Archives July 2023

The commercial real estate market, not unlike the single-family housing and residential markets, is subject to cyclical trends. Investors are constantly looking for how these trends might affect their individual markets for the foreseeable future and ask themselves: what are the best real estate markets for commercial investments? These ever-changing trends and their impact are what drives an investor’s strategy on how they will edge out their competition. To better understand the current and upcoming commercial real estate market trends, it’s also important to review the trends that brought us to today.

Understanding Today’s Commercial Real Estate Market

The real estate market has proven to be a reliable and successful wealth-building tool for investors in recent years and is expected to continue its growth in 2022. 

At the beginning and peak of the COVID-19 crisis, experts and professionals alike were concerned about the short and long-term effects on the real estate market. The pandemic undeniably impacted the economy on many levels. However, the real estate market continued to move without slowing down. 

The pandemic did force commercial space occupants to adapt quickly, but COVID-19 statistics are improving and businesses are resuming to operate normally. Many businesses had to take new health policies into account before requiring in-office work. Some businesses continue to adapt and implement work from home or partial work from home policies successfully. Demand for office space have risen again as businesses who prefer to work face to face have been cleared to do so. 

Commercial real estate agents can also expect demand for a restructured design of office spaces. Some commercial landlords may find that changing their buildings to accommodate more space or privacy between employees will prove an attractive quality to prospective tenants. 

Although the changes that the COVID-19 pandemic has caused have been challenging for the commercial real estate industry, the quick return to commercial spaces has proven encouraging. As the economy recovers and workplaces adapt to changing public health practices, the commercial industry is expected to remain strong.

Real Estate Trends & Predictions For 2022

Many experts are eyeing the real estate industry to see what will happen in the year ahead. A brief review of previous years might suggest that while predictions can be useful in planning, they are not entirely accurate. For example, at the start of 2020 many would never have guessed the biggest driving factor in the market would be the COVID-19 pandemic. As we head into 2022, the effects of the pandemic continue to drive several changing trends in real estate including an emphasis on e-commerce, upgraded rental properties, and inventory shortages. 

Real estate investors should keep an eye on the return to retail spaces. While the conversation around e-commerce has continued to suggest an end to brick-and-mortar stores, this is simply not the case. Many individuals, in light of eased COVID-19 restrictions, still want to attend restaurants, shop, and spend time in commercial retail spaces. With the exception of possible vaccine and mask mandates, many commercial areas are open for business as usual and investors should expect that trend to continue. 

Professionals across the industry have been anxiously waiting to see how many companies continue work from home policies in the future, and the answer is still unclear. What we do know is that many top companies still want employees back in the office — promising news for commercial spaces. Note that the decision to work from home vs. return to the office is very divided by industry (for example, Tech seems to be leading the work from home push). Investors interested in office spaces should consider possible tenants and which spaces would be best for these businesses. 

A few other trends to consider in the year ahead include the recovery of multifamily rental units and a shortage of housing inventory. Investors may find they are able to keep vacancies low in the year ahead with single-family and multifamily rental units. On a final note, investors should keep an eye out for state and federal plans to improve infrastructure across the country. These changes could greatly increase the accessibility of commercial spaces and increase demand from tenants. 

2022 is expected to be an interesting year for real estate market trends. Investors should keep an eye on both residential and commercial trends to stay informed about the year ahead. For those looking for new markets to watch, here are the top 10 markets to pay attention to in the year ahead: 

• Nashville, TN
• Raleigh-Durham, NC
• Phoenix, AZ
• Austin, TX
• Tampa, FL
• Charlotte, NC
• Dallas, TX
• Atlanta, GA
• Seattle, WA
• Boston, MA

Real Estate Trends & Predictions For 2021

Commercial real estate was expected to face some interesting challenges throughout 2021. Most notably regarding the future of remote work and office buildings. With a large portion of the workforce remote due to COVID-19, many investors questioned the future of office buildings and long-term commercial leases. These concerns were heightened as big-name tech companies announced employees would be able to work from home permanently. Many expected
office buildings to reopen as the vaccine is distributed across the country and the economy returns to normal. 

While office spaces were expected to bounce back, so to speak — 2021 saw a rise in something called “dark stores.” Dark stores refer to retail outlets or distribution centers that have shut down inside operations and instead allow for curbside pickup or shipping. Dark stores were used before the COVID-19 pandemic, but as expected, they increased in size and demand as restrictions were put in place on in-person shopping and dining. Real estate investors hoping to tap into this trend today should look for properties that are easily accessible and in popular market areas. 

Warehouses represented another promising commercial property type for 2021. The demand for warehouses increased dramatically as retailers attempted to keep up with the rise in e-commerce. Real estate investors can expect the property value of warehouses and other industrial property types to continue to increase in the years ahead. Owners can not only benefit from property appreciation but an increase in average rent prices for these spaces. 

Unfortunately, not all areas of commercial real estate were expected to thrive as the world continues to feel the effects of the pandemic. Investors were warned to be wary of hotels and other areas of hospitality-related real estate. These industries are expected to recover at much slower rates than others, particularly in dense cities. Investors who are eager to find opportunities in hotels should be sure to focus on markets that are recovering more quickly than others. 

There are a few real estate markets that are expected to stand out in the year ahead as a result of job growth, cost of living, and population increase. Here are some of the top growing commercial real estate markets from 2021: 

• Austin, TX
• Tampa Bay, FL
• Atlanta, GA
• Nashville, TN
• Salt Lake City, UT
• Raleigh-Durham, NC
• Portland, OR
• Denver, CO

Real Estate Trends & Predictions For 2020

When 2020 began, many industry experts predicted sustainable but slow growth across the commercial real estate market. Experts predicted the impact of changing demographic trends, as both Baby Boomers and Millennials’ preferences changed regarding housing, office, and other properties. 

With the U.S. experiencing its longest expansion in history, many believed the slow and steady growth would continue in 2020. At the start of the year, mortgage rates were at 3.75%, according to Freddie Mac. This was nearly a 1% difference from the monthly average just a year ago. At the end of 2019, this drop in rates was the cause of a surge in refinancing and purchase activity. Among experts, there was a consensus that rates will remain low in 2020, somewhere between 3.7% and 3.9% 

Due to high demand, prices for homes were predicted to continue their climb upward. Home prices were estimated to rise by 5.6% by Fall 2020. This is an increase of about 2.1% from last year. With more and more listings coming on the market, there will be much more competition starting in early 2020. On the lower price end, low-interest rates and a shortage of entry-level homes will cause prices to rise even more. The shortage of entry-level homes is due to builders tending to focus more on higher-end, higher-profit homes.

Housing inventory was predicted to remain limited for most of 2020 due to interest rates and record-high homeownership tenures. According to Redfin, homeowners stay in their homes for an average of 13 years or higher, a 5-year increase from 2010. Homeownership tenure in some cities goes as high as 23 years. Essentially, you can’t buy what’s not for sale. Even with historically low rates, potential buyers risk buying in a market with a supply shortage. This trend was predicted to continue through 2020 and may even intensify in the coming years, directly affecting commercial real estate as a result. A bit of relief to this situation may come with the projected increase in construction. According to the Census Bureau report, both building permits and housing starts have increased over the year. Realistically, the pace of building is still behind historical standards, meaning it may take months before the pace can support the higher demand.

According to Realtor.com, Millennials were a significant 46% of all mortgage originations in September 2019. This was no surprise as many Millennials regard homeownership very highly in their life goals, even higher than getting married or having children. The combination of low-interest rates and higher incomes urged more and more Millennials to close deals on homes. A problem they face comes from the Baby Boomer generation. Many of this group choose to stay in place, resulting in more homes being kept off the market. As Millennials get older, many of them will move from urban to suburban areas. Although, they yearn for a community that can imitate the lifestyle of a lively city. This trend is drawing Millennials toward affordable suburban homes on the outside of major cities. As cities like New York and San Francisco become increasingly expensive, younger families populate the small towns outside major urban areas.

These commercial real estate trends give rise to the growth of a number of cities in the coming year. The best commercial real estate markets for overall investment and development in 2020 include:

• Austin
• Raleigh/Durham
• Nashville
• Charlotte
• Boston
• Dallas/Fort Worth
• Orlando
• Atlanta
• Los Angeles
• Seattle
• Tampa/St. Petersburg

These cities are the top commercial real estate markets in terms of population growth and net migration. Larger metros, such as Los Angeles and Boston, are projected to have slower population growth but will continue to be highly sought-after real estate markets that will continue to attract capital. 

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Real Estate Trends & Predictions For 2019

Released jointly by the Urban Land Institute and PwC, the annual Emerging Trends In Real Estate report highlighted a theme of unpredictability for 2019. Researchers stated that simply “connecting the dots” will no longer work and that this will be a “new era that will demand new thinking.”

The report also posited that 2019 would lend itself to overlapping trends, with the intersectionalities themselves leading to new conditions. For example, researchers postulated whether or not the technology used to improve productivity and efficiency would accelerate the industry’s downsizing. Investors were advised to prepare to be surprised in any way possible, which was great for spurring innovation and creativity within the industry. 

The following covers the top commercial real estate trends and predictions for 2019, as well as a review of the trends in preceding years. Federal officials have hinted that they will continue boosting interest rates to moderate inflation and stabilize the economy. The Federal Reserve hiked rates three times in 2018, between 2 and 2.25 percent. According to Curbed, the slowdown of economic growth will impact the real estate sector, especially in emerging markets. As real estate activity slows, investors will have a tougher time identifying new deals.

In 2018, much of the commercial market’s attention was focused on the compression of the retail industry. CBRE Head of Industrial Research, David Egan, predicted that the shift in demand from traditional retail to industrial real estate will continue. As large retailers focused on e-commerce, the demand for warehouse, shipping, and logistics spaces continued. This was especially true as more and more traditional retailers entered the online space. According to Bisnow, however, the retail industry is not dead. Instead, experts believed retailers would focus on delivering omnichannel shopping experiences, while e-commerce retailers would start opening physical store locations. (Amazon Books is an example of the latter.) Experts also warned investors would need to spend more time supporting the efficient use of commercial space. Retailers were predicted to seek out better (not bigger) brick-and-mortar presences.

Another trend highlighted in 2018, expected to continue in 2019, was the growing number of millennials flocking to secondary and suburban markets. According to the U.S. Census Bureau, 2.6 million Americans moved from cities to suburbs in both 2017 and 2018. Experts believed this mass exodus occurred as millennials opted for larger, more affordable housing in suburbs when starting families. Neighborhoods that were walkable, transit-oriented, and have strong school systems attracted the most newcomers. This trend was of interest to commercial investors; with migration patterns leading to a spike in demand for retail development and employment centers. Multifamily developments experienced “amenity creep,” or a need to provide increased, high-end amenities to attract sophisticated renters and buyers.

Technology was also expected to play a big role in 2019. According to Curbed, industry-specific technology is changing the way real estate professionals do business. For example, there was been a boom in building and construction technology and a push for better, more transparent analytics reporting. Experts were also excited to see how machine learning and other emerging technologies could improve building management, organization, and design. The Urban Land Institute reported increased use of artificial intelligence in assets such as co-working spaces and smart buildings. Uses included building efficiency, safety, and security, as well as property access.

Amidst all these demographic and technology shifts, the Emerging Trends In Real Estate survey reported that construction costs topped the list of concerns for investors and developers. A decline in immigrant construction labor, superstorms leading to rebuilding efforts, and international trade wars were factors squeezing construction costs across the nation.

Finally, the commercial investing community gained a renewed focus on sustainability due to serious reports on climate change. Many investors turned to impact investing, making green practices a core part of their businesses. Keep reading to get an overview of the top commercial real estate trends from 2018 to better understand what factors contributed to these trends.

6 Trends Affecting The Commercial Real Estate Market

If you’re interested in getting your start in commercial investing, then you’ll definitely want to familiarize yourself with the trends and factors that influence commercial real estate market trends. Take some guesses on what kind of factors might attract new businesses and help certain markets boom. Did you guess any of the following trends correctly?
Commercial growth: Directly impacting job growth, the movement of major companies and sector-based growth can all lead to demand for commercial spaces and housing.

• Development: The urban development of city centers, business districts and public-private projects each affect the attractiveness of a market for commercial real estate tenants.
• Cost of business: The cost of conducting business will influence how companies move in and out of certain markets. Cities with relatively lower costs of conducting business are more likely to attract new businesses and employment.
• Infrastructure: Public infrastructure, including public transit, communication, electric and transportation systems all influence the ease of doing business in a market. Cities with continued infrastructure improvements are more likely to attract and retain residents, businesses and tourists.
• Housing: Local real estate prices, rental affordability, and housing options are all factors that contribute to the migration patterns of workers. For example, a major company may be influenced by their decision of where to move their new headquarters, based on the overall cost of living for their employees.
• Quality of life: Urban, walkable cities with plenty of public transit, parks, good schools, and entertainment all contribute to the general quality of life for residents. Great quality of life is important considerations for businesses and their employees.
• Tourism: The tourism industry presents many opportunities for commercial real estate to boom, such as hotels or airports.

How To Determine The Best Places To Buy Commercial Real Estate

Curious about which commercial real estate markets are best for getting started? It’s important to keep a few priority items in mind. Although there will always be variances, commercial markets that embody the following five criteria are known to offer the best returns for investors:

• Low Unemployment Rates: Cities that have a low or decreasing unemployment rate indicate a robust job market, with a probable demand for office and retail spaces.
• Low Purchase Prices: This might sound like a no-brainer, but it is important to find a property that is priced either below or at market value. If you want to profit off your renters, consider finding a slightly distressed property that is being sold for a deal. There is also the option to buy a commercial foreclosure property.
• High Asking Rents: Be sure to do your due diligence before jumping into commercial real estate and research comparable markets to see what average asking rent prices are. If the asking rent rate is high, and your purchase price is low, you should make a substantial profit.
• High Tenant Demand: Search for up-and-coming markets that are creating new jobs and developing new residential complexes because there will be an increased demand for space.
• Low Vacancy Rates: If you have high tenant demand coupled with low vacancy rates, you will be able to charge a higher rent price, therefore increasing your profits.
• Favorable Conditions For Business: Pay attention to local and regional economic policy. Are new plans attracting businesses to the area? Review the tax rates for business owners and economic growth as indicators.

Top 10 Fastest Growing Commercial Real Estate Markets

There are four different types of commercial real estate spaces investors can consider: retail, office, industrial, and multifamily complexes. If you’re looking to invest on a budget, experts recommend starting with either industrial spaces or multifamily complexes, as those options tend to have lower price points than retail and office spaces.

If you think you’re ready to make the jump into commercial real estate, consider these rapidly developing markets, which are arguably the best places to buy commercial real estate right now:

Summary

Although predicting the future of the commercial real estate market might seem like a job for economists and top-rate experts, the truth is that any investor can make their own educated guesses. As shown in this discussion, market trends are extremely interconnected from year to year. All you have to do is study up on market outcomes from previous years, as well as have an understanding of the economic drivers that impact the current commercial market. Investors who take the initiative to perform their own research and make educated predictions will be the ones who beat their competition and find the answer to: what are the best real estate markets for commercial investments?

Dreaming of homeownership? A mortgage loan can help you turn that dream into a reality. In this edition, we’re excited to explore the world of mortgage loans and how they can empower you to purchase your dream home. Let’s dive in!

Understanding Mortgage Basics:

Begin by familiarizing yourself with the different types of mortgage loans available. Research fixed-rate mortgages, where the interest rate remains constant throughout the loan term, providing stability in your monthly payments. Alternatively, explore adjustable-rate mortgages, which offer a lower initial interest rate that may adjust periodically based on market conditions. Understanding these options will help you make an informed decision when selecting a mortgage.

Building a Strong Credit Score:

A good credit score is essential when applying for a mortgage loan. Take steps to improve your credit score to access more favorable loan options. Pay your bills on time, reduce your overall debt, and keep your credit utilization ratio low. Regularly check your credit report for errors and address any discrepancies promptly. A strong credit score can lead to better interest rates and terms, potentially saving you thousands of dollars over the life of your loan.

Exploring First-Time Homebuyer Programs:

If you’re a first-time homebuyer, explore special programs and incentives designed to assist you in the homeownership journey. Many regions offer down payment assistance programs, reduced interest rates, or educational resources to help you navigate the process. Research what options are available in your area and determine if you qualify for any of these programs. They can significantly ease the financial burden of buying your first home.

Saving for a Down Payment:

Start saving for a down payment as early as possible. A larger down payment can result in a lower loan amount, lower monthly payments, and potentially better interest rates. Review your budget and identify areas where you can cut back to allocate more funds toward your down payment. Consider automating your savings by setting up a separate account dedicated to your homeownership goal. Additionally, explore alternative down payment options, such as government assistance programs or grants.

Getting Pre-Approved:

Before house hunting, consider getting pre-approved for a mortgage loan. This process involves submitting your financial documents to a lender who will assess your financial situation and provide an estimate of the loan amount you qualify for. Pre-approval demonstrates your seriousness as a buyer and can give you a competitive edge when making an offer on a home.

Remember, buying a home is a significant financial decision, and taking the time to educate yourself about mortgage loans is crucial. By understanding mortgage basics, building a strong credit score, exploring first-time homebuyer programs, saving for a down payment, and getting pre-approved, you’ll be well-equipped to embark on your homeownership journey. Stay tuned for more insights and guidance on homeownership in our upcoming newsletters.

Wishing you success on your homeownership journey!

Building a property from the ground up entails substantially more risk than purchasing an existing building that is already generating income. Likewise, financing construction is riskier than lending against existingstructures since development projects don’t generate income to pay loan interest until they are completed. For this reason, most bank-originated construction loans come with additional restrictions to try to manage these risks. For example, when a bank extends a construction loan, borrowers usually don’t get all the cash up front. Instead, construction loans are disbursed gradually as portions of the development are completed and inspected by the lender.

But builders don’t have to borrow from banks. They can also borrow from investors that lend their own cash, and these “debt investors” or “investor lenders” have become more active in construction lending over the last three years.

Investors Overtake Large Banks in Construction Lending

Traditionally, banks of all sizes were the most active construction lenders. However, during the pandemic, national banks meaningfully stepped back from construction lending, while regional banks stayed active. In the five years preceding the pandemic, national banks had the largest market share of construction lending. Now they’re in third place, outpaced by investor lenders and regional banks.

While the market share of construction lending for banks of all sizes still exceeds that of private lenders, investor-driven lending has clearly taken market share from banks over the last two years. Private construction loans are attractive to borrowers since they typically have fewer restrictions than bank construction loans. However, in exchange for the less restrictive debt, borrowers pay meaningfully higher interest rates.

With the potential for additional regulatory scrutiny on the horizon, U.S. banks of all sizes increased their cash balances by approximately $310 billion compared with early March. While some of this cash, approximately $98 billion, is due to borrowing from the Federal Reserve, most of it isn’t. If banks continue to hold onto more cash for risk management and regulatory purposes, there will be less cash available for CRE lending, especially for riskier varieties like construction financing.

Investor lenders may well continue to take share from banks. As they do, financing construction will become costlier.

Millennials are predicted to make up a large proportion of homebuyers in the coming years, but their impact on the real estate industry will not stop there. Millennials will also make up the next generation of real estate investors. While investing in real estate young may seem challenging, it is not impossible.

Aspiring investors should know that there are just as many solutions for real estate investing as there are challenges. Learning how to invest in real estate young will take time and research, but young investors can set themselves up for lifelong success with the right preparation. Keep reading to learn how to break into real estate at a young age.

Why You Should Start Investing At A Young Age

There are numerous benefits available to those who start investing at a young age. Perhaps most importantly is the opportunity to start on what would become a lifelong passion. Historically, real estate has proven to be a highly lucrative investment option. Those who take the time to learn about investing early can create the foundation for a worthwhile, profitable career in life.

David Wurst from Webcitz offers this insight: “real estate investing isn’t just for folks of a specific age. You can begin when you are young or when you are older. In either case, the goal is to weigh your options and choose which ones best match your risk tolerance and time commitment. But know this: Real estate can be a profitable investment for retirees, and if you missed out during your working years, it’s never too late to get in on the fun”. 

While you can start investing in real estate at any age, there are certain perks Millennials can bring to the table. For example, this generation grew up in a world surrounded by new technology. Considering all of the changes in the real estate industry today, a knack for technology could help young investors succeed early on. Read this article to more about the future of real estate technology.

Young investors will often also have a higher degree of flexibility when choosing an investing strategy. For example, investors in their 20’s and 30’s may have more free time and a willingness to try alternative investments. This can open the door to unique opportunities, like house hacking, that may not be attractive options later on. Finance expert Samantha Hawrylack adds that “millennials are less likely to feel tied to traditional investment strategies and are more open to new ideas. This can give them an edge when it comes to finding innovative ways to grow their money”.

Aspiring investors should remember to use age to their advantage and test out multiple exit strategies, markets, and even property types.

When it comes to purchasing properties, starting early provides the chance to build equity over time. If you buy a home now, ten or twenty years down the road, you’ve likely built up significant equity through loan payments and property appreciation. By investing in properties now, young entrepreneurs have the chance to build up significant equity. This can pave the way to impressive, high-value portfolios over time.

Yet another benefit of investing at a young age is the chance to build up a network that will last a lifetime. Your network will be crucial to securing financing, finding contractors, and landing deals in real estate. Young investors ready to hit the ground running can start building connections that will benefit them throughout life.

All in all, there is a multitude of benefits available to those who break into real estate, investing young. While you can start at any age, young investors have the chance to lay the groundwork for a successful investing career.

Challenges Of Being A Young Real Estate Investor

Before committing to your first investment, it is important to consider the challenges you may face along the way as a young investor. By familiarizing yourself with the potential obstacles, you can help make sure you are prepared for any potential obstacles. Here are some of the challenges of being a young real estate investor (and how to overcome them):

• Turning A Hobby Into A Business: While it may sound obvious at first, it’s important for investors to treat their new business like the business it is. Consequently, far too many new investors treat their first venture into entrepreneurship like a hobby. According to Ann Martin, Director of Operations of Credit Donkey Credit Card Processing, new investors must learn to treat their investments like a business. “By taking your real estate investments seriously, you’ll help ensure good returns,” says Martin.
• Lack Of Resources: Many young investors blame their inability to get started on a lack of resources. Some even report finding opportunities but complain they don’t have the money to take advantage of them. Others are too afraid to get started because they think they need more money. If you don’t get started, you won’t have any more than you do now. And there really are ways to invest in real estate with no money down. It’s just a matter of learning the right strategies and tactics. Have you considered a private money lender? Truth be told, a lack of capital should never be an excuse with all that is available out there. You need to know where to look and be prepared when an opportunity presents itself.
• Not Being Taken Seriously: While youth is frequently considered a strong asset in business, many young entrepreneurs fear they won’t be taken seriously. Unfortunately, it is a legitimate fear, but not one that can’t be worked around. Know that there are many circles in which others are specifically looking for those that are 30 and under. Opportunities are there for younger investors, but you need to be willing to put in the time to gain experience. Let your hard work be your resume. It also wouldn’t hurt to hire a veteran mentor or to partner up with a more experienced investor.
• Self-Doubt: Everyone that considers doing something different runs into the fear that they are insane for believing they can do it or should try it. Such feelings often sneak in right before the leap is made or after the initial excitement begins to wear off. Recognize that this is a way your brain sabotages you into inaction. Those in the business call it analysis paralysis. Don’t let this happen to you. Anticipate it, and realize the need to work through it to see results.
• The Process: If you haven’t been through the real estate transaction process yet, buy a home. Owning your own home creates a great financial foundation and will kick start your investing. It will also teach you a ton about the process of investing purely for profit.
• Lack Of Established Credit: Younger real estate investors often have to face the reality that they don’t have well-established credit. Maybe you are fresh out of school, still in school, or have just been strict about paying cash for everything. Credit can play a role in some types of investing and in business. However, you don’t need great credit or any credit to get started investing in property. Don’t let this excuse rob you of your potential.
• Student Loan Debt: Whether you are in college, fresh out, or dropped out for real estate purposes, there is a good chance you’re carrying some student debt. It is important to recognize that it can throw a wrench in your debt-to-income ratio, but there may be no faster way to pay off that debt than real estate investing.
• Expectations: Buying and flipping houses is often made to appear very easy. However, it is easier said than done. New investors will quickly learn that they need to start marketing for deals, learn how to evaluate properties, and write offers. Some expect to be doing a dozen deals a month right out of the gate. Money can come fast and easy in real estate, but it can take some time to build up a pipeline and close deals. The better you understand what’s really involved in getting a deal and what realistic volume is, the faster success will come.
• Connections & Relationships: One of the myths about the wealthy one percent is that they were born with money and connections. Some are, but there are even more millionaires and highly successful real estate players that have worked their way up from the bottom. Connections and relationships are some of the easiest things to build. You may need to learn or hone some communication and rapport-building skills, but nothing is stopping you from getting out there and making new contacts today. Build contacts, and you will be surprised at where some of them end up taking your business.
• Finding Customers: Stop looking for people to sell to, or for deals to fall into your lap. Start looking for as many people as possible to help with their real estate and finance problems, and everything else will fall into place.
• The What’s Next Trap: If you keep getting stuck on what you need to do next, you’ve skipped the most important step in getting into real estate investing: a business plan. Create a system that works for you, one that is tailored to your goals. Use it as a reference when you get stuck.
• How To Invest In Real Estate At A Young Age
• Many young investors will find it challenging to raise financing when they first start; however, this should not signal the end of the road. The key to investing at a young age will be learning how to leverage your time, motivation, and capital you have to your advantage. While it may seem difficult, finding success as a young investor will come down to learning the best ways to work with what you have.
• Luckily, several investing strategies are well suited to young investors. As you gain experience (and connections), the best part is you can use the profits from these strategies to continue building an investment portfolio. Beginner-friendly exit strategies can serve as an excellent gateway to more complex investments down the line. Here are three strategies to get you started:
• House Hacking
• Multifamily Rental Property
• Wholesaling
• House Hacking
• House hacking refers to renting out a room in the property you are already living in. For example, if you have a second bedroom or converted garage space, you could use those rooms to generate monthly rental income. This strategy is a great way to supplement your income without purchasing a property for yourself. House hacking can also be a great way to reduce your overall living costs, as you may be able to split living expenses other than rent with your tenant.
• There are a few things to keep in mind before house hacking, like understanding how to be a landlord and setting tenant boundaries. While this is a great way to generate rental income, the situation will involve taking on a roommate. Make sure you are ready to share communal spaces and manage a tenant before you list the space. If you are interested in getting started, read our ultimate guide to house hacking to learn more.
• Multifamily Rental Property
• Multifamily rental properties can be another great option for those wondering how to invest in real estate at a young age. This strategy involves purchasing a multifamily property and living in one unit while renting out the rest. This can be a great option for investors who like the benefits of house hacking but not the idea of an actual roommate. That being said, multifamily properties offer shared maintenance costs, steady cash flow, and in some cases, better financing when compared to single-family homes.
• There are several types of multifamily properties investors can look into. These include duplexes, townhouses, and even small apartment complexes. You should learn how to evaluate different markets, potential cash flow, and financing sources to get started. If you play your cards right, multifamily rental properties can turn out to be highly lucrative for young investors.
• Wholesaling
• Wholesaling refers to finding properties, getting them under contract, and then assigning that contract to a buyer. Wholesalers will earn money through contract fees. This process does require a strong understanding of your market area and an ability to network effectively. However, it is a great strategy to learn a lot about real estate and fast.
• This real estate exit strategy is actually where a lot of real estate investors get their starts. While wholesaling revolves around buying and selling houses, the wholesaler never actually purchases the property. Therefore, it does not require significant capital to get started. If you are interested in learning more about wholesaling, be sure to watch this video.
• Increasing Income And Savings
• If your goal is to increase your funds to begin investing, look for ways to increase your income in the meantime. For many people, this means starting a side hustle. Successful side hustles range from selling photography, to working online as a virtual assistant, to delivering Postmates. You may also be eligible for a promotion at your current job, and can negotiate a raise. 
• Once you are able to increase your income, treat the extra amount as savings. Set aside this money as you get paid. Gradually, you will build up enough cash for your first investment. From there, you can keep growing your funds and so on. 
• [ Learning how to invest in real estate doesn’t have to be hard! Our online real estate investing class has everything you need to shorten the learning curve and start investing in real estate in your area. ] 
• Scaling & Networking
• Perhaps one of the greatest benefits of investing young is that you have time to break into the industry at your own speed and lay the right groundwork for a successful career. Many new investors of all ages are hyper-focused on landing their first deal and securing their first property. While this is a monumental feat, it is not nearly as important as establishing the foundation for a future real estate business. Young investors should pay particular attention to creating a network and establishing strong business practices. 
• A great place to start is getting a real estate mentor and joining networking groups around your area. Be consistent as you try to break into the industry and focus on building lasting relationships with other real estate professionals. This should include real estate agents, contractors, other investors, real estate brokers, and more. Networking is key to a successful career in real estate, and building an expansive network early will help you in more ways than one down the line. 
• When it comes to your business, take extra care to develop your business plan and branding. Create core values and a mission statement for your company, and choose a business name that works for you. It can be a good idea to secure the social media handles and domain names, even if you are not at that stage yet. Remember that the work you are putting in now could greatly help you as your real estate business expands throughout your career. 
• Partnering Up
• Real estate business partnerships can be mutually beneficial for multiple reasons. A potential partner can bring financing solutions to the table as well as connections and experience. Partnering up with someone can help alleviate some of the stress and requirements of handling a business on your own. If you are running into obstacles that you do not think you can manage independently, this can be a great option for you and your business. 
• Educate Yourself
• Before you get started, one of the best ways to ensure your success is to spend time educating yourself. Frankly any investor continues educating themselves throughout their career; consider it a never-ending process. Not only does the real estate market trend over time, investing strategies and industry trends are in a constant state of change as well. There are plenty of free online resources, podcasts, books and expert blogs at your disposal so that you can start teaching yourself the ins and outs of the industry. 
• Summary
• Learning how to invest in real estate takes careful planning, no matter where you are in life. That’s why young entrepreneurs should not be scared away by the potential challenges of starting an investing career. Instead, learn to use your age to your advantage and start building a portfolio today. There are financing opportunities available, connections to be made, and numerous markets worth researching. Whether it is house hacking, rental properties, or wholesaling, there are several beginner-friendly entry points for young investors to break into real estate. With the right dedication, investing in real estate young can help you set yourself up for the life you want.
• What questions do you still have about breaking into real estate at a young age? Or, what is one thing you wish you knew before getting started? Share your thoughts in the comments below.
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