The real estate market constantly changes, and investment strategies need to adapt immediately to become more successful. Investors should be able to recognize market opportunities and must be able to work around them to increase their advantages. The COVID-19 pandemic brought many changes that required investors to make necessary changes to ensure their assets didn’t become liabilities. If you want to venture into this industry, here are some of the investment opportunities for this year.
Some properties can be candidates for redevelopment and convert into another type of real estate. This process entails making improvements to the structure and making it profitable in the market with its upgrades. The COVID-19 pandemic caused enormous losses for office buildings, entertainment venues, shops, and hotels due to the capacity restrictions implemented by authorities. However, many industries are now opening up again, even if the demand is still low. For this reason, many businesses were forced to file for bankruptcy and close their operations.
In real estate, industrial and affordable housing sectors still have high demand in the market that retains excellent opportunities for investors. Some businessmen would convert an old hotel into an affordable housing project, or turn an abandoned retail structure into a warehouse or an industrial structure that would yield a long-term solution.
One of the stable sectors of the commercial real estate industry is industrial real estate, which holds steady returns and demand for many years. The pandemic crisis, in a way, helped the industrial sector as the demand for space increased, such as warehouses, cold storage, distribution centers, and data centers. This increased demand may be temporary, but it would still hold a steady demand and continue to progress for the coming years.
Some landlords in the rental property sector are having difficult times with their business, especially now that many people are affected by recessions due to the pandemic. Many people are leaving their expensive living in the city and moving to a budget-friendly settlement in the suburbs.
Eviction moratoriums put landlords in a situation where they cannot evict their tenants who do not pay but still have the responsibility to continue maintenance works on the property and pay obligations such as insurance, mortgage, and taxes. Some landlords have no other choice but to sell their property, allowing other investors to continue the business, but with a lot of capital and patience. New investors need to anticipate that rentals will have huge discounts because of the crisis.
Fix-and-flip is an investor’s strategy to buy a property, renovate it, and then sell it for profit. They usually purchase a property at a low price due to the property’s condition. Investors need to sell the property as quickly as possible after finishing the renovations to have a respectable profit out of it.
The fix-and-flip market had a great run at the end of 2019 and early 2020, but profits decreased. Then in the second quarter of 2020, some investors waited to see how the pandemic would affect this sector. The real estate market will still have high demands for newly renovated homes, which is an excellent chance for investors to do a fix-and-flip strategy.
Lenders and servicers are trying to sustain debt obligations amidst the slow and steady influx of finances. Some banks will need to reconcile their books and foreclose delinquent loans or sell them at a loss. There are many non-performing mortgages available in the secondary market, where investors take advantage of the huge discount. They will work on a long-term resolution to consider a forbearance plan, a deed in lieu, a foreclosure, or modification of the loan.
Foreclosure of properties may take time, and investors hope for a surge of foreclosed properties in 2021. It would be the best time for investors to grab the opportunity to purchase properties that will have a lower price because of what the pandemic did to the real estate industry.
The real estate business takes a lot of courage and understanding, and risk to be a part of. People are beginning to appreciate a fourplex property in the residential sector, where they wouldn’t mind sharing walls with other families. People are looking for affordable housing, which can be an ideal prospect for investors. 2021 has the potential of becoming a profitable year for investors who are eager to do business in the market. Try delving into these real estate earning opportunities and see what will work for you to achieve your goals.