Opinion: Residential Investors Should Not Fear Rental Regulation or Real Estate Deflation
As we all know, the COVID-19 pandemic affected every aspect of our lives, including how we invest in commercial real estate in Oklahoma. People and businesses are struggling financially, leading to an increased demand for rental regulations and the specter of deflation. Any hesitation towards investing in rental properties is understandable, but there are still lucrative ways to work with real estate deflation.
How to Invest in Deflationary Environments
The Whole Picture
If you are investing in rental properties, your focus needs to be on your net cash flow rather than the gross. It is true that the value of the rent will go down in some cases, but so will some expenses such as taxes and insurance. As other costs fall, the net cash flow should stabilize.
Additionally, your personal expenses should decline as well, making any temporary shortage that you may face easier to handle.
The Rule of Supply and Demand
If there is a demand, commercial real estate can still be one of the best investments for deflation. There is little room for renters to negotiate for a sought-after space. Often, the demand for property comes down to location.
Cash Is Still King
If you want to know how to invest in deflationary environments, consider cash. Bonds and funds are always praised as being some of the best investments for deflation. It wise to keep cash on hand, but an excess of money also gives you the opportunity to purchase new real estate investments from owners who got in over their heads. Buying new properties in up-and-coming areas is an excellent way to keep your portfolio moving in the right direction.
Choosing to invest in commercial real estate in Oklahoma is still a smart business move. The demand for rental properties is only going to increase during a time of deflation. Fewer people will choose to buy their commercial real estate, particularly if they need cash for their business. While there is uncertainty right now, you can still enjoy valuable returns from commercial real estate. Please contact us if you have any questions about Oklahoma commercial real estate.