The future of real estate investment, development and funding is the accessibility to the investor considering real estate investing (or REI). The stable influx of capital and acquisition opportunity through the unification of all stakeholders — including the community and environment — through technology drives sustained industry growth.
As the CEO of a company that specializes in commercial property investments, I’ve seen the benefits of REI firsthand. I’ve also learned how you can leverage technology and community to achieve your objectives.
Established Benefits Of Real Estate Investments
You’re likely aware of the well-known benefits of investing in real estate, such as its potential historical appreciation, return on investment and cash flow, hedge for inflation and value-add opportunities and control over margins. REI also allows for portfolio diversification and a passive income, provides a capital gains tax shelter and offers a choice of management involvement.
However, there are a few potential drawbacks and precautions to consider, including limited liquidity compared to other investments, the need for due diligence and management responsibilities and encumbrance of personal assets.
It’s also key to remember to avoid submarkets with declining industry and population growth and to choose partners and stakeholders who are trustworthy and reputable. To conduct your due diligence on the subject property:
• Insist on complete financial statements.
• Research presiding zoning and environmental policies.
• Analyze macro and microeconomic factors influencing value and long-term viability.
Despite these risks — which are minimized when we inform our decisions — real estate represents a reliable and accessible path to long-term passive income and wealth generation. I’ve observed that the demand and competition for investment opportunities are growing as technology increases accessibility and provides more affordable, easier-to-manage and risk-tempered investments.
Technology Enables Investors Of All Skill And Resource Levels To Enter The Market
Barriers to entry for new investors are significantly less in comparison to prior cycles. A plethora of online platforms and vendors meet every functional and operational need (and even personal needs, e.g., productivity, brain games and guided meditation) with respect to REI and the resources required to execute a profitable long-term strategy.
Educating yourself on the technical, regulatory, financial and social aspects of real estate is a simple matter with free/low-cost forums and knowledge bases, which are maintained by the investment community and dedicated to the aggregation of knowledge within each niche. You have measured access to insights and mentors granted by the concentrated and searchable database made possible by our contemporary digital infrastructure.
Further supplementing your fuel for expedited and educated investment decisions, there is the broad availability and low cost of aggregated real estate and prospect data provided by mature, growth and start-up data platforms.
The connectivity, efficiency and transparency afforded by cloud-based management and monitoring platforms streamline today’s real estate investments. The software-as-a-service (SaaS) industry, for example, has found a welcoming market in the commercial and residential real estate sectors.
Enterprise resource management systems (ERMs) and automated property management platforms reduce management responsibilities for individual, fund and institutional investors. In my experience, most ERM and customer relationship management (CRM) platforms offer integrated mobile solutions for client and management side tasks that can help reduce paperwork (and waste), superfluous correspondence, bolster productivity, reduce labor costs and improve tenant satisfaction.
Financing projects, yet another critical component, find aid in the digital space as well. Specialty lenders and niche crowdfunding platforms create access to capital and investment opportunities for projects of all sizes and classes in the real estate and broader industry. Finding viable projects is progressively less challenging as crowdfunding platforms and investment funds provide access to vetted projects in growth markets across the country. Moreover, public real estate listing sites and auction platforms enable new and experienced investors to make remote and streamlined acquisitions.
Tech-Driven Accessibility To Short-Term Rental Investments
Short-term rental investment found new life after Y2K and continues to steam ahead despite regulatory pressures and push-back from the hospitality industry. Mobile connectivity, enterprise-level integrations and the internet of things (IoT) simplify the management and operations of vacation rentals in terms of marketing, booking, maintenance and financial monitoring.
IoT — the ubiquitous integration of internet connectivity in all our devices, systems and appliances — grants investors more control over access to the property, amenities and mechanical systems. This integration affords opportunities to create value for tenants and users, expense and liability reduction, and new investment models.
Getting Started And Choosing The Best Investments
Opportunely, real estate investing is an activity in which those with tenacity have the potential to find profits regardless of available capital, credit and experience. Leverage — a staple of REI, otherwise known as other people’s money (or OPM) — allows you to make acquisitions and generate returns by leveraging not only the capital and credit of private and corporate investors but also their knowledge and experience in development, management and exit strategy.
So, how do you determine the best fit for your goals and financial situation?
• First, assess your experience and skill level in real estate and investment management.
• Consider self versus professional investment management.
• Ask yourself, do you have the available time and motivation for project and property management?
• Gauge your tolerance for risk and expected returns.
• Consult a qualified CPA, accountant or tax attorney to determine which strategy is optimal for your tax situation.
• Evaluate the market by examining economic, regulatory, social and environmental factors.
Where you find a challenge in sourcing capital or projects due to a limited investment network or insufficient local opportunity, consider using social and fundraising platforms dedicated to real estate investors to help bridge the gap.
You can harness technology and become an early adopter or innovator by researching and implementing the best available tools for your investment strategy. You have myriad options for professionally or self-managed investments tailored to your experience level, interest in management duties, financial position and investing goals.