If you’ve been thinking about real estate investing, you might have already noticed the ways in which these investments differ from traditional investments such as stocks. When you invest in real estate, you have several ways you can use the property to make an income. For example, you can choose to buy a home you want to renovate and improve so you can sell it at a higher price, or you might want to rent out a commercial building and collect a monthly income.

You have a lot of freedom and opportunity as a real estate investor, which means you must also keep up with trends and changes in the industry. These are some of the recent changes in the industry as well as how each might impact your newest investments.

You Might Have Competition

Historically, young families that wanted to put down roots scooped up most single-family homes. In the past decade, however, this has changed. Since 2008, investment firms have purchased many of these homes, particularly foreclosures. For banks, this is reassuring because the firms are much less likely to foreclose on homes in the event of an economic recession.

Of course, that doesn’t mean individual investors can’t get in on the game as well. If you’re looking for a way to make passive income or you want to flip homes, you can still do so. It’s simply beneficial to know who you might be competing against in the process.

To be a solid competitor, you’ll want to have a specific purpose in mind for a property before you buy it. This is especially true if you plan to have a mortgage on the property. If you intend to use the home for yourself on a long-term basis before selling it in retirement, you’ll think about its value differently than if you want to buy the home and rent it out.

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Location Is Increasingly Valuable

While property location is important for those who want to live in a home they buy, real estate investors should also be concerned with location. Today, renters and buyers are both interested in proximity to green spaces, transportation hubs, and freeways. A neighborhood’s walkability is also an important component of your residential property valuation. Investors should take a mid- to long-term view of the changes a residential area might undergo in the future. Many resources are available today to examine zoning and urban planning in an area.

Technology Promotes Easier Transactions

Technology has changed the course of real estate transactions over the past decade. Not only are financial transactions simpler, but buyers and sellers are both educated about the process. Those interested in real estate investing also have more access to blog and video content that might stand in for professional financial consultants. If you have questions about a property, you can easily ask a listing agent online without picking up the phone or leaving your home.

Of course, this also requires you to determine which information is credible and verifiable. As an investor, you’ll need to learn how to use online resources to check facts that could impact your decisions.

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Accurate Property Valuation Is Your Friend

While property valuation is always important, consider several components before committing to a transaction. It’s more important than ever to be familiar with insurance rates, taxes, and other costs associated with the property because things can change so quickly. If you intend to use your property as a rental, an income approach will help you determine the expected cash flow no matter what happens.

Virtual Tools Are Crucial Resources

With COVID-19 came an onslaught of virtual resources and tools for open houses and showings. These could help you invest in properties you’d otherwise be physically limited from seeing. The benefit is you can view digital floor plans and virtual house tours to better determine if a property would be a good investment.

Virtual tools have also made property management much easier. If you choose to invest by renting out your property, you can easily manage rent collection, maintenance requests, and contacts without leaving your home or office. This means your investment might not require you to travel as frequently as in the past.

Fix-and-Flip Investments Are Popular

One real estate investing strategy is the fix-and-flip. This method involves finding properties that would benefit from a facelift, repairing and renovating them, and then reselling them at the best price possible. Flipping can generate revenue faster than sitting on a property and waiting for values to increase.

Live-in flip investments are also growing more common. This method can help you save money on taxes if you wait two years to sell the home. It also helps you save money on rent or a separate mortgage as you live in the house and repair it. This can be an especially effective investment if you have the skills and time to fix the house up yourself.

Inflation Is a Major Problem

Homebuyers must also contend with inflation. When more money enters the economy, the value of the currency decreases. As a result, prices can soar, and you might have less purchasing power than you would have several years ago. As a result of inflation, the costs of building supplies such as lumber have increased, too. You might find that a new construction is not the soundest investment. On the other hand, rent is higher than it was, possibly making rentals the better real estate investment.

Trends Can Be Difficult to Spot

The general state of the real estate market is always changing. A fluctuating market can make tracking trends more challenging, even with online resources available to help you spot changes such as financing costs, mortgage rates, and flipping activity. To get the best deal on a real estate investment, consider new construction and foreclosures.

While the real estate world has evolved significantly, you can protect yourself and your investments by tracking changes in the market. Make smart investments by moving with real estate market changes instead of against them.

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In this FREE event you’ll discover how the top 1% use little-known “compounders” to grow & protect their reserves. Our Infinity team of experts show you how to be the best possible steward of your finances and how to make your money and investments work for you instead of you working for them. Regardless of your financial situation today, you’ll have a road map to get to where you want to be.