If you want to be successful as a real estate investor, you have to understand how to boost your profits, manage your expenses, forecast market trends, and maximize your ROI. Whether you’re primarily interested in commercial properties, residential properties, fixing and flipping, buying and holding, or some combination of strategies, it’s important to recognize when current events and market demand might require you to reevaluate those strategies.
This is the case in 2020, where many go-to investment rules seem to be up for debate. Some markets that were competitive last year are dropping off. Others that have been cool for the last few years are starting to heat up. And while commercial real estate has long been touted as the best money maker for investors, recent trends suggest that a new type of investment property might reign supreme this year: The classic single-family home.
A Renewed Focus on the Home
Of all the lifestyle shifts we’ve experienced this year, perhaps nothing has been more globally impactful than the shift towards living life from home as much as we can. While different areas of the United States are experiencing the COVID-19 pandemic in vastly different ways, almost everyone has spent more time working, shopping, and living life at home rather than being out and about.
This renewed focus on the home has prompted some homeowners to reconsider their living situations. Many employees are questioning whether it might be possible for them to continue working remotely even after the pandemic subsides. Many families with children are realizing that if the continued trend of working and schooling from home continues into 2021, it’s very possible that their family will need more space—more bedrooms, office space, yard space, etc.—than they did previously.
If more employees are in fact able to transition to 100% remote employment, the need for families to live near urban hubs will dwindle. This may prompt homeowners to look for new homes in more suburban or even rural areas in order to cut costs or invest in more property.
Life From Home Means Less Need for Commercial Space
On a similar note, our increasingly home-centric lifestyle has led many business owners to question whether they really need as much space as they’ve owned or rented up to this point. With more employees working remotely, less office space is needed, and if families do move away from urban areas, there may be a decreased need for commercial property in those urban areas.
Furthermore, the financial blows many small businesses have experienced this year may prompt business owners to downsize wherever possible. While it’s still too soon to tell, it’s possible that entrepreneurs will be looking for ways to minimize overhead and operate more digitally in the coming year. This is perhaps the biggest reason why residential properties are proving to be the safer bet in 2020.
But This Isn’t a Total 180.
None of this is to suggest that commercial property is on its way out—in fact, as we continue to adjust to mid-pandemic and post-pandemic life, it’s very possible that a variety of new and exciting opportunities for unique commercial property investments will present themselves. This downturn in commercial property will likely be short-term.
Rather, this article is intended to remind real estate investors of all sorts of the importance of knowing one’s own market and getting ahead of trends. Even though commercial property is usually king, it’s very possible that carefully selected, competitively priced single-family homes may be your ticket to maximizing your ROI in 2020.
Private Money Lending for Residential & Commercial Property Investment
Whether you intend to tackle the residential market this year or to see where the commercial market takes you, we’re here to help you fund your investments. Get in touch with us HERE to learn about our lending options and how we can help you secure your next investment property.