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The less known best real estate investment opportunities

 

As the real estate market continues to evolve, it is now easier than ever for real estate investors to diversify their real estate investment opportunities. Almost ten years ago, the subprime mortgage crisis caused a havoc in the housing market which led to an economic downturn in the US and eventually worldwide. Since then, the real estate market, and more specifically the US housing market, has been recovering as more trends in real estate investing are emerging, and new ways to access credit are evolving. In this blog, we will talk about the less known real estate investment opportunities that can be used in both commercial and residential real estate investing.

Why consider other real estate investment opportunities?

Indeed, times are changing! Nowadays, new real estate investment opportunities are created to meet the needs of home buyers, real estate investors, and the real estate market. For example, short-term rental platforms like Airbnb are attracting more people than traditional hotels, and the need for space in central areas has made it possible for micro unit real estate developments to emerge. On the other hand, real estate crowdfunding has made it possible to access more capital.

Buy and hold

Buy and hold real estate investing is the process of purchasing a real estate rental property to own and make profit from over a long period. Profits of a buy and hold real estate investment are made through cash flow, which is rent collected from tenants, and appreciation on the real estate value.

Buy and hold real estate investing can be extremely beneficial to long-term real estate investors. However, investors should choose real estate properties that are located in stable or growing neighborhoods to ensure high vacancy rates. Factors you should be looking at while choosing a location for your next buy and hold investment include: level of employment in the area, average rent prices, proximity to schools, and crime rates.

Related: When Is Buy and Hold Real Estate the Best Investment Strategy?

Fix and flip

Under a fix and flip scenario, a real estate investor, or “flipper”, will purchase a property at a discounted price, which could be because of the property’s condition or the owner’s need to sell the property quickly. Real estate flippers perform the necessary renovations and repairs to make a profit by selling the real estate property at a higher price than acquired. Another way to make profit from real estate flipping is by buying low and selling high, taking advantage of a “hot housing” market situation.

Fixing and flipping is one of the basic and most implemented real estate investment opportunities. However, it needs capital which can be raised in traditional ways like bank loans or private money loans or by crowdfunding! YES, crowdfunding sites where you can apply for a chance to be listed on a platform if you meet minimum eligibility criteria.

Real estate crowdfunding

Real estate investment opportunities are taking the shape of the future by entering the crowdfunding world. Real estate crowdfunding is an innovative way to finance the real estate sector. Imagine having a sum at your disposal and wanting to contribute to a real estate development. Traditionally, this type of activity was limited to institutional investors, but today, thanks to technology, it is possible to invest from home without particular capital with as low as $50.

Real estate crowdfunding has two main investment types to choose from:

1- Equity investments: Where investors in commercial or residential real estate can make profit by holding an equity stake in the property, therefore, sharing a portion of the rental income generated.

2- Debt investments: Where real estate investors invest in a mortgage loan associated with a specific property, and profit is made by sharing the interest as the loan is repaid.

Related: What’s all this real estate crowdfunding?

Short-term rentals

Short-term rentals are real estate properties, ranging from small studios to single family homes, that are rented out for a short period of time. Platforms like Airbnb make it easier for a landlord to find tenants, thus saving time and managing the short-term rental in a better way. In addition, a short-term rental can generate higher rental income than traditional renting, especially in areas where tourism is popular or in a central location. However, laws and regulations are constantly shifting the short-term rental industry as governments are looking for ways to regulate short-term rentals.

Short-term rentals investing is one of the fastest growing real estate investment opportunities today. Make sure to check your local laws and regulations before considering to rent out your real estate property on Airbnb though.

Smaller living and micro units

Micro units are small apartments that are usually around 200-300 square feet. With smaller living becoming a growing trend in housing options, particularly in urban areas where space is not affordable, micro units will be a solution to the increasing housing density in urban centers and overpopulated areas: Tiny, well-designed apartments that maximize the use of every square inch available. The increased demand for these real estate investment opportunities is a huge chance for residential real estate investors to put their money in.

Related: Are 3D Printed Homes the Future of Real Estate Investing?

Real estate investment trusts (REITs)

Some real estate investment opportunities allow investors to invest in real estate without directly owning a property. The best example of this are REITs, or real estate investment trusts. A REIT is a publicly traded company that owns, operates, and invests in commercial real estate. REITs are required by law to pay 90% of their profits as dividends to the shareholders. Investing in a real estate investment trust is more favorable than direct investing (owning the property) because you can profit from it while keeping your investment liquid, which means that your investment is relatively easy to sell.

Related: What is a Real Estate Investment Trust (REIT)?

The Bottom Line

There are many real estate investment opportunities that are less known to most people, and new trends in the housing market and the recovery of real estate sector will bring those opportunities to the surface.

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Abdallah Allabadi

Abdallah is a civil engineer with Masters in Real Estate and Facility Management. He focuses on writing about real estate analysis and the top locations for buying properties.

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