Why and How Investors are Winning So Big This Year
Living near the ocean I watch tides come in and go out and I see a definite similarity to real estate. Indeed, real estate is a sea with changing tides. The metaphor of course is that real estate is a huge industry with a vast amount of changes on a regular basis. The landscape of investment opportunities rise and fall just as the tides rise and fall. Just like surfers who miss the tide, some investors' rides are flat and occasionally they get sucked under the water. However, when you can catch the tide and ride the wave, you can have a safe and successful journey. This year the tide is high and ready to be explored.
Nuances of today’s real estate high tide
Millennials are the largest segment of people in the country today and the larger majority of them prefer to rent. Many of their parents, who are in the category of baby boomer (second largest group of people) also find renting to be advantageous as they no longer want to be tied down to the responsibility of home ownership and maintenance. Additionally many people were forced into renting when the recession hit and they lost their homes. They are finding comfort in the freedoms and mobility of renting. Many studies show that the next 15 years is poised to grow the tenant base by 4 million households to a total of tenant base of 22 million households.
Entrepreneurs are described as people who fulfill the needs of others for a profit. Seasoned and purposeful investors (entrepreneurs) are looking to cash in and help fulfill this growing need.
The institutional and wall street investors have moved on. Of course this group of investors had a different agenda than the average independent investor has. Their model was to buy mass quantities of property and ride the wave of growth and sell off for a profit. While this is similar to what you as an individual may want to do, they cast a broad net and then get out fast. Now that they have acquired tens of thousands of properties, they are busy renovating those properties and working toward the second half of their business model. To package these properties into small portfolios and sell to the middle sized investment companies or individuals for a profit. Indeed, there are many great opportunities that continue to surface for the small investor and now with this large competition out of the picture, individual investors can do what they do best..create incredible small businesses with rental property.
While interest rates remain historically low, there is no doubt the feds are looking to raise these rates. To lock in the highest possible cash flow, you will want to acquire as many investments as possible with the low rates before they climb to the point of stripping all your cash flow away. Lock in low prices:
Nationally home prices have been on the rise. This is caused in part by a threat of higher interest rates as well as low inventory; supply and demand is hard at work here. As prices rise, this too will reduce your cash flow. Acquiring property before they rise any further allows you to not only keep maximum cash flow but it also allows you to ride the wave of appreciation instead of letting appreciation force you out of the opportunity.
Sit up and take action
Rising demand for rental property is a compelling reason to sit up and take action before the window of opportunity closes. While we are in this wonderful time to invest I offer you this piece of advice...“When too many dollars are chasing the same investment, the wise investor fishes in a different pond”. By that I mean do not get caught up with auction fever. A good investment is only good if it fulfills your investment criteria and is sustainable. Do not make sacrifices to your criteria out of fear of losing out on opportunities. Opportunities are everywhere. Find the best markets to invest in and you will be able to build an incredible portfolio worth owning.