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Tag: real estate profit

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • Five Key Tips to Investing in Rental Properties

    Five Key Tips to Investing in Rental Properties

    1. Stay on Top of Your Personal Debt

    Savvy investors tend to make sure they are not highly levered, especially prior to investing in any real estate property they intend to rent out. While all would agree that it’s not necessary to have 100% cash up front in many situations to make the property a great investment, it’s wise to try to pay down any personal debt you may have prior to, or after acquiring a rental property. Otherwise you may find that your expenses – especially something like a huge, unexpected medical bill – could cause you to pay a lot more in interest, thus losing profit, than you were originally seeking to.

    2. Make Sure You Can Really Afford Your Downpayment

    Whether you want to purchase a rental property for supplemental income, to diversify your investment portfolio, or as part of a longer-term investing strategy, it’s essential that when you decide to pull the trigger, you’re confident your budget can sustain the downpayment. This ties back to staying on top of your personal debt and other investments in your portfolio, but at the same time it’s a common mistake. You won’t be putting down 3-10% like you may on your personal home. With the minimum being 20% and if financing, you generally see it coming in the form of a personal loan, you can once again get into a rut with interest and possible refinancing if you can’t really afford the initial downpayment.

    3. Stay Away from Financing with High Interest Rates

    Comparatively in 2020, the cost of borrowing money has been very cheap due to economic factors from the COVID-19 pandemic, however in general loans with higher interest rates are best to avoid when looking to buy a rental property. Remember, you’re not going to get the benefit of a traditional mortgage interest rate, so be sure to stay away from personal loans (or other means of obtaining financing) that carry high interest rates.

    4. Location, Location, Location

    Investors already in the rental market are just starting to see prices stabilize, but only in certain “prime” locations. For example, if you look at various subdivisions of geographic areas within the Manhattan real estate market, you’ll find studios in the Upper East Side (for example) are now all above a ‘floor price’. However, if you look at similar studios in East Harlem, you won’t see the same uniformity. In fact, it’s very much to the contrary; there’s still high volatility in rental prices in ‘non-prime’ locations. To ensure your investment property is as immune as possible to market fluctuations resulting from uncertainty, the location of your rental property is essential to a successful return on investment.

    5. Invest in Landlord Insurance; Assume Unexpected Costs

    The two don’t necessarily go hand-in-hand (you should always assume unexpected costs), we wanted to recommend landlord insurance specifically on top of homeowners insurance. Landlord insurance generally covers property damage, lost rental income, and liability protection, in case a tenant or a visitor suffers injury as a result of property maintenance issues (for example). Depending on various factors of your rental property, the cost may be higher than you anticipate and you may be one of the people who thinks “this will never happen to me, so I don’t need it”, but in these cases it’s definitely better to be safe than sorry. Investing in a rental property is a big commitment and the landlord insurance certainly isn’t somewhere it’ll be worth it to cut costs in the long-term.