The economy is changing in a variety of ways. In fact, we are going through a whole new economic revolution. What new real estate investment opportunities is it creating?
The New Economy
Some features of the current economy may be transient and part of regular cycles. Like high interest rates, increased challenges in finding credit and financing, rising unemployment, and an increasing number of consumers and businesses falling into financial distress.
However, love it or hate it, the AI revolution is going to be as impactful as the industrial revolution was years ago. It changed cities, employment levels, the landscape, and where people lived, and their financial status, as well as our entire food and commerce system. Many of the effects are already happening under the surface. Even if the data won’t publicly show up for another quarter or two.
Here are four opportunities this is creating for investors.
1. Failed Building Projects
While the new construction sector has remained strong until now, it seems highly probable that capital and financing constraints are going to result in more uncompleted projects. Along with the fact that many builders are running out of cash due to rising costs, along with miscalculating local rental markets.
These are opportunities to go in and finish new buildings and communities. Acquiring assets at great discounts and coming out with a premium product to rent or sell.
2. Buy To Rent Homes
Consumer distress has been building. Many are now out of credit and savings. They cannot refinance. They are beginning to fall behind on payments. Or they are just fearful of losing the equity windfall they’ve built up over the past few years, or losing their jobs to AI in the near future.
Many are now willing to sell for less, with buyers owning a stronger negotiating position for terms as well.
All of these owners still have to go somewhere. Rents are strong and will be supported by a captive and growing renter pool. Making buying to rent single family homes an attractive space to engage in right now as well.
3. Failing HOAs and Condo Associations
It is at this phase of the economy when many condo and home owner associations also begin to fail and fall into financial distress.
As more consumers fall into default on other bills, they eventually fall behind on association dues as well. Meanwhile associations are grappling with escalating costs. Which can be compounded by storm or other natural disaster damage, and the need to levy special assessments.
This is further compounded by the fact that associations which do not have adequate financial reserves do not qualify for owners and buyers to refinance or obtain a new mortgage with many lenders. Resulting in units being tied up in legal battles or being abandoned.
Much of this can often be solved by new, more experienced, and more efficient management. With opportunities to convert entire projects to rentals, and vice versa.
4. New Markets
Between inflation, remote work, and AI, the demand for new places to live is growing, as is the
need for affordable rentals, where investors can find opportunities for great yields and growing new locations that are gaining popularity.