To understand where the potential landmines are and where to dig for gold, we need to understand the true path of wealth. What have the rich always been doing? What have they been doing specifically during this COVID-19 pandemic? Where have they adjusted and where are they putting their money right now? Well, GO DO THAT 💰🧐!
How The Rich Always Make Money
Money is not Wealth. Cash is not King. Cash money devaluates 😖 meaning it heavily loses buying power. Moreover, cash money in the bank is being first hit with negative rates in 2020 (you pay the bank to hold your money 😵). Then it takes another hit from inflation lowering it’s buying power (if the same coffee costs now $2 instead of $1 a few months ago, you now pay twice as much to buy the same coffee) and if you have anything left you can now pay (after already having paid income tax) a second round on wealth tax 😒. Remember: Inflation-corrected recurrent cash-flow is the only true queen 👑 to building lasting wealth!
As we have stated over and over again the wealthy buy assets (it’s all explained here). Assets put money in your pocket and Liabilities take money out of your pocket. The rich also rarely ever pay tax (follow our “keep your money” - no tax trail here).
What Have The Rich Been Up To During The Pandemic?
Like anyone else out there the rich parked their jets in the hangar, went inside their exclusive homes to stay safe 😷 and moved online. Transitioning into the digital and virtual world is more important now than ever before. The real estate world is doing “virtually” everything & everything “virtually” from 3D tours, zoom walkthroughs, virtual presentations to video previews as a listing service. Some banks are even doing drive-by appraisals with properties that are already under contract. Real estate’s new “virtual reality” is the “New Normal”! It’s never been more obvious how much home matters which make real estate investors even happier 🤗🔥. Home is where we eat, sleep, play, work, homeschool, and run our businesses in 2020. Private outdoor spaces like patios, decks, and gardens are more a necessity than a luxury for safety & community nowadays.
On one hand, the stock market seems to has gone bananas plunging and peaking like a rollercoaster. Oil has gone negative 😵, meaning oil barons are now paying buyers to take their crude barrels from their hands, crazy stuff. On a global scale, all businesses, hotels, restaurants, shops, malls have been shut down simultaneously, and even now entering summer traveling is still very much restricted. We can obviously see that mostly the essential businesses are staying afloat and that online business is the big thriving force during the 2020 COVID-19 pandemic.
On the other hand, we absolutely can, beyond any shadow of a doubt, all hands down, conclude that of all the asset classes real estate is surely here to stay and prosper 🥳.
What the rich have primarily been doing is cashing out in preparation for the lurking depression (how to cash out and prepare-> here) and position themselves in the best possible disposition to act (meaning the best position to acquire assets on a sale/bargain). Which many have started doing during the lockdown…
Buy A Business With $0 Down During COVID-19
Well, you can absolutely start doing the same. You can even use the SBA (7a) CARES ACT loan program for that purpose. It's a historical opportunity for you a buyer to obtain acquisition loans with the first 6 months of principal and interest paid by the SBA!
Where Have The Rich Adjusted And Where Are They Putting Their Money Right Now?
So you know they have adjusted because you can hear about all of the bankruptcies daily on the news. There is one “secret🤫” that we need to share with you in advance though so you can see all these events in the right perspective 😉.
There is a BIG difference between the real heartbreaking bankruptcy of the poor | middle-class mom-pop-shop and the so-called “filing bankruptcy chapter 11” for the rich multi-billion businesses.
Bankruptcy for small owner-operated businesses actually means financial ruination with usually a devastating personal credit effect. Filing for “chapter 11 bankruptcy” for big bug companies actually means they can remain operational, there are no time limits, and their debts can be discharged as often as they file for bankruptcy. Furthermore, they are not forced to sell assets for compensations and they can pretty much lay off personnel at will and file for bankruptcy as an attempt to avoid paying outstanding wages.
All the headlines of big businesses filing for bankruptcy actually mean that they are “cashing out”, keeping all of their assets tax-free and moving away from the affected business categories and investing their assets/money into the new, emerging, or adjusted more profitable and growing business categories 🧐.
So again, follow the real news trails (no drama stations, but financial sources for investors) to see which real estate sectors are in big trouble filing for “chapter 11 bankruptcy”. Now you know to keep away from these ticking time bombs, even if they are being offered for sale at very tempting prices. If the folks with billions are running from it, you should probably do the same!
Where Are They Putting Their Money Right Now?
To see where to put your money as a real estate investor you just need to dig a little deeper into the research of the market. Data centers (data storage centers) are a hot real estate market, popping up all over the world with big data moguls like Facebook, Google, Amazon competing for every square meter worldwide. CBRE (Coldwell Banker Real Estate) says that the e-commerce supply chain requires up to three times more warehouse and logistics space, that’s a hint! Phone towers with the eminent “5G Global Rollout” are another hot real estate market paying high recurrent and secured cash-flow. Local vertical farming and local manufacturing seem to be essential during the pandemic so probably a good candidate for after the pandemic into the "New Normal" too. Just follow the great merger and acquisition trails 🐾 to see where the money is heading.
And The Usual Cash-Cows ?!
Any real estate tied to the big entertainment & leisure industry such as theaters, cinemas, sports stadiums, concert halls, resorts, amusement parks, cruise ships, etc. will have to adapt to the “New Normal”. We have seen Starbucks closing up to 400 stores (see Mergers&Acquisitions figure above) and moving to drive-by and digital with a whopping $3 billion line of credit reserved for these pending investments. Drive-thru cinemas have experienced a new revival since the pandemic hit, Kopp's Drive-Thru cinema's transitioned all of the theater’s ticketing and concession ordering online or through an app, everything is online in a contactless-type of process. We can expect these developments to continue after the pandemic especially when there are so many billions being invested in these innovations.
No-one seems to know for sure how the “mass- entertainment” industry will look like after lock-down. All we can expect is that the emerging K-wave of bio-nanotechnology will play a prominent role in the new social norm. Mandatory vaccinations for admittance, temperature or blood checks on entrances, in-app health history disclosure. More AI and robotics such as "waiter-bots, cook-bots, delivery-bots, and driverless anything" (for humanless contact as a safety measure) might become more and more the new standard. These robotics changes will also serve for the loss in revenue, cutting personnel costs drastically in the case of "mass control management" guidelines making going back to high-density/high-volume events unlikely.
So these real estate investments should probably be considered “quick-sand investments 🥺” for now and be held accordingly at least until the “New Normal” is defined in a crystal clear manner.
The greatest uncertainty remains for the real estate investors in the usual cash-cow areas, the residential, and the commercial housing categories. Even though the COVID-19 pandemic credo “stay home stay safe” has given “home sweet home” a whole new dimension all in itself….
People still need a JOB to pay for their rent. Investors rely on these rent payments to pay-off their investments. So with unemployment skyrocketing during the pandemic outbreak and adjusting even more after the lockdown, the only certainty seems to be that “affordability” is key and crucial. The high-end sector of this market has already started to crumble… So if people need to downsize or save on expenses the most affordable housing options are going to continue to be the goldmines 💰 they always were!
Even more reassuring is the fact that the former recessions also have left some clues on how to deal with real estate in the midst of all the changing landscapes, download your “Make Money In Any Market CheatSheet” to plan, adjust and implement your strategy going forward.
Now more than ever you need to revise your numbers!! How low can rents fall? How high can vacancy rates go? What is an acceptable return going into the “New Normal”? So think affordable, with work from home amenities, with gardens/patio’s or any private outdoor space….🔥💰💰. What are your OPEX margins? What part of your CAPEX or Equity can you redirect to invest in these amenity improvements to position your properties as winners for the “New Normal”? The money has always been in the numbers!
WHAT DOES IT REALLY TAKE TO GET RICH?
The saying goes that it does not take money to make money. But it doesn’t mean you don’t need money, because you do! Only after you have invested a substantial deal of money in your financial education and growth and you have acquired enough assets to set a proven record of your investment skills, then and only then this statement will self-actualize and become a reality!!!
You will always have to balance between money, time, and knowledge. The more knowledge you acquire the lower your risks in investing becomes; it is only risky if you don’t know what you are doing. If you have time but no money follow our “flip to fortune path” to get the money you need to start your learning and investments going.
It takes a dream, a vision, a lot -we mean an insane amount- of determination, the ability to use your natural-born gifts properly, and an unwavering willingness to learn quickly to understand how money really works. That’s when it all starts working for you.
We don’t sell quick get rich schemes here, we are in the business of spreading the truth and paying it forward through financial education. We tell it like it is and for those willing to listen, learn, and grow the reward is endless and for sure 💰.