What Makes A Great Income Property Investment In This Market?
Income properties continue to stand out as one of the safe havens and essential investments as the economy rotates. Of course, how well these assets perform all comes down to the execution, and doing it right.
There are some players out there putting investor money into real estate in a way that seems almost inevitable to fail hard, and lose money. This voids the whole point of this being somewhere secure to preserve capital, and generate cash flow, and positive returns while other asset classes disintegrate into turmoil.
So, what makes a smart income property investment now?
The Need For Income Producing Real Estate
This is now a must have asset for every investor. That includes family offices, funds, corporations, and individual investors ranging from those new to the workforce to those already in retirement.
With massive layoffs happening, a frozen job market, and dividends on other investments likely to be cut off, everyone needs alternative sources of income.
With 98% of CEOs preparing for a recession now, and even the world’s biggest banks like Credit Suisse suffering a 50% plunge in market cap, it is reasonable to expect the value of many other assets to plunge rapidly. Public stocks, crypto, NFTs, and private tech stock investments seem almost certain to take deep dives. Most of these can go to zero, leaving nothing to be recouped for investors.
Real estate is a great income producing machine. In fact, regardless of temporary fluctuations in paper values, good properties can go on producing the same amount of income.
Even better, not only do these hard, tangible assets hold value, and prevent your investment from going to zero, but they can actually benefit from recession times.
This is providing that income properties are invested in intelligently.
6 Things To Look For In A Great Income Property Investment
1. Buying At The Right Price
The number one rule of investing is to not lose money. Thus, it is even more important now to be sure the right offers are being made. Which are preferably below value, with strong discounts to offset any volatility.
2. Ability To Control Asset Value
Don’t leave your financial future in the hands of the markets or market manipulators. Invest in properties with room for improvement, upgrades, expansion, and even for adding new revenue streams.
3. Diversified Income Streams
Multifamily real estate is great for building rich diversification of income. This may include affordable to more expensive units, mixed use properties, and a well-diversified tenant base. You do not want your entire building all working for Twitter or Credit Suisse right now.
4. Make Your Money When You Buy
Asset price is a part of this, in addition to buying into existing cash flow and performance.
5. Sustainable Rents
Don’t just count on Airbnb, or speculate on increases. Preferably you are getting into units with under market value rents, which are likely to grow, have not peaked, and people are moving into the area, not out.
6. Wise Management
Be sure property management is aligned with investor interests, and is not a conflicting profit center. They should not be burning good tenants or leaving vacancies open. They need to be maintaining reviews and online reputation, encouraging good stewardship and care of assets, and conducting proactive maintenance.