The current state of the economy in the midst of the coronavirus pandemic offers a great deal of opportunity, but it's not without risk. In my current consulting role, I feel fairly secure with my job, plus I have my degree as a pharmacist, so I feel confident in my ability to find some job to pay the bills if I were to suddenly find myself without an income. That being said, I am using 2020 to aggressively increase my net worth, and work towards a net worth of $10 million by 2030.
The core of my growth strategy will remain the same. I am maxing out both my 401k and my health savings account (HSA). My deposits into both of these accounts are tax-deductible, which decreases the amount I pay in taxes, and has the added benefit of decreasing the amount I pay in student loans each month. I haven't started investing any of the principle in my HSA yet, and I've actually had to use some of the balance this year due to my own health concerns, but I'm hoping to get some of that balance invested into stocks this year to grow that balance for the future. For my 401k, I switched as much as I could to my company's stock, and the rest is in small growth cap stocks. My company's stock price is artificially suppressed and I feel very confident that the price will drastically increase in the next 10 years. And they pay a nice dividend as well, so that's even better.
With my after tax balance, I invest 1% of my income into our employee stock purchase program, which provides even more value when purchasing company stock, and I plan to aggressively purchase stocks with dividends until the market gets back to the highs of February, or until the housing market prices decrease again, then I might shift back into real estate.
If we are in a housing market bubble, like some have been saying, then I will probably try to find deals that are 30-40% off today's prices. That seems like it falls back in line with a fairly priced market, but I'm just not sure that the Millennials, and now even some of the older Gen Z will let that happen. There are so many people who have been patiently waiting for home prices to fall back down, that they could inadvertently keep them from falling much at all. The biggest threat I see to the housing market comes from small portfolio landlords (like myself), and from short-term rentals (like Airbnb and VRBO). For landlords with only a few properties, it can be easy to miss mortgage payments with only a few tenant vacancies.
Many of us have tenants who are the cohort of people most strongly impacted by the closures from the coronavirus pandemic. For the Airbnb landlords, I imagine most of them will be just fine, because they should be able to forebear their mortgage payments for 12 months, like everyone else. The real trouble, and ultimate collapse will come if people don't start traveling and staying in Airbnbs several months after the mortgage forbearance expires. That's when we might start to see a large amount of foreclosures, and that's why I don't plan to invest back into real estate until maybe the summer or fall of 2021.
With my after tax balance, I invest 1% of my income into our employee stock purchase program, which provides even more value when purchasing company stock, and I plan to aggressively purchase stocks with dividends until the market gets back to the highs of February, or until the housing market prices decrease again, then I might shift back into real estate.
If we are in a housing market bubble, like some have been saying, then I will probably try to find deals that are 30-40% off today's prices. That seems like it falls back in line with a fairly priced market, but I'm just not sure that the Millennials, and now even some of the older Gen Z will let that happen. There are so many people who have been patiently waiting for home prices to fall back down, that they could inadvertently keep them from falling much at all. The biggest threat I see to the housing market comes from small portfolio landlords (like myself), and from short-term rentals (like Airbnb and VRBO). For landlords with only a few properties, it can be easy to miss mortgage payments with only a few tenant vacancies.
Many of us have tenants who are the cohort of people most strongly impacted by the closures from the coronavirus pandemic. For the Airbnb landlords, I imagine most of them will be just fine, because they should be able to forebear their mortgage payments for 12 months, like everyone else. The real trouble, and ultimate collapse will come if people don't start traveling and staying in Airbnbs several months after the mortgage forbearance expires. That's when we might start to see a large amount of foreclosures, and that's why I don't plan to invest back into real estate until maybe the summer or fall of 2021.
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