What are the best real estate investment strategies in the wake of COVID-19?
The events of 2020 have changed a few things, and have accelerated and amplified some trends. How might this influence your choice of real estate investing strategies now and in the near future?
COVID Side Effects
Some of the obvious impacts of the coronavirus and other events of 2020 include:
Low interest rates
Revived focus on health and the environment
Higher unemployment rates
More housing defaults
Increase in remote work and migration shifts
More interest in tangible hard investments and passive income
With this in mind, some of the best real estate investment strategies appear to be as follows.
Fixing & Flipping Houses
There appears to be a window of opportunity and a sweet spot where we are experiencing pending increases in the level of distress among some property owners, with a simultaneous rise in demand to purchase homes, and a resulting rise in home values.
These are the perfect conditions for house flippers. It provides the ability to acquire property at attractive prices and terms, and resell quickly with great margins.
Rentals
As many in the retail market shift back to renting from homeownership, and those new to the market put off buying in favor of renting, landlords stand to benefit from an increase in demand, and the potential for long term tenants. Increased competition for rental units can also give landlords more choice of tenants, the ability to raise rents, higher occupancy rates, and better overall yields.
Multifamily Redevelopment
An increased need for rentals as well as recent distress in the commercial property space for older landlords suggests many properties could be ripe for redevelopment, repositioning, and even converting other types of now unnecessary commercial buildings into multifamily apartments. Whether it is updating existing apartment buildings available at discounts or turning the oversupply of offices and retail into rental apartments, there are many exciting value add plays to be made in primary, secondary and tertiary markets.
New Construction
Real estate economists have been pointing to a severe shortage of inventory as being largely to blame for recent spikes in house prices. With a growing population and builders producing units at a much lower rate than 20 years ago, investors may be able to find their sweet spot in building their own inventory. This could be infill in mature neighborhoods, or expanding outwards where today’s buyers and renters are most interested in finding housing.
One benefit of recent economic changes may be lower construction and labor cost for builders. Providing this opportunity is used to carefully design to meet the true new needs and wants of qualified end users and dodges any pockets of urban oversupply the margins can be very attractive. Think healthier and cleaners homes, multigenerational living, larger pantries and storage spaces, and perhaps self contained quarantine quarters for family members.
For all of these strategies SolveMyLoan.com can help provide financing with short term bridge loans and long term fixed rates loans for stabilized properties.