and having a direct line of contact with the seller, I negotiated better terms and increased the value of my portfolio.
Whether we are in another curve or we’re out of the pandemic, real estate will always continue to be one of the safest investments and the key to creating generational wealth and taking action — fast. Although the rental market sounds a bit risky with the looming eviction moratorium, there are numerous programs that tenants and landlords can leverage to create an equitable situation, while your property is gaining equity. Take the risk and jump into the market.
Carol Sankar is a consultant and the founder of The Confidence Factor for Women in Leadership. She has been featured at TEDx, The Steve Harvey Show, Harvard Business School, The United Way and more. In addition, her work has been covered by Inc. Magazine, Glamour, O Magazine, Forbes, Harvard, Entrepreneur Magazine — to name a few. Carol is also a contributor for Inc., & Entrepreneur Magazine. For more details, visit www.carolsankar.com
