Those who have committed to entering the real estate game this year are likely searching for their first investment opportunity. Like most industries, real estate is subject to market trends, economic shifts, and ever changing technology. Anyone considering investing should be ready to tackle the changes that may impact their potential opportunities.
A panel of Forbes Real Estate Council members share some big changes that they predict for their real estate in 2019 and how one can prepare for it.
1. A Shift Toward Revenue-Generating Property Investments
According to Chris Ryan, BEYOND Properties Group / eXp Realty:
Because of hefty trade agreements and increasing interest rates, investors are looking for revenue-generating properties. The important thing when buying this type of property is to not over-extend yourself and leaving enough room in the budget for vacancies and improvements.
2. A Return To A Human-Centric Approach
According to Christopher Lazarus, Sellect Realty, LLC:
During the past year we have seen a shift from big data, which peaked when Facebook was utilized to manipulate people during the 2016 election. Through 2019 and beyond, Lazarus predicts a strong opportunity for business owners to focus on the person and long term relationships which will be the key going forward.
Deborah Rabbino Bhatt of Vesta New York likes crowdfunding websites for real estate investments. She says it doesn’t always happen that everything aligns create a perfect deal done, so she likes to invest in someone else’s deal.
4. The Power Of Networking
Yousif Abudra of BENA Capital, LLC predicts that the best opportunities will go to investors with the best networks. As competition increases, new investors will need to have “a robust, experienced team in place to help them identify, close and execute each deal.” His own team is already strengthening their broker, property management and contractor networks in all markets to prepare for a more competitive market environment.
5. Consistency In Brand Messaging
Michael J. Polk of Polk Properties / Matrix Properties says that he believes that all messaging sources should reflect the same brand identity. Clients should see a consistent message that shows what the brand offers.
6. AI-Driven Deal Sourcing
Artificial Intelligence, AI, is being levered more in sourcing deals, Marc Rutzen of Enodo Inc explains. “It’s getting harder and harder to find good value deals.” Real estate technology is also making major strides forward, so investors will use these resources to earn a competitive edge.
7. Accessibility Of Opportunities
The biggest change that Bethany Babcock of Foresite Commercial Real Estate sees in 2019 is the inability to access investment opportunities in commercial real estate. Rule changes and crowdfunding will allow investors who aren’t within the “inner circle” of real estate professionals to access more opportunities.
8. The Rise Of Tech-Enabled Services In Multifamily
Benjamin Pleat of Cobu (formerly known as Doorbell Communities) says this will be a groundbreaking year for tech based and convenience services. “The next wave will be tech-enabled services that create strong communities and lead to a highly personalized experience for each resident.”
9. Client Demand For Data-Driven Insights
Both buyers and sellers have access to more information and context than ever before. The only way for investors to prepare is to provide data-driven insights that provide a unique value to the client. Cody Vichinsky of Bespoke Real Estate also notes that marketing and website brand messages need to be on-point and more clear than ever.
10. A Rising Rate Environment
According to Brew Johnson of PeerStreet, 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.”
11. Careful Goal Planning
With a new year comes new planning for your business goals and how to reach them, says Rita Santamaria of Champions School of Real Estate. One should be very specific in their goal setting, review each department, and discuss how they will implement the process of reaching those goals.
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|
Ridaa Murad of BREAKFORM | RE says some of the biggest returns come from finding large macro trends driven by regulatory changes. “In my lifetime, I haven’t seen a better regulatory change than those created by Opportunity Zones.” Their team has been studying this trend and expects to act on this change in 2019.
14. The Impact Of Interest Rates On Customer Borrowing Power
Courtney Poulos of ACME Real Estate preaches that “prior planning and preparation prevent poor performance.” Those who focus on property flipping and renovation will need to understand that a spike in interest rates will affect the borrowing power of the customer in the coming year. She recommends, “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.”
Kara L. Stachel, Esq. is an experienced Fort Lauderdale real estate attorney. Ms. Stachel is admitted to the Florida Bar and the New Jersey Bar, and is a member of the Florida Bar Journal’s Editorial Board, American Bar Association, Commercial Real Estate Women Network, and Real Property, Probate and Trust Law Section of the Florida Bar.
Stachel Law’s real estate clients include lenders, brokers, investors, consumers, sellers, and real estate agents, all of whom are counseled and represented throughout every step of a legal matter. The firm provides clients with extensive experience in complex real estate transactions and litigation.