The pandemic has led many businesses to close, especially those that require physical interactions with clients and among company workers. Real estate investors have to rethink their business models, as COVID-19 has changed the way people live. But compared to other businesses, the change is not as drastic. This disruption can be an opportunity for real estate investors to build wealth.
As the housing sector is always evolving, investors will always have something new to offer. But these changes will work only for those who are willing to dive into a shifting industry landscape. Here are pandemic-friendly strategies that will boost your real estate business:
Invest in buy-and-hold real estate
Building a rental property portfolio in the middle of the pandemic can be great for aspiring landlords. Buy-and-hold real estate is an investment strategy, where an investor purchases a property and holds on to it for some time. The investor will sell it after a while but will rent it out while they clear out financing.
This is a common strategy that projects long-term gains with short-term cash flow. Investors can find a house and land to buy and turn it into a great rental home to generate income. Payments coming from rentals can generate instant income that can be allocated for mortgage payments while putting a relevant amount into the investor’s account.
As the property will appreciate eventually, this investment will allow investors to earn money even if they are not yet ready to sell the property. Moreover, the decline in housing activity and the foreseen drop in home value can be a lucrative buying opportunity for buy-and-hold investors.
Pursue commercial real estate
Buying a commercial property these days is not as expensive as it used to be a few years ago. While commercial real estate does not offer immediate returns, acquiring proven assets at a lower rate is a smart move.
Hotels and event locations have felt a significant decline in their business. Because of this, many will sell their properties. This is a great buying opportunity for investors, as hotels and event locations will once again reopen in the coming months. There is a great chance that the industry will bounce back, which makes buying hospitality properties attractive.
The same goes for buying an office space. While people are forced to work from home for now, they will eventually move back to the office setting when the health crisis subsides. While this may not happen in the next few months, offices will open their doors to employees sometime in the future. But you must invest in office spaces in established business centers for better results.
Investing in senior housing is also an advantage. This industry is never out of business, though it has hit a rough patch with the pandemic. As baby boomers are heading for retirement, the demand for senior housing will grow soon.
Self-storage locations are also hot these days, especially with many families downsizing as an effect of the pandemic. This service becomes a necessity because people are looking for places where they can store things that are valuable but are not needed at the moment.
Look into the advantages of real estate investment trusts (REITs)
If you are looking for passive income, invest in a REIT. REITs are companies that own or operate income-generating real estate assets. You can invest in these by buying stocks of these companies. Stocks for REITs can be bought for one share at a time and are modeled similarly as with mutual funds.
REITs also allow prospective investors to penetrate the real estate market without investing in a property. Shareholders can invest in businesses with profits that are generated from real estate. If you do not have the money to buy a house of your own, you can start investing in real estate with a REIT.
Check out tax liens
With many people losing their jobs to the pandemic, tax lien investing can be a viable option for real estate investors. Tax liens are given to homes when their owners cannot fulfill their scheduled payments. There are times when local municipalities place these properties for sale to an investor. When investors pay the dues, they can own the property. For others, homes obtained through this technique can also be converted to a buy-and-hold property.
Of course, these techniques should be used with caution, as investing is always a risk. Whether you are new to investing in real estate or already have years of experience, these techniques can help you improve your portfolio even at this economically volatile time.