To pay or not to pay rent?

The coronavirus pandemic has us all a bit worried and confused. Numerous businesses have shut down for the time being, and the economy and trade are at an all-time low. To compensate for that, the government is giving aid and even recommending to landlords to freeze rent until this all blows over. So, what should you do? When asking yourself "to pay or not to pay rent" what is the smart choice? Well, as it turns out, the answer is pretty straightforward. But, to have a clear understanding of it, we need to take a deeper look into how COVID-19 has impacted real estate.

COVID-19 pandemic - to pay or not to pay rent?

So, to pay or not to pay rent? What should you do? Well, as it turns out, you really should pay your rent if possible, even if you are protected. The key thing to understand here is that your landlord, or the agency behind him/her, will simply freeze your rent. This means that you won't suffer any penalties for not paying it now. But, you will have to pay for it eventually. Know there is a significant difference between freezing and forgoing rent payments.

Government aid

The current government plan for reinvigorating the economy is to give every taxpayer $1200. How much this will actually affect the economy is yet to be seen. But, it will serve as a way to alleviate the current lack of finance that people are going through. Now, even though this government aid is certain, we still don't advise you to rely on it for your rent. You'll be much better off by paying it regularly and saving that aid for other expenses. Ideally, you will spend it on small local businesses, as they've been hit the hardest by COVID-19.

When not to pay rent

Only if you have to put yourself in considerable debt to pay your rent, should you consider not doing so. In essence, there are two ways you can go about it:

• Talk with your landlord about different payment options - Some landlords will be reluctant to give you a break, but you still need to explain your situation to them and hope for the best. If that doesn't work, consider talking with a lawyer to see what can be done. If necessary, head to divinemoving.com and see what storage options you can get before you are able to move into your new home.
• Use the rent freezing + the government aid to deal with rent fees - Whether or not $1200 will be enough to cover the rent you froze is dependant on how high your rent is and how long the pandemic will last. If it isn't enough, you may have to find other ways to deal with upcoming rent payments.

Caption: A lawyer can help you decide whether to pay or not to pay rent if finances are the issue.

Alt: A lawyer going over a lease with a tenant.

Understanding real estate during the coronavirus pandemic

Until the coronavirus pandemic passes, we cannot say for sure how it will affect the real estate market. Some predict that it will create a significant drop in real estate prices since the current demand for apartments is low. While others think that the effects of coronavirus will be temporary and that within a year or two, everything will be back on track. So, as it is in all fields that are as complex as real estate, making predictions is difficult. However, certain noteworthy indicators should at least give us an idea of whether you should rent or buy and how real estate prices will behave.

Limited travel

While some countries have reduced certain measures instated to combat COVID-19, most are still in effect. And one of the largest, and most impactful ones are the travel limitations.Most likely, travel bans and restrictions are the last things that are going to go back to normal. Even the biggest optimists don't expect that we will have the same access to international travel during 2020. If you were planning to relocate locally, you will be able to move to your new place hassle-free. But, if you are renting a place in a tourist area, you might be in for a rough time.

Caption: Most tourist destinations will be quite empty during the summer of 2020.

Alt: An empty beach.

Most markets related to tourism are bound to take a massive hit. And, as a result, most places that are situated in tourist areas will feel that hit in their real estate. It is safe to say that the usual rent rates will be reduced drastically. Purchase costs, on the other hand, might stay the same for a while. After all, most people believe that coronavirus will pass and that their property will regain its original commercial value.

Market effects

This effect is something that we should see in the overall U.S. real estate market. Will it be to the same extent as it is in tourist areas? Definitely not. However, you should see a surprising reduction in rent rates, especially for commercial spaces. So, if you were planning on renting an area for a new business, doing so right after the COVID-19 blows over would be a good idea. Buying property, on the other hand, will cost you pretty much the same as usual.

Learning from COVID-19

If we are to learn anything from the COVID-19 outbreak, it's that things can change quickly. Most of us didn't even think that coronavirus was something serious a mere month ago. But now, you need to consider whether to pay or not to pay rent. So, if you take something from this experience, try to understand how fragile our lives are.

As for real estate, we should expect a larger number of people choosing homes outside of large cities. Even though this has been a real estate trend in the past years, the fragility of our health systems shows us that living in smaller communities is not only cheaper but also safer. So, if you were planning to downsize, now is the perfect time. Call Imma at TVRE she can help!

Photos used

https://pixabay.com/photos/muizenberg-cape-town-south-africa-4688420/

https://pixabay.com/photos/contract-consultation-office-408216/

https://pixabay.com/photos/coins-currency-investment-insurance-1523383/

https://pixabay.com/photos/dollar-money-cash-money-business-1362244/