Is 2021 a Good Year to Start with Real Estate Investment?
At the beginning of 2020, many people were hopeful and optimistic about the year ahead. However, the Covid-19 pandemic became a game-changer as the economy took a great hit. Many industries were majorly affected as most companies shut down and sent their staff home. Others had to embrace working from home in compliance with regulation protocols.
If you love investing or want to start in 2021, you’ve probably considered putting your hard-earned money in real estate. You know real estate is a sure bet with the right real estate strategy. You might think that it requires a lot of money upfront and involves a lot of work.
While some of it is true, there are plenty of options that could make real estate suitable for you this year. So, does real estate investment have potential in 2021? Is 2021 the right year to get into it?
If you’re looking for a straight answer, it’s yes. Read on to know how. In this article, we look at some trends and strategies in real estate that you could consider in 2021.
- Fix and Flip
Flipping houses is one of the riskiest aspects of real estate. However, it could be significantly fulfilling if you get it right. Remember that in any investment, the level of risk is directly proportional to potential returns. The higher the risk, the more the potential returns.
Many had predicted that 2020 would be a grim year for real estate. However, these speculations were put to rest as the demand for property outpaced the supply. This led to the rise of home values. This trend is set to continue into 2021.
Flipping houses involves buying a property below the market price, “fixing” it, and selling it for profit. To invest in the fix-and-flip market, you need to hunt down houses whose prices you can bargain downwards. Ideally, you want a house that needs cosmetic repairs.
You need to tread carefully and ensure you do due diligence before you buy a house. You should know how to find great real estate investment deals. Also, know that the fixed houses may fail to sell as fast as projected. Pay a lot of attention to the location, price, and repair work needed.
Also, investors who’d stayed away from the market in 2020 are set to return this year. This could make the competition even stiffer. However, with the right skills, information, and mindset, house flipping could be very lucrative.
- Adaptive Reuse of Unwanted Space
Adaptive reuse refers to renovating or converting old unwanted real estate space into flexible space that serves the current and predicted market needs.
This is one strategy that’ll save many investors who are grappling with the effects of the Coronavirus pandemic. The travel and hospitality industries go hand in hand. Travelling was almost rendered ineffective due to restrictions to curb the virus. This means that people were not traveling for vacations or business.
Investors who had put their money in holiday villas or in entertainment spots counted losses throughout the year. While people might be going back to their normal activities, the impact has been greatly felt and demand is still low. So how can you cushion your investment from making further losses?
You need to get creative and innovative. For example, trends are showing that demand for industrial real estate and affordable housing is on the rise. If you own some holiday villas in a town, you could convert them into an affordable housing project.
If you’re going to pursue adaptive use of spaces, make sure you adhere to state regulations that may be in place for such projects. If you do it the right way, however, you could reap massive returns.
- Location Matters
The Coronavirus pandemic changed a lot in the way people go about their daily lives. One of the major changes was eliminating the need for people to travel daily to offices and workplaces. Many companies urged their workers to work remotely.
In addition, many people got tired of staying at home confined in small spaces. This droves them out of the big cities in favor of the countryside. Big cities are now grappling with low tenancy rates and nosediving rents. Remember this is amidst an economy that’s trying to recover.
While we remain hopeful since there’s a Coronavirus vaccine, there’s not much hope that the rent in big cities will fully recover.
What does this mean for real estate investors in 2021? We can say that it’ll be prudent to invest in rental property located in the suburbs and rural areas. Tenants are becoming more inclined to areas that are less populated.
Also, the demand for spacious property is on the rise. Invest in a property where your tenants won’t feel as if they’re restricted in a small area they can hardly breathe.
Note that these are predictions that are subject to change depending on other factors. However, there’ll always be opportunities to take advantage of regardless of the situation.