New Year‘s resolution season is well underway, and those who have committed to entering the real estate game this year are searching for their first investment opportunity. Like many industries, though, real estate is subject to market trends, economic shifts, and evolving technology. Anyone thinking about investing in the property must be prepared to face changes that might impact their potential opportunities.
We asked a panel of Forbes Real Estate Council members to share some big changes that they predict for their industry in 2019. Here’s what they think is around the corner, and how they’re preparing for it.
Industry insiders discuss what’s happening in 2019.All photos courtesy of Forbes Councils members.
1. A Shift Toward Revenue-Generating Property Investments
The writing is on the wall thanks to hefty trade agreements and rising interest rates. All these things are making investors look for good revenue-generating properties. The main thing in buying these types of properties is not over-leveraging yourself and leaving a good budget for vacancies and improvements. – Chris Ryan, BEYOND Properties Group / eXp Realty
2. A Return To A Human-Centric Approach
Last year we saw a shift from the big data that had been building up over the last decade. It peaked when Facebook was used to manipulate people during the election. This ignited a movement that had slowly started gaining ground. Through 2019 and beyond I see a strong opportunity for business owners to focus on the person instead of the sale. Long-term relationships will be the key to 2019. – Christopher Lazarus, Sellect Realty, LLC
3. Crowdfunding
I like the crowdfunding websites for real estate investments. It doesn’t always happen that the stars align perfectly to get a deal done, so I like investing in someone else’s deals. However, the model isn’t perfect so I stick to small amounts in each deal. – Deborah Rabbino Bhatt, Vesta New York
4. The Power Of Networking
The best opportunities will go to investors with the best networks. Competition for the assets has increased, so new investors absolutely need to have a robust, experienced team in place to help them identify, close and execute each deal. We are strengthening our broker, property management and contractor networks in all markets we invest in to prepare for a more competitive market environment. – Yousif Abudra, BENA Capital, LLC
5. Consistency In Brand Messaging
I believe all messaging sources should reflect the same brand identity. What that is, is up to you. In my case, this means to review all social, client and external (real world) contacts. The goal is the embodiment of the overall brand offerings. – Michael J. Polk, Polk Properties / Matrix Properties
6. AI-Driven Deal Sourcing
I think more and more investors are going to leverage AI to source deals. We’re very far into the current cycle, and it’s getting harder and harder to find good value-add deals. At the same time, real estate tech is advancing by leaps and bounds. It only makes sense that investors will seek a competitive edge through CRE tech, and AI is the most promising for identifying deals. – Marc Rutzen, Enodo Inc
7. Accessibility Of Opportunities
The biggest change we are seeing and will continue to see in 2019 is investors’ access to investment opportunities in commercial real estate. Crowdfunding and changes in advertising rules have allowed investors not within the “inner circle” of real estate professionals to access opportunities. That will continue with the launching of advertised real estate funds accessible to qualified investors. – Bethany Babcock, Foresite Commercial Real Estate
8. The Rise Of Tech-Enabled Services In Multifamily
This will be a groundbreaking year for tech-enabled services in the multifamily industry. Over the past decade, we’ve seen the proliferation of amenity spaces, followed by the increasing number of convenience services offered in buildings. The next wave will be tech-enabled services that create strong communities and lead to a highly personalized experience for each resident. – Benjamin Pleat, Cobu (formerly known as Doorbell Communities)
9. Client Demand For Data-Driven Insights
Buyers and sellers have access to more information and context than ever before, and the only way to prepare is to provide data-driven insights that provide unique value to the client. Also, make sure your marketing materials have crystal clear messaging. If a website is not providing a clear, transparent overview, it’s likely that this will send them on their way. – Cody Vichinsky, Bespoke Real Estate
10. A Rising Rate Environment
There is more uncertainty in a rising rate environment: How will it affect affordability or translate to the housing market or commercial real estate? These issues are more acute for equity investors, which is why many are attracted to short-term debt in these environments. Our focus continues to be allowing individuals to invest alongside institutions to access the same investment opportunities. – Brew Johnson, PeerStreet
11. Careful Goal Planning
The beginning of the New Year means planning business goals and their attainment. Planning with our team is imperative. From the accounting department to the managers in charge of each region it is a sit-down sharing of ideas, planning the direction to complete the goals for the coming year and the implementation process. This can be in person or teleconferencing. Just get it on the calendar. – Rita Santamaria, Champions School of Real Estate
12. Ventures With Property Owners
Owners of legacy commercial assets are sitting on an opportunity to invest or “roll” their own properties into redevelopment ventures with experienced real estate operators to generate attractive returns. Our business is focused on forming these ventures to invest capital and execute property repositioning plans to enhance property cash flow and generate tax-deferred liquidity for property owners. – Babak Ziai, BrandView Capital Partners
13. Regulatory-Driven Macro Opportunities
While it’s incredible to find the micro opportunities in real estate, some of the biggest returns come from finding large macro trends, especially those driven by regulatory changes (think RTC era investments). In my lifetime, I haven’t seen a better regulatory change than those created by Opportunity Zones. We’ve been studying this for a while and 2019 is our year to execute on this change. – Ridaa Murad, BREAKFORM | RE
14. The Impact Of Interest Rates On Customer Borrowing Power
Prior planning and preparation prevent poor performance. Flippers and renovation artists need to consider that a spike in interest rates affect the borrowing power of the customer at certain price points. The list price matters. List at a competitive price — overpriced and overreaching rehabs are sitting for longer or reducing. Build a 10% contingency into the plan for market shifts. – Courtney Poulos, ACME RealEstate