Countless successful investors have a diversified portfolio that includes select real estate investments. Due to the cyclical nature of the nation’s economy, there are times when it is naturally more advantageous to invest in real estate. Real property, whether residential, commercial, or industrial, is generally considered a long term investment. Decades of economic growth and recessions have proven that no type of investment can be considered safe or recession proof. However, there are several proven ways to designate investment portfolio options in a way to prevent unnecessary fluctuation. Real estate investments can be safer than many other investment vehicles during the inevitable storms of recession.
Investing in rental properties has been a lucrative career move for many different types of investors. Whether experienced or novice, real estate investors soon learn the ins and outs of successful property rentals. Individual rental properties such as single family homes, townhomes, condominiums, or duplexes are a great starting point. These investments, when properly managed, will provide some protection against inflation and recession.
The key to safer real estate investments during a recession is to carefully select renters. When taking on a new tenant, consider their consumer credit, employment, and criminal background. This will provide a fuller picture of the individuals before they sign a lease agreement. Reducing turnover and keeping rental units occupied are essential for long term investment strategies to be successful. Shelter is necessary for survival and tenants are not going to stop paying rent during a recession. They may discontinue cable subscriptions or gym memberships, but they will maintain their housing.
Depending on the location, a real estate investment in vacation property can provide consistent income year round. Especially when the location of a property is located in popular vacation spots like Miami, New York, or Las Vegas. Unlike standard rental properties which require ongoing property management services, vacation properties are relatively simple to manage. Turnover services may include simple tasks such as cleaning, providing new linens, and managing inventory supplies. These routine turnover items can be contracted out to a local service provider for a very low fee.
Whether a new investor decides to purchase a modest home for the intention of renting to a family or has the resources to purchase an entire apartment building, they will likely find that real property is a worthwhile investment. Rental properties provide consistent income streams and virtually pay for themselves over time.
Investing in self-storage real estate has a number of key advantages. This growing market offers the opportunity for many owners and investors to generate a passive income stream that can help support them long-term, often without the risks and responsibilities associated with traditional property investments.
Self-storage is always in demand. When the economy is high in a given area, many people will invest in new possessions, leaving them with the need to store their current possessions. When the economy is low, those same individuals may need to downsize their homes and other key expenses. Before diving in with self-storage investing, however, there are several things any investor should carefully consider.
1. Know the Market
Investing in self-storage units starts with understanding the current market. An interested investor should take a look at the current availability of self-storage units in the area. Is there plenty of availability, or are current self-storage facilities struggling to keep up with the demand? By better understanding the market, it’s possible to make more effective buying decisions.
2. Check the Property
Before purchasing an existing self-storage facility, investors should examine the property. Taking a look at current profits and expenses will give investors a good idea of the kind of return they should expect.
3. Evaluate Improvements
In some cases, investors will need to make improvements on their self-storage units after making the purchase. In order to determine accurate profits, it’s important to consider how much those improvements will cost and how long it will take them to start turning a profit. In some cases, improvements may make it possible for investors to raise the rent on their units. In other cases, the market will not support the corresponding increase in rent, which means that investors should calculate that difference before beginning their improvements. A careful evaluation of the market before buying can make it easier to determine how much of an increase the market will support.
4. Prepare Some Cash Reserves
Like any other type of property investing, self-storage investment may require some cash reserves, especially in the early days of the investment. Having these funds on hand can make it easier for you to weather any storms in the market.
Making the jump to self-storage investing is a big step, but it’s one that is often well worth it. If you’re ready to see a change in your investment strategy, consider investing in self-storage today.
Prime property markets like beachfronts can be impacted by numerous changes. One such factor is natural disasters. When any type of such an event like a hurricane, earthquake or wildfire occurs, highly desirable property markets could:
Increase Insurance Rates
Because prime real estate is often is exclusive, high end locations, associated property is quite costly. In such instances, property insurance is usually high to begin with. However, in the wake of a natural disaster, such locations might witness skyrocketing insurance costs. Furthermore, some insurance companies might be reluctant to offer insurance policies to individuals who own property in regions that are currently being impacted or have historically been hit by a string of natural disasters,
Decreased Property Values
When a natural disaster impacts a specific area, decreased property values can result. A region that is hit by a major disaster can be viewed as damaged goods. In other instances, property evaluators could subscribe to the philosophy that if something of that magnitude happened once, it could certainly occur again.
Decline In Demand
Property situated in a region directly impacted by a natural disaster might be in less demand following the event in question. waning interest could force individual property owners or real estate agencies dramatically lower the asking prices of homes built on such properties. Decreased asking prices could mean a precipitous drop in profits.
Certain natural adverse natural events forever alter the landscape of specific environments. For example, what might have been expensive beachfront property might be completely washed away by a hurricane. Such storms could cause such pronounced flooding, erosion and wind damage that existing properties are totally destroyed and the landmasses they existed on become uninhabitable.
Diminished Sellable Property
Along the theme of altered environments comes the prospect of a diminished amount of sellable property. Should entire exclusive neighborhoods be burned to the ground by wildfires or washed away by a hurricane’s floods, there is less property to sell. Less property equals a diminished market.
Unfortunately, some scientists opine that climate changes will only continue to increase the occurrence of natural disasters. Therefore, real estate agencies might one day revise their strategies and help ensure that those who purchase homes in vulnerable locations safeguard their properties as much as possible or consider purchasing property in less risky locales.
While California may have a reputation for being one of the most pricey real estate markets in the world, it has proven to be one of the best areas to invest in. Investors who are looking to get single family real estate properties have a golden opportunity to do so. The golden state offers up gorgeous beaches, vibrant culture, and an ever-growing population for those looking to invest. With the land of opportunity awaiting new investors, the opportunity to capture returns on the rising home values is just around the corner.
California has an extremely strong job market which serves as one of its most attractive attribute to investors. The state boasts 54 of the Fortune 500 companies headquartered right here in their very own backyard. The market shows that California will continue in job growth, and will provide investors with a continuous cash flow as more and more people are flocking to the state.
While the rising cost of homes is pricey in the area, the state has rather low property taxes. Though California may not have the lowest property taxes across the country, the tax rates are aimed to help those investors who are looking to improve the flow of cash. Low tax rates mean that more and more people will continue to buy and rent in the area. Any area that people may feel they can capitalize on, is one in which they should consider to invest in.
There is an extremely high rental demand in the state of California. Everything from work, weather, entertainment, outdoor activities, and the overall growth has helped to make investing in California real estate one of the smartest financial moves right now. As this growth continues, the rental rate within the state will continue to go up over time.
Between the job market and desirable lifestyle that California has to offer, it only helps to increase the home values in the state. The housing market is one in which the most desirable areas to live constantly attracts new home buyers. This presents a high demand for the areas which in turn increases the property value in the state. This is just an additional reason to invest in California based real estate.
Most new real estate investors shy away from commercial ventures because they find the prospect a little too intimidating. While there might be a slightly bigger learning curve involved, taking this path can lead to a more rewarding experience. Those new to real estate investments may be surprised to learn just what benefits are involved in investing in commercial real estate.
Earn More Income
Compared to a residential multi-family home, commercial real estate
, such as an office or retail space, can provide a significantly higher income potential. Even compared to high-performance stocks that may earn you an annual 2% to 3% return, investing in commercial property can result in a 5% to 15% return. Of course, your income potential will depend on the number of tenants, but, overall, commercial real estate offers the highest income potential.
You Can Build Equity Faster
By leveraging your investments, you can purchase more commercial properties within a shorter time frame. This is done by making a small down payment on the commercial property and financing the remainder of the purchase price. Since the lender can rely on the income potential of the property, they’re more likely to approve loans on commercial real estate. You can use this strategy to invest in several commercial properties within a shorter time frame, growing your equity faster than you would in investing in residential real estate.
There’s Less Risk
A commercial property will have many more tenants than a typical multi-family residence, so losing a tenant will have a lower impact on your income. You’ll be able to use the income generated from the rental payments from the remaining tenants to cover the difference. Additionally, commercial tenants are often expected to pay for the expenses of maintaining the property. They may have to cover the costs associated with maintaining common areas, taxes, and other building expenses.
Protect Your Investments
You’ll have more security in protecting your investments in commercial real estate. In addition to the land, which has value in itself, you’ll own the property on the land. As you develop that property to suit your tenants, any improvements you make will boost the property’s market value. Even when you lose a tenant, you still have the value and equity in that property.
Before you commit to residential real estate investments, it may be worthwhile to learn more about commercial real estate. You can make use of resources that will enable you to invest what you have as a means of getting your foot in the door while enjoying the benefits that commercial real estate investing provides. Giving it a try can result in a more positive experience than you anticipate.