The novel coronavirus has disrupted every sector of the real estate industry. That includes commercial real estate and multi-family housing. While some sectors have seen a steady decline in demand, others present lucrative opportunities for investors.
Needless to say, the real estate market in a post-pandemic world won’t be the same. If you’re looking to try your hands at real estate investing, it’s important to understand how the markets will change once the pandemic is over.
This article will outline a few useful strategies to help you invest in real estate in a post-pandemic world. Let’s dive right in.
Be Wary of Emerging Markets
Urban metropolises are no longer the hotspot of real estate investments. The rise of remote work and improved internet penetration have made it possible for people to move to suburbs and exurbs. That, in turn, has contributed to the growth of several up and coming real estate markets.
A recent survey has identified various cities, such as Charlotte and Nashville, as emerging boomtowns for real estate investors. Patterson, one of New Jersey’s thriving cities, has also grabbed the attention of investors due to its population growth and affordable housing prices.
But it’s crucial to consider various factors before you take the plunge and invest in an emerging market. The last thing you want is to let throwaway housing prices lure you into investing in a location with minimal scope of appreciation.
Start by looking at the unemployment rates and population in the region. A gradual decline in unemployment or lower-than-average levels is a positive sign.
Similarly, a steady increase in the population indicates that the demand for housing will skyrocket. Also, the region will likely attract more federal funding for infrastructural development. That’s precisely why the Paterson, NJ real estate market is enjoying the recent real estate boom.
Besides the population and job market, it’s a good idea to look at housing specific parameters, including:
• New construction numbers
• Rental rates
• Existing home sales
If you’re contemplating investing in Patterson, NJ, real estate properties, you could also consult an experienced investment real estate agent to analyze the market conditions. Keep in mind that many of the new markets that gained popularity during the pandemic might lose traction when the world returns to its pre-pandemic normal.
Have a Backup Plan for Income Properties
Long-term rentals used to be one of the most seamless ways to earn passive income from your real estate investments. That quickly changed in 2020 when various state and local governments passed laws directing landlords to waive rentals for tenants who couldn’t afford to pay.
It was understandable considering widespread furloughs, lay-offs, and pay cuts in different industries. But these laws spelled doom for mom-and-pop landlords who made their living from rentals.
It emphasizes the importance of diversifying your income streams to ensure steady cash flow in adverse situations. Make sure you have a backup plan to generate revenue even when your income properties don’t yield any.
Harness Short-Term Rentals
As more people retreated indoors during the pandemic, they’ve also gravitated toward buying new homes with large outdoor spaces and ample room for working or studying at home. So, does that mean the end of rental properties?
While the demand for long-term rentals could decline, people are more likely to opt for short-term rental properties. And the market for short-term rentals isn’t going to be limited to vacations.
That’s because nearly three-quarters of the global population wants the flexibility of remote work to stay at their current job. Also, a majority of these people would trade benefits and perks for the freedom to work remotely.
These professionals choose to work from any corner of the world, including beach towns, mountain resorts, and quaint villages. They spend weeks or months in a location before moving to their next destination. That, in turn, has skyrocketed the demand for short-term rentals.
Investors can enjoy higher returns and frequent payments without the hassles and risks of long-term tenants. As remote work becomes more prevalent, real estate investors should look for opportunities to turn their properties into short-term rentals.
Invest in PropTech
Whether you’re offering multi-family homes or short-term rentals, it’s essential to understand that the expectations and preferences of tenants have changed. Today, digitally savvy tenants are used to enjoying features, such as contact-free check-ins and automated locks, wherever they visit.
It highlights the importance of investing in robust property technology (PropTech) solutions to create a frictionless experience for tenants. Also, it’ll help you collect a ton of data about tenants and better understand the market.
Final Thoughts
While the post-pandemic real estate industry won’t be the same, it’ll provide new opportunities for investors. Make sure you analyze the economic growth and housing-specific metrics before investing in an emerging market.
Also, utilize short-term rentals for high-yield returns and frequent payments. Don’t forget to invest in PropTech solutions to understand tenants better and improve their experience.
