What new real estate investment trends are generating opportunities to increase deal volume and profit margins?
You might be surprised at just how outrageous, desperate, slick and creative some of these trends are.
4 Real Estate Investment Trends to Watch:
1. Hidden Deed Restrictions
Supermodel Christie Brinkley reportedly included a ‘revenge clause’ in the deed transfer of her recent home sale. This particular clause prevents the new owner from selling to her ex-husband or hiring him to perform any work for the house. Clauses like this are in addition to lenders’ guidelines and provide additional restrictions that the buyer knowingly agrees to.
It seems as if you can put any wild restrictions on a deed these days. However, investors that provide the clearest deeds may be placed at a significant advantage.
2. Build–to-Rent
Small builders are gaining traction by leveraging rental-buyer cash to put up new homes and communities. For some real estate investors, the pitch is alluring. Others may question the value and price they are buying at and prefer immediate returns. Waiting for a property to be built can eat away at margins.
3. Corporate Housing
Facebook’s dive into the Menlo multifamily market signals the official revival of the live-work trend, otherwise known as corporate housing. However, for the most forward thinking investor that wants to go big, it also promotes the massive opportunities provided by future corporate housing projects on a national level.
Businesses won’t be jumping on this trend because it is cool, or because they are increasingly relocating to more affordable business hubs, but out of a necessity to attract and retain the best talent. Regardless of the reason, many large business are expected to follow this trend.
Tapping into organizations and becoming an official service provider can help fast track many investors to increased deal flow and improved profit margins.
4. Spec Rehabs
Spec building has long been one of the most controversial real estate investment strategies. It can be even more of a gamble than spinning the roulette wheel in Las Vegas. However, this new trend seems even more outlandish in today’s market.
According to Inman News and Market Wired, a “boutique real estate investment firm” has leveraged $50 million from Colony Capital to acquire “updated single family properties” in Southern California. They intend to put an additional 50 to 100% of the purchase price into “improving” them even further.
Clearly, this is perhaps one of the wildest investment strategies yet. It’s true, there may be an end-market that will fork out the money for these homes. Yet, it’s glaringly obvious this firm has never picked up a real estate education course that discusses the dangers of ‘over-improving.’ Essentially, in theory, they would have to resell these properties for 205% of their market value to make a minimal profit margin.
What makes it even more bizarre is when you compare this strategy to the ability to pick up homes from New York to San Diego at sizable discounts. Just look at the Versace Mansion, which just happened to sell at less than one third of its previous list price!
Whomever this firm is, investors could bank big on selling them their inventory!
