Real Estate Investors Optimism Continues to Climb
The survey results are quite favorable for investors and real estate investment companies. Let’s break it down and look at how investors feel and why they are optimistic.
Fall 2023 Investor Sentiment Survey from RCN Capital
Compared to the spring survey, investors who were polled for the fall version had a much rosier outlook, even with murmurs of a looming recession.
The survey’s more salient points include:
- 72% of the polled investors said that market conditions for investing are the same or better than one year ago.
- 75% of respondents believe conditions will remain stable or improve over the next six months.
- In the spring survey, only 30% of investors stated that market conditions were better than a year ago, but in this recent survey, that number climbed to 49%.
A report from analytics company CoreLogic also revealed that real estate investors remain motivated and optimistic. According to them, investors account for more than one in four home sales, and the interest of rental property buyers and fix-and-flip investors hasn’t faltered.
What’s our takeaway from this information?
In short, recent difficult market circumstances haven’t dampened investors' enthusiasm. Real estate is still one of the most stable and passive investment strategies. This is good news for companies offering real estate investments for beginners and experienced investors.
The willingness of investors to stick with real estate despite some of the market challenges is a sign that the prospects for the industry and investors alike are promising. Investor resilience demonstrates an understanding that real estate continues to hold value as a stable and attractive asset class. They catalyze increased market activity, growth, and innovation. Investor optimism fuels solutions to overcome obstacles, which, of course, benefits them and the market.
Challenges Facing Real Estate Investors
While investor optimism is strong, it’s crucial not exclusively to view the real estate landscape through rose-colored glasses. Wise investors weigh the benefits and the challenges of every opportunity. Here are a few of the challenges facing real estate investors.
- Market volatility: There is no doubt that the real estate market has inevitable volatility. Geopolitics and global events like a pandemic can present some unique challenges. Economies and markets are affected by international events, and this, in turn, can present obstacles for investors.
- Negative cash flow: Cash flow is the amount of money moving in and out, and a negative cash flow happens when more money is going out than is coming in. Low tenant rents, high vacancy rates, and flawed rental strategies are common culprits for negative cash flow in real estate.
- Increase in liability: Property managers and operators can be hindered by the seemingly endless government regulations that increase liability. New rules and laws have to be understood and followed, which can slow down the investing process. Some of these delays can result in significant negatives for the investor.
- Sustained inflation, strained supply chains, and tight labor markets: Economies run on the supply and demand model. When supply chains are interrupted, labor markets are tight, or energy costs rise, the result is increased prices. It naturally follows that investing in some real estate becomes more expensive, and the market becomes more volatile. A bright light is that private real estate generally continues to perform well during times of increased inflation.
- Rising interest rates: It goes without saying that rising interest rates are a challenge that the private real estate market must deal with. These rates have an impact on property values and how investments perform.
Even though these challenges exist, the choice to invest in real estate is still a smart one.
Because real estate is a tangible asset that offers a way to diversify a portfolio and generate income, it also appreciates. It also behaves as an inflation hedge, has tax advantages, and its strength is long-term stability.
If you're thinking about investing in real estate, the key to success is having both an understanding of your financial goals and of the market.
Alternative Investments in Real Estate
When the term “real estate investing” is thrown into the ring, many people will tend to think only about buying property to rent it out or flipping a fixer-upper. The truth is that these are only two investment possibilities.
Two other viable alternative investments in real estate are:
- Publicly traded REITs (real estate investment trusts)
REITs are companies that own or finance real estate across various property sectors. They are a great way to diversify your financial portfolio - remember that diversification minimizes risk. Publicly traded REITs are much like stocks, representing ownership in a portfolio of real estate assets.
Investors buy shares in REITs that are traded on stock exchanges. The nice thing about them is that an investor realizes benefits such as rental income and appreciation without having to be directly involved in the ownership and management of the properties. Unlike private real estate investments, REITs offer more liquidity due to being easily bought and sold on the stock market. Keep in mind that the trade-off is less direct ownership control.
- Short notes/notes/real estate notes
A note is short for the term promissory note - the paperwork outlining the loan terms between borrower and lender. Notes are an asset that can be bought, sold, or traded. When you invest in real estate notes, you are, in essence, purchasing a paper loan on a property. You have become the lender and collect the monthly payments, which include principal and interest, from the borrower.
The difference between real estate investing and note investing is that when you invest in notes, you are buying the debt on the property, whereas when you invest in real estate, you’re buying the property.
Real estate notes allow you, as the investor, to earn a steady income from real estate without the responsibilities of owning physical property. If the borrower defaults, you can foreclose on the property.
Connect Invest offers short note investment opportunities for residential and commercial real estate investors. For a minimum of $500, investors can invest in real estate debt securities that fund a diversified portfolio of collateral-backed residential and commercial real estate projects.
Investors choose short notes with durations of 6, 12, or 24 months. When the note matures, investors can be paid out or re-invested. There is zero overhead, no account fees, and good liquidity. Investors earn high-yield, monthly passive income from interest payments.
The benefits of Connect Invest’s short notes investment model include:
- Earning passive income
- Diversification which helps to reduce risk
- None of the responsibilities of property ownership
- Faster returns on investments
- Mitigated market fluctuations
- Choice of risk level
Earlier, we learned that according to the Investor Sentiment Survey, real estate confidence remains strong, and investors remain optimistic. Connect Invest short notes are a low-risk way to begin passive real estate investing.
Now is the time to begin investing in your future!