1. Sentiment has changed
Investor sentiment has definitely shifted and unfortunately some have lost their equity in properties the last few years with rising interest rates. Many are more interested in debt positions than equity. We added debt to our investment strategy almost two years ago and lend to rehabbers/builders locally. It’s been an excellent way to put our money to work short-term and see very strong returns.
Let us know if this is something you’re interested in. We offer our investors a 10% annualized return on lending opportunities. Here is a short video on a recent project.
Overall we believe diversification is extremely important in real estate and that’s why we have invested in different asset classes, markets, and deals. We would never encourage an investor to put all their eggs in one basket.
2. Prices are Still High
Light to moderate value-add investors are optimistic about pricing for acquisitions moving forward, but those that seek highly distressed assets believe prices will still be too high. In years past, buyers were in bidding wars and overpaying because interest rates were extremely low. We have always been very cautious/conservative about the entry point and never want to overpay for an asset.
3. Property Insurance rates
Property insurance rates continue to rise as we see more natural disasters around the country. Investors need to underwrite accordingly, always have money in reserves, and negotiate with their insurance brokers. There are ways to reduce monthly costs like higher deductibles.
4. Administration Changes
There is much uncertainty around Trump’s return to office and administration policies, but most believe it will be a net positive for investors. Trump himself is a real estate investor and knows the importance of providing housing for our nation.
5. Be in the Room
I have regular meetings with partners, investors, and prospects online via Zoom or over the phone. Technology is great, but NOTHING replaces being in person though and connecting! We are made for community and I can’t recommend enough having face-to-face interactions with people.
If you’re looking for opportunities to connect with other real estate investors, please reach out as I’d be happy to recommend a few conferences around the country that might be a good fit for you.
6. The Time is NOW
They say the best time to buy real estate is NOW. While hindsight is always 20/20 and everyone wishes they would have bought after the market crashed in 2008 when prices were extremely low, we can’t turn back time. If you are sitting and waiting for the perfect opportunity to arise, you may be waiting a long time.
Who knows what will happen with interest rates, the economy, the administration, or all the other factors out there. We DO know that real estate has been and still is a safe place to invest our money. We get to enjoy appreciation, cash flow, diversification, tax benefits, equity growth, and it can be totally hands off!
7. Don’t Quit Your Day Job
You may not be ready to jump into real estate full-time and attend a conference like Best Ever. For many, you’ve got an excellent job and you make a great living. Consider allocating some of that to real estate and passively investing. As you add more streams of passive income, you may be able to cut back at work and have more time freedom. We’re happy to help if you’d like to navigate this possibility on the passive side.
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