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With inflation increasing and the world heading into a global recession many people are looking for new ways to make ends meet. You may ask yourself if investing in real estate is a good idea.
The answer is yes. There are currently numerous opportunities and benefits for savvy entrepreneurs in the property market. Carefully selected assets can provide steady revenue and produce fantastic returns and tax benefits.
Real Estate Investing
Real estate is potentially one of the most lucrative investment options you can enter into, and leveraging property is a smart way to build wealth, provided you manage your properties correctly.
A good example is 32-year-old Michael Albaum, who started investing in property in 2014 at 23. Michael now owns 61 rental units and grosses $431,000 per year from his combined rental income.
With increased inflation predicted for 2023, it can be safely assumed that most properties will appreciate, showing a profit if resold. However, there are many other ways that real estate investment can be lucrative besides just buying, renting, and reselling. Here are some of the other ways to earn money from property investment:
- Appreciation
- Development and improvements
- Inflation
- Rental income
- Royalties from natural resources
- Real estate investment trusts (REITs)
- Mortgage-backed securities (MBSs)
- Mortgage investment corporations (MICs)
- Real estate investment groups (REIGs)
The property investment market deals with huge amounts of money so, with the many types of real estate investment options available, it’s imperative to undertake in-depth research before deciding as to what type of investment will best serve your needs.
This article will walk you through the more lucrative types of property investment and explain some of the best ways to invest in the property market in 2023.
Best Types of Real Estate Investments
Let’s dive right in and explore the five best property investment options available today.
1. Rental Properties
Buying property and leasing the buildings out is a good way of ensuring a steady income, provided you do proper background checks on your tenants. There are many people who can’t afford to purchase their properties and will gladly pay for the use of your buildings and facilities.
It is customary for tenants to pay a security deposit to cover expenses in the event of damage to the property, such as broken windows or toilet seats.
However, when renting the property out, there is always the risk of ending up with a tenant operating a crystal meth lab or even renters who purposefully damage property or steal and remove fixtures from the home.
For this reason, it is essential to schedule regular home visits to assess the property and ensure that it is being looked after.
Some homeowners prefer to deal with rental matters personally, but a professional property manager can remove many headaches from the process.
2. House Flipping
House flipping is a method used to make a quick buck on the resale of a house or property and has the potential for producing huge profits.
In order to qualify as a flip the intention is to purchase the property with the aim of reselling at a profit within a matter of months, or a maximum turnaround period of not more than a year.
We will look at house flipping in more depth a bit further on in the article.
3. Real Estate Investment Groups (REIGs)
If you have capital and access to financing, and you want to own rental properties without the pain of actually managing them, real estate investment groups (REIGs) are a good option for you.
REIGs, which are small mutual funds that purchase or build condos or apartment buildings, allow investors to join the group by buying property through the company.
Any single investor has the opportunity to own one or multiple self-contained living spaces, while the company managing the investment group looks after all the units, including maintenance, vacancy advertisements and even interviewing prospective tenants.
A portion of the monthly rental amount is charged in exchange for performing these essential management tasks.
One of the big advantages of REIGs is that all the units pool a percentage of the rent to cover against occasional vacancies. This means that you’ll receive some income even if your unit is empty.
4. Real Estate Investment Trusts (REITs)
REITs provide exposure to your real estate portfolio without your having to enter into a traditional property deal.
REITs are purchased and sold on the major stock exchanges, like any other kind of stock.
In order to keep its REIT status, a corporation is expected to payout 90% of its taxable profits as dividends. This enables them to avoid paying corporate income tax.
REITs are a good solid investment for stock investors who crave a regular income.
REITs allow investors opportunities to enter into commercial investments that are usually not an option for individual investors.
In short, REITs are a more formal version of REIGs.
5. Online Real Estate Investing Platform
These online investing platforms are also known as real estate crowdfunding, and are for those who are wanting to join others in bigger residential or commercial deals.
Online platforms provide a means for investors to connect with real estate developers who are looking for funders.
They provide a good opportunity for investment diversity requiring minimal capital.
Val’s Rental Property Management Company
Now that we’ve had a look at some of the different types of real estate investing, let’s look at some of the benefits of using rental property management companies.
Real estate property management is largely based on mutual respect and trust. This is because, when you allow a property management specialist to take over you have to relinquish a large amount of your control over your investment.
In all probability, they might not do things the way you would do them but you have to be willing to step aside and let them do their jobs.
It is quite a specialized field, with many rules and regulations that can be confusing to a layman.
Property management is best handled by an expert in the field – like Val’s Management Services, who are familiar with all the necessary bylaws of the real estate industry.
Let’s dive in and take a look at some of the services offered by a property management specialist.
Val’s Property Management in South Bend, Indiana, specialize in rental properties and house flipping. If you have a property you want to rent out or you need an investment property specialist to assist with your house flipping investment, Val’s is the place to go.
Here’s how they can assist you with managing your rental property investments and your house flipping endeavors.
Benefits of Rental Property Services
Rental property services take away all the headaches involved with renting your property out.
They will handle the screening of prospective tenants, deal with maintenance issues, sort out the red tape and complete most of the finicky legal work.
They also manage your rental income, enforce leases and assist with evictions when necessary.
All you have to do is pay a small monthly fee for this fantastic service, leaving you free to enjoy the benefits of your investment income without any of the stress.
Professional property management is the best way to invest in real estate easily and securely.
Benefits of House Flipping Services
House flipping is growing in popularity and there is scope for huge profits with a quick turnaround time. However, house flipping is not as simple as it looks. It can be a very costly mistake if handled incorrectly.
That’s why it pays to have an investment property specialist like Val’s Management Services to handle the nitty gritty details and ensure that you come out on top.
We facilitate the purchase and sale of investments, handles repairs, maintenance and rehab. They also offer remodelling advice that won’t break the bank but will still “Wow!” prospective buyers.
A professional management service know what buyers are looking for and how to make the most of the space available.
This will cut your costs at the end of the day by removing the likelihood of unnecessary mistakes with unwise remodelling decisions.
Property Investment in South Bend and Mishawaka Indiana
You might wonder why South Bend, Indiana is such a popular place to invest in. South Bend is a hub of learning institutions, hospitals, and tourist attractions.
These are some of the places you can check out in South Bend, Indiana.
- South Bend Indiana Universities and Colleges
- South Bend International Airport
- Tourist attractions in South Bend
In fact, South Bend is growing at a rate of 0.22% annually and has seen a population increase of 1.98% since the last census. South Bend is actually experiencing it’s largest population growth since the 1950s, making it an excellent choice of location for property investment in 2023.
How Real Estate Investors Can Prepare for 2023
As we move into the new year you will want to be prepared. Here’s how you can make the best of investment opportunities in 2023.
- Sort out your finances – take stock of your current savings, income and expenses and prepare a forecast for the next few years. Calculate how much you can comfortably afford to invest in property. Note that your budget should include closing costs and down payments as well as monthly mortgage repayments.
- Find affordable financing options – your choice of finance options determines the profitability and sustainability of your investment so make sure that you research the different possibilities well. Mortgage rates are becoming astronomically high which means that investors need to explore alternative financing options.
- Scout out the best markets – the pandemic saw a cooling of city markets and an increase in movement to rural areas as citizens fled to smaller towns in hopes of lower infection rates and less strict lockdown policies. Look for areas that are projecting good growth trajectories, like South Bend, Indiana.
- Brush up on your real estate tools – the real estate industry is moving into a technological trend, using tech-based apps and enhancing their analysis through the use of big data and AI. It’s important to keep up with technological advancements in order to stay abreast of the market.
Real Estate Property Investing During Inflation
Let’s take a look at how inflation affects the real estate market. Interest rates rise with inflation causing higher home prices, higher mortgage repayments and fewer buyers.
The effect is positive for those who already own properties with a locked-in interest rate, but can negatively impact homeowners who are on a variable interest rate.
Inflation also increases the price of goods and services including construction and building materials. Developers and investors are at risk of facing cost overruns.
This means that the overall impact of inflation has to be measured against the cost of all building materials and labor, and the profit margin has to be carefully assessed.
At the end of the day investing in real estate is all about canniness and timing.
Real Estate Property Investing During a Recession
Let’s investigate purchasing real estate during a recession. During these times it’s very important to have a strategy for maximizing profits.
A property management specialist like Val’s Management Services will be able to advise you in making wise real estate investment decisions.
A recession is indicated by a declining economy, and sees people purchasing necessities rather than luxuries. While a recession does not provide a very positive outlook there are three factors that can make buying into real estate during a recession a good idea.
- People always need housing – no matter how bad the recession is people are always going to need places to live.
- Recessions bring bargains – recessions bring opportunities for investors to purchase rental properties at discounted prices.
- Low correlation to stocks – there’s very little carryover from volatile stocks into the real estate market making property investment one of the safer options during a recession.
After reading this article you should be more confident regarding property investment, having a greater understanding of how increased inflation and the coming recession are set to affect the real estate industry.
Because of the large amounts of money involved in the real estate industry it is a much safer and sounder decision to engage the services of a property investment company rather than going it alone.
They will be able to advise you as to the best way forward and assist you in making good on any rental and house flipping projects that you are undertaking.
It may cost a little more initially than handling everything yourself but you can save a lot of time, hassle and money at the end of the day by allowing professionals to manage your business ventures for you.
Check out Val’s Management Services in South Bend, Indiana, for the best professional assistance in the area.
Sources:
- https://www.investopedia.com/articles/mortgages-real-estate/11/make-money-in-real-estate.asp
- https://www.cnbc.com/2022/05/24/this-32-year-old-grosses-431000-per-year-from-real-estate-investments-and-lives-off-passive-rental-income.html
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- https://southbendin.gov/south-bend-sees-largest-population-growth-since-1950s/
- https://www.tandfonline.com/doi/abs/10.1080/10835547.1990.12090615
- https://www.annualreviews.org/doi/abs/10.1146/annurev-financial-102710-144901
- https://www.bankofcanada.ca/wp-content/uploads/2016/12/fsr-december2016.pdf#page=41
- https://www.investopedia.com/terms/r/reig.asp
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