Historically speaking, the real estate industry has proved to be one of the most enduring markets in existence. As long as there are people, they will need housing. Therefore, even during turmoil like the ones we have experienced over the last couple of years, the real estate sector industry has seen a fair share of activity.
However, COVID-19 did not remain without certain consequences. As a matter of fact, ever since the outbreak of the pandemic, the average price of newly listed homes rose by whole 32.6%. On the other hand, the home buying power rose only 21%.
That puts quite a lot of pressure on new investors to make educated moves and make sure they are able to make money on their properties. Let us take a look then at a couple of the most profitable options that should help them along the way.
Commercial real estate investing
This market corner consists of office buildings and similar properties, so, in normal circumstances, you can expect to lock tenants into multi-year leases and secure a very stable cash flow even if lease rates on similar properties fail. However, these long-term leases can be a double-edged sword since you can find yourself locked with below-market rates. So, you should try to get in touch with the insiders or conduct independent research to see where the market is going in the next couple of years. Once you do that, making a plan of action, weighing financial aspects, and looking for motivated sellers will be much easier.
Retail real estate investing
Retail stores took quite a heavy blow during the COVID-19 pandemic giving a substantial part of the cake away to the ecommerce industry. Now, though, when it looks like the virus is finally slowing down, we are expected to see a higher retail activity which presents a very good investment opportunity. In this case, you can use the same strategies as with commercial properties but there are also a couple of ways to secure your investment even further. For instance, offering that part of the rates comes in the form of sales profit gives tenants more flexibility as well as increases your earnings as the store grows.
Residential real estate investing
When it comes to the residential real estate market we can say that the key to success can be found in diversifying your investments as much as possible. Therefore, although emerging neighborhoods and single-family rentals should be a focus of your efforts, you shouldn’t be afraid to venture outside your city or even country. For example, you can try to explore the Montenegro Prospects properties for sale. This small country has a killer seasonal turnaround so that could make a good way to boost earnings during slower summer periods. Also, make maintenance your priority and nip small issues before they get out of proportion.
Luxury real estate investing
One of the main lessons you need to learn before entering the luxury real estate market is that luxury properties are not considered exclusive because they are expensive but rather because they come with some unique perceived added value. Aside from that, the luxury buyers demand access to all sorts of amenities so make sure to invest only into properties located in the vicinity of shopping malls, art galleries, and theaters, but also other luxury properties as well. If you are not able to find enough luxury condos to meet your business goals consider developing high-end vacation properties from scratch.
General real estate investing considerations
Now that we’ve covered some of the specific aspects of different real estate market corners, let us quickly look at some of the general considerations that should help you out regardless of the native sector.
Location is the key
Some locations are simply too hard to work with. If we, for example, take a look at Detroit and its shrinking populations, we can see why numerous investors simply decide to skip this city altogether and move to some more promising locations like Frisco or Nashville. This may be a hard pill to swallow, especially if you are emotionally attached to some locations, but the business world rarely forgives such blind spots.
Consider using REITs
If you are not familiar with the term, REIT stands for real estate investment trusts and it allows you to invest in real estate without actually having to deal with the physical real estate. Very similar to mutual funds, these organizations usually deal with the properties like hotels, apartments, and retail spaces and are considered a very safe investment option, albeit with a much lower profit turnaround.
Much like any other business venture, your real estate investing empire could greatly benefit from some experience and natural growth. So, before you start putting your money into high-end and large-scale projects, be sure to sharpen your skills on something smaller like a single apartment. This way, you can try out different strategies and management tools before and enter the major league ready for a fight.
We hope these few considerations gave you a general idea about the current state of the real estate market and the strategies you can leverage to increase your chances for success. Generally speaking, the real estate industry was always considered one of the safest long-term investment options in existence. But, even the safest market needs to be approached with due attention and diligence. So, be sure to take as many precautionary measures as possible.