What we learned from 2020
In 2020 I had the great pleasure to be invited as a guest to a great number of podcasts. Most of them revolve around topics related to real estate, but several also look into early retirement, leadership and how to grow a business, etc.
In each of these podcast recordings, I was asked the question about the future of our lives in some way or another.
During the holidays I was reflecting on what the events of 2020 have taught me, what questions we should ask in the new year, and hopefully, find answers for. Sometimes I have opinions already, or maybe call them suggestions.
One of the core starting questions is: Will more of our economy be run by work from home?
Right now a lot of companies are saying yes and extend the time period for their workers.
This is a big paradigm shift. When we do something as an emergency reaction, it is seen as temporary and we don’t typically spend a lot of time exploring consequences, reflect on circumstances, or expect the emergency to last very long.
Think of a person named Lucy found in the cold of winter and rescued by providing a poncho and access to a warm space, water, and food.
There is gratitude and thankfulness and warmth flooding through Lucy — initially.
After some time, well past the emergency, while still wearing the poncho, it becomes obvious to Lucy that the poncho is super-comforting, like a protective shield. It is something she would not want to miss anymore.
That’s how a person becomes known as “Lucy — the one who almost always wears a poncho”.
Lucy doesn’t wear the poncho only because one was provided during the emergency but because further reflection provided clarity of the benefits, the usefulness in all kinds of circumstances all the way to an identifying signature outfit.
That poncho goes from emergency covering to a symbolic outfit of Lucy.
I believe something similar will happen with the issue of work from home.
It was a reasonable reaction to the emergency of an infectious disease. It allowed anybody who could do work this way to keep earning income, protect and provide for the family and stay in touch with coworkers as well as others.
Let’s use my friend Kathy as an example. In a few months, she will be one of the people who used to drive to work each morning to occupy a cubicle in a company building. Kathy will reach 1 year of work from home soon.
Kathy has realized that this kind of work can work, even though she still misses some of the benefits of being together in one location/building.
Kathy has recognized that using the corner of a bedroom, a small closet, or the kitchen table is not really a long-term solution for work.
Kathy learned that being in traffic for half an hour, and in congested areas of the country easily more than 1 hour each way each day is not something she is missing.
During the holidays I spoke to Kathy and wanted to know how her life has changed and what she is doing in 2021.
She told me that a lot of things have already changed for her at the end of 2020.
Kathy was looking at the appalling work situation in her small house in the Bay Area and started calculating what she was paying each month for mortgage and food, and many other recurring expenses.
She found very quickly that almost 50% of the family income is going out the door for mortgage, gas, electricity, waste management, etc. That gave her pause.
Kathy’s company had already announced that they would stay in the work from home posture for the first half of 2021 but they did not say it would be the way to work forever.
Kathy and her husband began looking around a radius of 1 1/2 to 2 hours driving distance to find a new house. They recently moved into a house almost twice the size they used to have. Due to the low-interest rates they actually pay 30% less than they used to and Kathy has a proper office for her work. She has become massively more efficient and her kids know:
“when mom’s in this room, and the little sign is on the door, we have to be quiet and stay outside the door.”
Kathy chose that distance from her company in the case that there will be future meetings she has to or wants to attend. With about 90 min it is not a comfortable drive but doing it 1x or 2x a month is possible. The benefits for the quality of life this move provides far outweigh that drive, should it really become necessary.
Another thing that Kathy did through her move was leaving the density of the big city and move into more rural areas on the outskirts of a medium-sized town. She is actually following a trend that intensified a lot in 2020.
In Kathy’s case, she is still in the coastal zone were finding properties that perform well enough to invest in them can’t be found. That means Kathy will enjoy living in a much more affordable house and keep working with me on investing in residential real estate in other parts of the country where we can meet the 1% rule — the property where the monthly rental income is 1% of the purchase price.
I would not be surprised to see in 2021 that more and more people sit down and ask:
“What’s that nice warm poncho I found during the pandemic and how can I make it permanent?”