It is no secret that investing in real estate is one of the most effective and productive ways to build wealth. While there are several paths to success in the real estate market, it can be difficult for newcomers to sort the chaff from the grain given the excess of information out there. Needless to say, finding the best opportunities to invest in real estate can be tricky.
Luckily, we are here to provide you with the best resources to help you find your perfect property.
Here, you will find all the knowledge you need to get started locating lucrative rental properties and making moves with your money that will generate positive cash flow now and into the future.
How To Find Real Estate
Many people who want to invest in real estate think that the first step is to simply buy a property. But new buyers often find that locating income-producing properties is a task within itself. The following section will explore the different ways to find investments, whether commercial or residential.
Multiple Listing Service (MLS)
The most widely distributed resource in real estate is the Multiple Listing Service (MLS). Websites like realtor.com or homesnap.com use this database for all of their listings, making the information widely available for everyone to see.
This database holds a collection of properties posted by different real estate companies and brokers across the country.
LoopNet
If you are looking for publicly traded commercial properties for sale, LoopNet is the best place to start. There, you can find properties ranging from single family rentals to large complexes like shopping malls, fast food restaurants, and apartments.
Newspapers
Though it may seem old-fashioned, the local newspaper’s classified section could be the best place to look for a house on sale by a local owner. Here, you will find classifieds that companies and real estate agents do not post on MLS.
Outbound Marketing
In outbound marketing, you bring the buyers to you. You can share your portfolio by way of advertising, direct mail, and a variety of other marketing techniques.
Craigslist
Craigslist.org is becoming a prime site for real estate investing. There, millions of people sell, buy, swap, and give away dozens of properties.
Word of Mouth
Though this method is overlooked, real estate developers find that you can easily place yourself in a position to find deals by simply talking about your business. In most average-sized cities, you can join a local real estate club or visit the BiggerPockets Marketplace to advertise the fact that you invest in real estate.
Real Estate as an Investment in 2021
Being able to familiarize yourself with the state of the market is a crucial aspect of becoming a successful real estate investor. This gives you the advantage of forethought and flexibility in the market.
There is no doubt that the real estate market was down in 2020 due to the pandemic. This, however, can make it a perfect time to learn different ways to invest in a troubled economy. Here are the best opportunities for real estate investment in 2021.
Adaptive reuse
In the wake of the coronavirus pandemic, adaptive reuse may be what saves commercial investors. With this method, real estate developers take unwanted estates and turn them into different types of real estate that better serve the demands of the market.
The company re-openings due to the recent vaccine rollout have helped subsidise the impact of the coronavirus crisis. However, the incredibly low demand forced many businesses to file bankruptcy and to close entirely.
While recovery is inevitable, investors and property owners are finding other, more recession-proof ways to invest in real estate. Affordable housing and industrial real estate, for example, are high in demand.
Non performing mortgages (NPM)
As a result of the Biden administration’s national moratorium on foreclosure, there is talk of a potential housing crisis on the rise. There is an expected wave of foreclosures coming in fall 2021. Naturally, there is tremendous pressure on bank lenders to maintain debt obligations.
The government may be using quantitative easing right now, but it can only last for so long. This means the U.S. is providing cash to financial markets to keep them afloat, but eventually, banks will be forced to sell delinquent loans or foreclose on them. Either being a big loss.
However, selling the delinquent loans–the obvious choice for the banks–will make reducing the overall burden easier for both lenders and borrowers.
A non-performing mortgage, sold on the secondary market, could work to find a long-term solution for the delinquency. Investors, old and new, can purchase these loans at steep discounts following a recession.
The smart thing to do right now is to prepare for the wave of NPMs that are sure to hit the residential or commercial markets by being ready to invest.
Rental properties in struggling markets
Eviction moratoriums have left most landlords, in the cities, underwater. Unable to evict tenants who are not paying rental income but still responsible for the costs of maintaining the property. For investors with patience and capital, who can ride out the current wave, this provides a rental investment opportunity.
Many landlords are eager to get properties off of their hands that they can no longer afford. Now is a great time to invest in real estate such as single family units, apartment complexes, and other residential properties.
How to Invest $200K in Real Estate
There are a variety of options available to real estate investors looking to use a large sum of money the right way. After you have hit $200K in savings, the type of real estate you can invest in grows exponentially. Below is a general description of the things you can do with your $200k.
Purchasing a single property
Buying a single family rental can allow you to borrow against the equity built up in the property’s appreciation. Only, you must buy it with no loans or debt. This is one of the best ways to invest $200K safely, as it frees up time for you to pursue other endeavors.
Investing in multiple properties
Two hundred thousand dollars is enough, in most cities, to invest in as much as a $1,000,000 apartment complex or several self-storage units, the hottest new buzz in real estate. The down payment on these can be as little as 20%.
Making a down payment on an apartment building
The type of real estate with the highest long term earning potential is a multiple-unit apartment building. The only downside is the time and energy it takes to manage the multiple tenants.
Investing in a crowdfunded real estate deal
A tried-and-tested way of getting a high return on investment is crowdfunding–when a pool of small investors help a real estate agent flip a project and sell it. You can manage a crowdfunding project on online platforms relatively easily.
Investing in real estate investment trusts (REITs)
By investing in a REIT, you can make money while remaining completely passive. Several companies pool money from people to land large real estate investments. If you want to buy shares directly, you should invest in REITs. You can also set your own personal objectives with your REITs, with the help of professional advisors like brokers and financial managers.
Why Invest in Commercial Real Estate?
Commercial Real Estate could be the best place for you to invest your money, whether you are a newcomer or if you have invested in dozens of properties before.
The most obvious benefit is the tax benefits. When your property goes through depreciation, you can deduct the value from your taxable rental income. For some buyers, reducing the tax burden is the sole reason for choosing real estate over other investments, like stock.
CRE is also much less competitive than residential real estate, where prices continue to drive upward. Notably the dollar volume for commercial real estate in the U.S. was 57% lower year over year in the third quarter of 2020. Compared to other types of real estate on the market, it is generally easier, at this point in time, to find CRE to invest in.
Lastly, the sheer potential and range that CRE gives you is the biggest reason to invest. The higher the price of investment, the higher the returns. Instead of only earning a few hundred dollars on a single family unit house, you could earn up to hundreds of thousands on the right multi-tenant property.
An effective and recession-proof way of getting started in commercial real estate is through self-storage rental units. Get guidance and support from other self-storage investors and start succeeding as a commercial real estate investor today.
