Real estate is one of the most stable investment opportunities in the country. There are three critical reasons for this. The first is cash flow. Unlike other industries, cash flow in real estate is not seasonal. That means properties generate the same monthly income, making it much easier to budget and plan.
The second is tax breaks. Properties give investors many tax breaks they may not be aware of. For example, there is a 1031 Exchange, meaning you can sell your real estate and not worry about paying taxes on the capital gains if you reinvest it in another property. That can lead to some serious savings for investors.
Lastly, there’s appreciation. You will see tremendous appreciation over the years if you purchase a property and manage it well. Real estate is one of the ways to build wealth, and if you find a great property at a reasonable price, that wealth can come quickly.
However, staying up-to-date on the latest trends is essential if you are considering investing in real estate. What worked in the past might not work now, and vice versa. So here are a few of the newest trends in real estate investing that you should be aware of.
Rise of the Suburbs
In recent years, there’s been a resurgence in the popularity of suburban areas. More and more people are moving out of cities and into suburbs, where they can get more space for their money. This has caused an increase in demand for suburban properties, which is good news for investors looking to get involved in this market.
If you want to invest in the suburbs, you have various options. First, you’re eligible for an FHA loan if you’re a first-time buyer. This loan has a low down payment and lower credit requirements, so it can be an excellent option for many investors. You may also want to consider rent-to-own properties, which allow tenants to live in the property while paying off some of the cost upfronts.
However, if you want to invest in a second home, it’s better to get a conventional loan. Look for a local mortgage lender and check their rates and fees. You should also consider long-term holding costs, such as property taxes, insurance, and maintenance. If you understand these costs, you can find a great deal on an investment property that will pay off for years.
A jumbo loan is for you if you’re into homes in luxury suburbs. This kind of loan is for homes priced over the limit of a conforming loan. Again, if you have good credit and a sizeable down payment, these loans can be relatively easy to get approved for, especially from local lenders who know the market well.
One trend that has been happening over the last few years is a decrease in international investment in real estate. This is due to several factors, including political instability in some countries and a strong US dollar. However, this doesn’t mean that there isn’t still money to be made from foreign investment; it just means that you might have to look harder for deals.
Increase in Rental Properties
Another trend that’s been occurring is an increase in the number of people who are renting rather than buying properties. This is due to various factors, such as the high cost of homeownership and the flexibility that is renting offers. This trend is good news for investors who own rental properties, as more people will be looking to rent than ever.
One of the latest trends in real estate is co-living arrangements, whereby people rent rooms in shared apartments or houses. This trend is driven by the high cost of living in many cities and the desire for a greater sense of community. Co-living arrangements offer a more affordable option for renters and the opportunity to live with like-minded people. If you’re considering investing in this trend, look for properties in urban areas with a high demand for rental units.
Micro-housing units are another trend that is on the rise, particularly in urban areas. These are small living spaces, usually between 200 and 400 square feet. They are designed to be compact and efficient, with amenities such as Murphy beds and fold-down tables. Micro-housing units are popular with millennials looking for affordable places close to downtown areas. If you’re considering investing in this trend, look for properties near public transportation and other amenities that appeal to this demographic.
The real estate market is constantly changing, so staying up-to-date on the latest trends is essential to succeed as an investor. By being aware of the above directions, you’ll be better positioned to find deals and make money from your investments.