Lucrative real estate investments change with the times. Rentals, flipping, certain types of commercial properties, REITs and REIGs may be the way to go now.
NEW YORK – The real estate industry has seen its ups and downs during the pandemic. However, with historically low interest rates and the demand for more square footage when it comes to residential homes, an increase in online ordering, and a decrease in needed office space, finding the right real estate investments during this time has become a little tricky.
Nonetheless, there are still ways to invest in real estate in 2020 that are lucrative and are projected to provide investors with a passive stream of income. Here are a few ways to find profitable real estate investments during the pandemic.
Purchasing and owning real estate is an investment strategy that is one of the best ways to build wealth today. Unlike stock and bond investors, prospective real estate owners can use their investment in a particular property as leverage by offering to pay the total cost upfront, then paying off the balance, plus interest, over time. Making such an offer to someone struggling to cover their multi-family housing developments overhead is hard to ignore. This is the reason why one of the most profitable real estate investment opportunities right now is rental properties.
Apartments for rent, or multi-family housing, is a great place to find profitable real estate investments despite its constant state of influx. Investors can choose to purchase and hold these particular properties while taking advantage of the lowest rates we have seen in decades. Overall, this move will save investors thousands of dollars via interest saved in the long run. The reality is people will always need affordable housing, which is what apartment and multi-family housing provide. Thus, once the economy turns around and more and more people are able to get back to work, the demand will be there.
Real Estate Investment Groups (REIGs)
Along those same lines, investors may want to consider real estate investment groups (REIGs) as well. REIGs are actually a great investment route for people who want to own rental real estate without the hassles of running it. REIGs, in the simplest of terms, are very much like small mutual funds, since they provide investors with income and appreciate over time. Furthermore, all the truths mentioned above still apply here – people will always need housing, and this way, you can invest without having to deal with the actual management of the property or the day-to-day operations of said multi-family housing.
Commercial real estate
Similarly, investors should consider other aspects of commercial real estate such as office buildings, the hospitality sector, senior housing, and self-storage. At the moment, all of these commercial real estate investments have taken a hit due to the ongoing pandemic. But of that group, only office space should be approached cautiously.
The hospitality sector, self-storage, and senior housing are all projected to have a strong comeback once the pandemic is over or at least until herd immunity is achieved via an FDA-approved COVID-19 vaccine.
Yet another viable option is house flipping. This particular type of real estate investment is ideal for people with considerable experience in real estate assessment, promotion, and renovation. Here, whether you are looking for mobile homes for sale or traditional stick-built homes, house flipping still requires available capital along with the ability and free time to do possible DIY repairs and renovations or, at best, to oversee them.
Nevertheless, the nice thing here is that your capital or money is only tied up for a short period of time. Plus, most people that choose to go the house flipping route often see quick returns, which, let’s face it, every investor likes.
Real Estate Investment Trusts (REITs)
Real estate investment trusts (REITs) are also an option. If you are not too familiar with REITs, think of it this way – when you want portfolio exposure to the wonderful world of real estate minus the hassle of a traditional real estate transaction, then you want a REIT. Often, investors see high dividend yields here and moderate long-term capital appreciation.
Other benefits include a history of competitive performance, diversification, liquidity, and transparency. As a result, most REITs are considered a true total-return investment. Oddly enough, this particular type of investment opportunity tends to thrive in the face of uncertainty, so REITs are a great place to find profitable investments during the pandemic.
Online real estate platforms
An online real estate platform is exactly what it sounds like. Also known as real estate crowdfunding, this particular investment type is perfect for bigger commercial or residential deals. Though you need some capital on hand to invest in real estate crowdfunding, the perks are clear – geographic diversification and flexibility to invest in a single or a portfolio of projects. If you can eat the cost of a management fee or two and are looking for a more long-term return, then you should check out online real estate platforms.
Though this technically falls under the commercial real estate umbrella, savvy investors are getting involved with warehouses. The pandemic has prompted more people to shop online, and to purchase anything they could ever need on Amazon. Since Jeff Bezos’s net worth is a measly $181.4 billion and climbing, it might behoove you to check out warehouse space across the country. Consequently, the demand for available warehouse space has grown exponentially, so this is also something to consider as the pandemic makes its way into 2021.
Lastly, you may want to consider investing in tax liens. Unfortunately, many people in the next couple of months are going to have trouble making their mortgage and tax payments, which is why forbearance programs have been doled out by the government this year. But the truth is forbearances can only put off the inevitable for some.
As a result, there will likely be more foreclosures as we head into 2021. So you may want to check out the information on delinquent homeowners in the next few months as these types of properties are going to be a viable place for investors to focus their efforts.
The bottom line
Ultimately, real estate investors can use these above-mentioned properties to generate rental income or even to simply bide their time until the perfect selling opportunity arises – if they so choose. The bottom line is there is a variety of available and profitable investment opportunities right now, so it is more than possible to build out a robust real estate investment portfolio amidst the pandemic and moving forward.
Unfortunately, the ongoing pandemic has forced many to learn how to make ends meet in new and creative ways. Investing in real estate is definitely not a new concept, but for many, this may be the first time you are considering doing so. That said, there are real profits in real estate investing, so whether you are a seasoned investor or a first-timer, the time to invest is now.
© 2020 Benzinga.com – Benzinga does not provide investment advice. All rights reserved.
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