Warren Buffett, the notorious business tycoon, once said: “Be greedy when the others are fearful,” and one would hardly find a more timeless quote when it comes to investment. After all, it perfectly fits the current situation as well. While many of us are holding our breath, savvy investors are already dividing the biggest pieces of the property market pie.
Although the fabric of real estate is changing considerably, the sales are far from plunging even despite the pandemic. Real estate remains a favored option because it can be owned indefinitely, tends to appreciate in value, and has predictable cash flow with profits that can be further reinvested. Unpredictability or not, it continues to represent a potent way for anyone to multiply their wealth.
So, whether you’re looking to grow your portfolio in 2021, or you’re eager to get started with investing but aren’t sure how, these are the things you should know.
Take time to strategize.
One stereotype to break straight away is that you need substantial capital to invest in real estate. The famed “you need money to make money,” phrase might have been valid before, but the market has seen an emergence of many flexible options in recent years. Real estate crowdfunding, for example, offers solid returns with investments starting at as little as $100.
So, anyone can become a real estate investor today – no matter their age, experience, or budgets. But seeing roaring success takes a little more mastery. When strategizing, always make sure to define your specific goals. Think about the steps you’d want to take, set up an approximate timeline, and – perhaps most importantly – identify your financial resources. By setting these expectations, goals, and budgets, you can navigate the team with not only more confidence, but also more immediate clarity.
Find the right allies.
It can’t come as a surprise that real estate is extremely human-centered. Smart investors learn how to leverage their relationships and network to find their way to unique deals, lead more beneficial negotiations, and stay one step ahead of the mass trends. At the same time, they have trusted advisors that have their feet on the ground and are well familiarized with the minutiae of the market.
After all, not only do you need legal and commercial experts to find the right fit without any hidden traps, you might also need help figuring out what to do with your property afterwards. Whether you choose to remodel and resell, resell directly, or rent out, your partners can guide you through this process and explain what might be the smartest move based on both your individual goals and the specific market conditions.
Don’t scratch the surface only.
Some say that you shouldn’t wait to buy real estate, but you should buy real estate and wait. Any investment is a strategic game – and properties pose no exception. The ground rule is to always dilute risk by diversifying your portfolio. Also, never simply accept whatever comes your way, especially when it comes to the market price. Experienced investors know that there are lucrative opportunities out there that can be scored at a lower price – be it through an administrative auction, a foreclosure, or an opportunity price.
But being smart and analytical doesn’t only apply to assessing prices and returns. The location of the property plays a critical role. The pandemic has shuffled the cards significantly, with new opportunities emerging every single day. It’s a well-known fact that cities like New York or San Francisco are seeing mini exoduses, while traditionally overlooked regions are now seeing a renaissance. Tapping into the trend and exploring more suburban locations with vast work-from-home spaces can certainly pay off.
Real estate has been fast catching up with the needs of today’s investors, meaning that no matter your specific goals or budget, there’s always an opportunity for you. However, to make the best of it in 2021, make sure to always strategize and lean on trusted partners along the way.
Mateo Monsalve Molina is the Founder and CEO of Loyalty Property Advisors, a company facilitating investment in real estate in Colombia. He has participated in the launching and advisory for diverse startups and has vast experience working with both public and private entities. A graduate in law from University of Medellín, Mateo has built up a strong connection with real estate investment and continues to explore this field further.