Meanwhile, back on Earth, Jeff Bezos wants to be your landlord

Jeff Bezos just can’t get enough. 

The king of e-commerce has partnered with Salesforce CEO Marc Benioff in the Space Race. There is formidable competition. Virgin Galactic founder Richard Branson, already a legend in air travel, has his own space ambitions, as does Tesla Founder and CEO, Elon Musk.

But back at mission control, Bezos is moving in on a neighborhood near you. 

Fintech enters the housing market

Arrived Homes is the latest fintech app that aims to remove obstacles between individual investors and wealth-building opportunities. 

At first glance, Arrived Homes seems like it’s lowering the barrier of entry to the real estate market. This will ring like a siren call to Millennials and Gen Z, already significantly behind where the Boomers were at this stage in their lives by measure of property ownership. 

But things aren’t always what they seem. Peeling back just one layer reveals that Arrived Homes could lock Millennials and Gen Z out of homeownership for good. 

Moving the goalposts

The cost of housing in the United States is primarily a function of supply and demand. As Millennials pay off student loans and negotiate salaries that resemble progress on paper, the cost of homes is always one step ahead. The price tag is always increasing a little faster, always just out of reach

FRED data on median home proce
Data source: FRED St. Louis

Raises and promotions never seem to keep pace with the rising cost of living, creating a confusing life conundrum that has resulted in postponement of marriage and a free fall in birth rates.

Millennials are now in their late 20s and their 30s, and Gen Z is on the shores of adulthood. Both cohorts rightfully want their share of the proverbial pie. 

Supply and demand, demand, demand

The pandemic brought on a Millennial wave of Urban Flight, as lockdowns made city dwellers realize just how small their living spaces really were. The influx of buyers in the already-tight liquidity market has led to home sales closing over asking prices by double digit percentages. According to Redfin, 70% of buyers faced bidding wars in May of 2021 – up from 52% of buyers in May 2020.

home buyers got in bidding war stat
Source: Redfin

Juxtapose that against a market whose supply stock has been stunted by city ordinances and permits, largely reserved for large developers with deep pockets. Not-so coincidently, those same developers also happen to be the benefactors of the housing subscription model

Another sneaky force adding pressure in the mix is the rise of AirBnB. The short-term rental app took even more housing chips off the table. Its platform further incentivized the mindset that houses are investment assets to capitalize on – not homes that people need to live in. 

These pressurized dynamics were already driving double digit ‘appreciation’ in real estate. According to a June S&P Global report, the U.S. housing market gained 14.6% in value year over year between April 2020–2021. At time of press, that trend is showing no sign of slowing.

Changing lenses

The real estate market’s ‘appreciation’ percentage gain is one way to present the fact that renting Millennials and Gen Z are now 14.6% further behind the American Dream, which for our intents and purposes here, starts with owning a home. It also loosely translates to “rent is probably going up soon.” 

That makes for two demand-side pressures contributing to the price increase in the housing market, while the supply side has remained stagnant. How will we solve this problem?

One solution that definitely won’t work: Jeff Bezos’ latest project, Arrived Homes. Presumably, it’s about to throw gasoline on an already overheated market.

Jeff Bezos is a man of profound talents. But great talent can be applied to bad visions with harmful ramifications. Indeed, misguided ambition can amplify the fallout of a small-context vision. 

American Dream for sale

Arrived Homes will accelerate the transformation of the American Dream into an ‘investment class’ that appreciates. That’s a big change from its place as a milestone of “making it,” and symbolism of freedom and independence.

The housing market’s assetization is reminiscent of the successful conversion of higher education into an investment, which learned everything it knew from the capitalization of health care.

Arrived Homes creates an access point for investment capital to flow into the pressure cooker that is the American housing market. It creates more demand without a corresponding supply expansion. You don’t need a finance degree to understand that when demand exceeds supply, prices will continue their exponential climb. 

Getting buy in

As material wealth continues to consolidate into fewer hands, young adults will continue to find themselves in perpetual debt without ever owning anything. 

world economic forum, you'll own nothing and you'll be happy
Still from World Economic forum YouTube channel for editorial commentary purposes

 In fact, the World Economic Forum came right out with recommendations to get comfortable with the idea of perpetual serfdom. What a message. But don’t worry: We’ll be happy. The economists at the World Economic Forum, who are much smarter than us, said so. Apparently, their cum laude is supposed to mean we’ll believe anything they say is true. 

Intentionally or not, Arrived Homes deceptively positions itself as granting access to a market that it is actually shutting people out of. Americans don’t need partial ownership in rental properties: They need a primary residence. The number of renters officially eclipsed the number of homeowners in 2018, and the divide has been growing ever since.

The math isn’t hard: Every property added to Arrived Homes’ portfolio is one house’s status going from owned to rented.

Collective commercial real estate investing

But it doesn’t have to be this way. HappyNest is a collective investing, real estate fintech app that, first of all, arrived to the market before Arrived Homes did. Our platform gives real people access to a market they never could realistically consider – the literal inverse dynamic that Arrive Homes creates.

HappyNest seeks to help people grow their primary nest egg, by opening doors to wealth-generation opportunities without slamming the doors on other future prospects. That’s because HappyNest’s investment portfolio consists of commercial and industrial properties, a lucrative asset class that has historically only been available to the wealthy and connected. 

But by pooling capital from real people, we can cultivate access to possibilities we couldn’t accomplish individually. By teaming up with HappyNest, investors aren’t indirectly driving up living costs and minimizing their homeownership prospects in the future.

Jeff Bezos’ next move

Wouldn’t it be wonderful if Jeff Bezos instead applied his incredible gifts and talents to something that enriched communities, not just board members? The man has the world at his fingertips – any further personal wealth accumulation at the expense of others is no longer ethically justifiable by ambition alone. It’s hard to imagine there would be a tremendous change in his living standard compared to what he’s established after his first few hundred billion. 

We already know Jeff Bezos can accomplish whatever he sets his mind to, for better or for worse. Who will be impressed if he makes another successful business? At this point, it’d be more surprising if he didn’t. Any more wins in this arena are expected –  boring, even.

Dramatic Crossroads Yu-Gi-Oh Card by AlanMac95 on DeviantArt
Dramatic Crossroads Yu-Gi-Oh Card by AlanMac95 on DeviantArt

Perhaps Bezos should consider expanding his definition of value and worth. He could challenge himself to look beyond dollars, patents, property, and copyrights. He could focus on drawing up the blueprint for more conscious capitalism – one that is focused on ‘win-win’ as opposed to ‘win-more.’ 

Can Bezos sell the vision of a cleaner, more equitable world? Could he work out the operational inefficiencies in energy production and consumption? Can he set up the infrastructure for every American to get quality health care with Prime-level speed? How about cut the cost of lifesaving products like insulin while still maintaining enough margin to support a healthy business? 

Can he change gears now, from building an empire, to investing in a legacy?

We hope we live to see it. If Jeff Bezos were to pursue a venture like that – we’d buy the first share. 

Thinking two steps ahead

But with this next venture – Arrived Homes – the answer appears to be ‘not for now’.

Perhaps the allure of becoming the world’s first trillionaire is something he simply cannot resist. It almost seems that the biggest weakness of the world’s most successful man is one most of us can relate to in some way or another – our own egos

Once he’s conquered the real estate market to his liking, he might still have time to achieve his greatest feat yet – merging aptitude with empathy, while Millennials and Generation Z sort through the damage his monumental success has inflicted upon their lives. 

Until then, we invite you to think not just one, but two steps ahead in your investing journey. Together, we can get our share of the American Dream, too.  

And some things are worth fighting for.

3 reasons why private REITs are strategic hedges against volatility

Despite the wild ride investors of all kinds have been on this year, their portfolios were almost certainly hit with volatility.

Change is afoot; uncertainty about the future lingers. 

Long-standing investment wisdom holds that markets do not like uncertainty.

The best we can do to manage risk under murky conditions is minimize the variables that contribute to volatility. 

Real estate and REITs are attractive, incoming-generating options.

But after an IPO, publicly traded REITs become subject to numerous irrelevant or amplifying market dynamics that do just the opposite. Many of those dynamics have little to do with the performance of the REIT’s portfolio value or management.

Here are three reasons why private REITs are an attractive alternative investment to hedge your portfolio against volatility.

They aren’t grouped in ETFs

A well-run, private REIT’s share price is a truer reflection of value than many publicly traded investments.

Consider this: According to Statista, the number of publicly traded ETFs has gone up more than seventeen-fold since 2005. 

At the same time, the number of companies listed on the stock market has been on the decline.

 

 

The result? The stock price of publicly traded securities is becoming increasingly tied with the performance of the overall U.S. economy and less directly correlated to the performance of the underlying asset itself.

The value of the investment asset is now intrinsically tied to the performance of all the companies in the fund. That may include competitors or even completely unrelated industries. 

There are 20 publicly traded ETFs that are composed solely of various REITs.

If one asset in the ETF dives, the value of all assets are impacted. The more ETF exposure, the more amplified the influence of groupings becomes.

You know what they say: The company you keep. 

By contrast, a private REIT’s share value is primarily a function of real estate appreciation and property management performance. 

That has proven to be a blessing for HappyNest’s portfolio. 

The tides of the last 12–18 months have hit various real estate sectors asymmetrically. 

Some sectors thrived: The demand for industrial properties, such as HappyNest’s shipping fulfillment center in Fremont, IN, grew substantially as major retailers dialed up their ecommerce capacity.

Meanwhile, large sections of the workforce were sent to work from home. Skyscrapers and office buildings across the country became ghost towns

How quickly the demand for office space and other hard hit sectors  rebounds remains to be seen.

Had HappyNest been grouped with an office space REIT in an ETF, its share value would have been impacted by office sector decline. That is despite the fact that HappyNest has no office space real estate in its portfolio. 

They aren’t shortable

Speaking of market forces that distort true value: Recent activity in GameStop’s stock price revealed that many players in the publicly traded markets aren’t always gunning for share value to grow. 

GameStop got lucky – they were given a second wind by retail investors. 

But hundreds, if not thousands of other publicly traded, struggling businesses have not (and will not) be rescued in the same way.

When hard times hit, the last thing any organization needs is numerous parties vested in their failure. 

Last year, as retailers across the country were forced to shut down, retail REITs faced many challenges. Vacancies mounted, decreasing revenue.  Property values themselves also took a hit as shutdown uncertainty cooled demand.

To make things harder, short interest in retail REITs skyrocketed. Tanger Factory Outlets for example, has over 30% short interest as of February 12th. That only adds anvils to already-heavy challenges.  

Now, this is speculative but, Tanger Factory Outlets probably wishes they were a private REIT. If they were, they would be insulated from the downward market pressure of shorts simply because, well,  their shares aren’t shortable. Simple as that. 

They aren’t day traded

One publicly traded share can be, and often is, traded numerous times a day. Day traders and algorithms are the arbitragers of investing.

They have little to no interest in the long-term success of an underlying company. For them, it’s not really an investment – it’s a trade. 

In fact, short-term traders are generally quite agnostic about what they’re investing in (especially the algorithms). 

Their strategy is to capitalize on short-term price action. That’s it. 

They jump in for a few hours, maybe a few days, and are gone as quickly as they came.

This ebb and flow of day trader capital in an investment pretty much only brings volatility to the share price, blurring the true value of an asset. 

The rise of commission-free and independent traders has increased the ranks of these kinds of traders substantially.

This type of activity is for the most part curtailed in private REITs. 

When investors buy shares in private REITs, they generally intend to hodl it for the long term. 

Shorting, ETF groupings, and day trading are all volatility variables that are neutralized when investing in private REITs. 

The result is a steady investment foundation on which to determine the best possible strategy to optimize shareholder return without fear of unexpected liquidity issues.   

HappyNest’s portfolio is poised for steady growth

While some real estate sectors have hit rough times, others have experienced tremendous growth. HappyNest’s portfolio been on the right side of that like, and has a bullish outlook.

All of HappyNest’s portfolio properties have active, 8-10 year rental agreements with major organizations such as FedEx, AutoZone, and CVS.

Given the balance sheet of these organizations, we expect our revenue flow (i.e.: rent) to remain steady as well as the value of our properties to continue to appreciate.

Everyone has to decide their own investing strategy risk tolerance. 

But no matter your investing style, having a steady and reliable investment in these volatile times not only brings ROI (and passive income), but also peace of mind.

And it’s hard to put a price on that. 

Inflation is coming – how will it impact the real estate market?

There’s little doubt inflation is coming. By some measurements, it’s already here. The question is: How do you proactively hedge your portfolio against this value crusher?

If history is any guide, private real estate is the heavyweight champion of inflation hedging compared to alternative investments

To better understand what lies ahead, we need to understand how we got here, and why real estate tends to perform well during periods of high inflation.

What is inflation?

Nobel prize-winning economist Milton Friedman once said: “Inflation is taxation without representation.”  

That’s because inflation is primarily a function of federal policy on things like interest rates and price controls. These things have the ability to erode your purchasing power significantly, and the decision makers are appointed, not elected. 

Inflation is often the product of increasing the supply of currency without a corresponding increase in economic output. 

It’s important to understand that the value of anything is dynamic and relative. Economists assess the value of a currency against things like other currencies, the cost of goods, and asset pricing over time.

As costs increase – particularly on fundamental commodities like oil, timber, or metals – purchasing power decreases. Inflation is afoot.  

How is inflation measured?

Economists have created several models to calculate the rate of inflation. 

The federal government has two ways of measuring inflation. There’s:

Inflation rate: Poorly labeled, what is often referred to as the ‘inflation rate’ is actually an index that measures the rate of change in inflation compared to the previous period (year over year, for example).

Consumer price index (CPI): CPI is a calculation based on the prices of consumer goods across various sectors, such as the cost of energy, groceries, housing, etc.

CPI is the metric that impacts the average American directly, as it is based on recurring household expenses.  As the cost of these goods rises, Americans feel the pinch.

In April 2021, Federal Reserve Chair Jerome Powell announced that the consumer price index had clocked in at 4.2% for the month. 

consumer-price-index-for

That’s the highest monthly rate of increase since 2008 – and we all remember what happened in 2008.

Inflation on Wall Street

This increase was expected. The Federal Reserve printed trillions of dollars in order to address the economic fallout due to shutdowns ordered in response to COVID-19. 

It’s hard to be economically productive in lockdown. As a result, the output of the United States (GDP) went down by 2.3%.  Not bad, all things considered.

Yet, the S&P 500 – an index that reflects the 500 biggest companies in the U.S. – gained over 16% during the same period.

Peel back another layer of this onion and things get even more eye-watering. 

Price-to-earnings ratios (PEs) are used to assess how expensive a stock is relative to the underlying company’s earnings. The higher the PE ratio, the more expensive the stock is. 

Between January 1, 2020 and January 1st 2021, the S&P 500’s overall PE ratio jumped from 24.88 to 40.3. That’s just shy of a 40% increase. 

S&P 500's PE ratio (2010-2020) (1)
Data source: multpl

Clearly, gains were not based on the improvement in performance of the S&P 500 companies, but on an influx of capital into the markets.

 

The logical explanation for this disparity is that a considerable portion of the newly minted greenbacks found their way into the stock market. 

Stocks simply got more expensive. Investors need more capital to buy the same amount of shares they did in 2019 without the fundamentals of the companies backing that price hike. This discrepancy reflects inflation. 

Inflation on Main Street

As asset and commodity prices increase, the purchasing power of the dollar declines. 

It’s a sneaky force that debases the value of your savings account. 

The cohort that ends up paying the heftiest price for inflation are wage and salaried workers – particularly if they don’t own assets that appreciate in value. Wages haven’t historically kept pace with inflation, let alone during years of elevated levels.

Put it this way: If you had $10,000 sitting in a savings account in April 2020, you’d need to have $10,420 in there now to buy the same amount of goods this year. 

And that’s only if you trust the numbers reported by the Federal Reserve. 

Other economists, including famed contrarian investor Michael Burry – who foresaw the 2008 Financial Crisis – believe the real rate of inflation is significantly higher than the numbers reported by the fed.

Michael Burry Twitter
Michael Burry Twitter

Real estate as an inflation benchmark 

In addition to the S&P 500, the real estate market serves as a reliable benchmark for inflation indexing. That’s because the need for housing remains fairly consistent, and the supply grows slowly.

According to a report by Zillow, the housing market gained 7.4% in value during 2020. Furthermore, Zillow projects this trend will not only continue, but accelerate throughout  2021.

If you own property, that’s good news. Your net worth just grew by however much your real estate asset(s) appreciated. 

If you don’t…you slipped 7.4% further behind on your journey to homeownership. That figure could well be 15% by the end of the year against the 2019 level. 

Time to ask the boss for a big raise.

Considering the real estate market gained 7.4%, and the S&P 500 gained 16% in 2020, perhaps Burry is right to raise an eyebrow at the Federal Reserve’s reported CPI of 1.4% for 2020.

Inflation on the global stage

A hallmark of inflation is that the prices of commodities start to rise, particularly in assets where production of the supply has bottlenecks or lead times, and therefore grows slowly.

To understand this better, it can be helpful to think of the dollar itself as an asset. 

After all, the global community certainly does. That is why many foreign governments hold large reserves of U.S. dollars. 

Relative to other countries, the U.S. has enjoyed decades of growth and stability. Subsequently, the U.S. dollar has proven to be  a reliable store of value, particularly relative to other volatile currencies.

However, the DYX –a measurement of the dollar’s value compared to a handful of other foreign currencies – has been melting like an ice cream cone on a hot summer day.  

dxy_cur

Because the U.S. dollar is the global reserve currency, a big slide in the DXY could prove especially catastrophic if foreign governments were to liquidate their holdings.

We don’t know, J.Pow, but those inflation numbers just aren’t checking out. 

Why real estate thrives during periods of inflation

When it comes to inflation and real estate value, it’s a classic case of ‘a rising tide raises all boats.’

From an investment standpoint, an asset with a fixed or slow-growing supply, but steady or increasing demand, will gain value over time.

Building a house requires permits, materials, construction time, and financing. The growth in supply tends to be slow. 

Constricting supply growth either further, the price of building materials for new homes have skyrocketed over the last year. 

The cost of lumber, for example, exploded 130% to historic highs in 2020 alone. Steel and concrete are also experiencing sharp price increases.

That adds additional challenges to expanding supply. Meanwhile, thanks to the work-from-home and ecommerce revolutions, demand in several real estate sectors has skyrocketed.

Money printer go ‘BRRR’

Now, let’s sprinkle in that extra three trillion dollars that got injected into the economy in stimulus measures. That alone would have led to significant gains in the real estate market. 

Let’s say we have a total economy worth $1,000,000, and a total of 10 houses in the real estate market worth $10,000 each. 

If the same economy then prints another $1,000,000 – without a corresponding increase in economic output – the total economy is now worth $2,000,000. Those same houses are now worth $20,000. 

Good if you owned one of those houses. Less than optimal if you didn’t, particularly if your bosses didn’t give you a 100% raise during the same time. 

The U.S. did not double the amount of dollars in circulation like in the example above. But it illustrates the point that real estate appreciates in tandem with inflation.

Interest rates, the accelerant

Despite shutdowns and high levels of unemployment, the real estate market gained more value in 2020 than it had in any other year since 2005. 

Part of that is that the borrowing costs of money have been historically low. Borrowing money is easy and cheap, enticing more potential buyers into the market. 

Institutional investors take advantage of these low rates by borrowing at 0% and investing that money into assets that yield 5% or more – like the real estate market, because hell, why not? 

Real estate is an attractive investment to whales, because it can generates income in the form of rent from the jump. Rent prices increase with the value of the leased real estate. (Brace yourselves, renters). 

By setting up REITs, institutional players can optimize yields through corporate tax exemptions

Given that the  Central Bank recently said they wouldn’t hike interest rates in the near term, the real estate market’s value appreciation is slated to continue as interest-free investment capital flows in.

This adds more weight to the demand side of the equation.

Get your slice

You may have caught on already, but there are winners and losers when it comes to inflation. 

The winners own assets and investments that appreciate substantially without any extra effort on their part. 

Unfortunately, waged and salaried workers whose pay doesn’t keep pace with rising commodity prices get pinched. Their purchasing power is increasingly eroded. The average 2–3% annual raise fails to reconcile the decline of the dollar’s purchasing power.

With indicators of inflation already flashing code red and graphs moving into exponential inclines, investing in real estate can protect your net worth against erosion in value.

Even if you’re not in a position to buy property, you can enjoy the market’s gains by investing in REITs like HappyNest, for as little as $10. From there, it’s entirely up to you how much you want to invest, every dollar of which carves out your stake in the real estate market and its future gains.

Getting on the right side of inflation

HappyNest generated 5%+ returns every quarter – for a total of over 20%  compounded annualized return – for its shareholders in 2020.

Our shareholder ROI outpaced both the S&P 500 and the overall real estate market’s gains, even accounting for the influx of capital and inflation. 

As HappyNest’s portfolio of properties appreciates in value, so will your investment. While investing always comes with risk, HappyNest’s properties currently have reliable tenants like FedEx and CVS on 8- to 10-year lease agreements. We don’t anticipate any interruption of dividend payments. We expect to have ample time to react in the event of an unexpected vacancy. 

Learn more about the properties in our portfolio.

5 Real Estate Market Predictions For 2021

Well, we think everyone can agree that 2020 was full of surprises.

This year spared no industry from a barrage of audibles, the full impact of which remains to be seen. As the year draws to a close, it’s about that time of year to look back at trends that emerged and make predictions about what comes next.

Longstanding real estate market trends that had held steady for over a decade saw sharp reversals. But are these circumstantial blips on the radar, or harbingers of a societal restructuring?

We look for clues to forecast real estate market trends for 2021.

Rent in big cities will drop

Up until this year, rents across the nation had been climbing steadily higher quarter over quarter for almost ten years. 2020 interrupted that: Rental prices in some of the hottest housing markets cooled in the second half of the year..

There were two key catalysts for the drop. Firstly, a huge portion of the workforce went home. For the first time, employees were longer restricted to a radius close enough to the office for a daily commute. Secondly, interest rates dropping to zero made loans cheaper for prospective home buyers.

For the first time in their lives, Millennials will experience a renter’s market.

A renter’s market goes hand in hand with an investment property buyer’s market.

“In places like Manhattan, many buyers have been priced out over recent decades,” says Jesse Prince, Founder and CEO of HappyNest, a real-estate investing app.

“The impacts of COVID may present unique buying opportunities for those risk-tolerant operators willing to bet that effective vaccines are right around the corner, large corporations will begin to repopulate the urban core office markets in the near-term, and business will rapidly return to normal.”

Buyers who picked up rental investment properties during the housing market dip of 2008 enjoyed decade long gains. History might be repeating itself.

Office space will be converted to residential units

Big city landlords aren’t the only ones poised for a tough year. Urban flight could have consequences on commercial real estate owners too. Thousands of businesses went bankrupt this year; needless to say, they won’t be renewing their leases. Many companies that were better fortified to withstand the turbulence of 2020 announced that their employees can remote work permanently, including headcount heavyweights like Google, Shopify, and Nationwide.

Others welcomed the elimination of a recurring lease expense on their P&L – especially those who found their teams were just as productive at home.

Presumably, the combination of these three factors will leave a dent in the demand for office leases. The question is – how big of a dent?

“Whether or not the current trend of urban flight will reverse in the post-pandemic New World remains up in the air – a risk factor that shouldn’t be ignored by developers underwriting any new projects,” Prince says.

Even prior to the Work-From-Home Revolution, the transition from suit to sweats was well underway. According to a research report by GetApp, between 2010–2019, the number of remote employees surged 400%.

Landlords in the right municipal zoning might consider converting their buildings into mixed-use, work-loft properties to fill vacancies faster.

“Converting underutilized office space into mixed-use properties is by no means a new strategy, one that proved effective in several urban markets during the recovery from the Great Recession.” Prince says.

The months following widespread vaccination will be critical gauges on COVID’s impact on office space demand in the coming years. For opportunistic investors, it could also be a rare ‘buy the dip’ opportunity in the commercial office real estate market.

Increase in demand for flexible lease office spaces

Business owners in new or long-term leases found themselves stuck paying for offices they weren’t using for the lion’s share of the year.

As leases draw to an end, business owners across the country will be asking themselves: What value does a shared working environment bring my company and my employees?

In a survey done by Publicis Sapient, only 15% of respondents said they wanted to return to the office full time, 21% said they preferred to work remotely full time, while 64% said they’d prefer a hybrid model with some days in office and some days remote.

Some of those employees just might get their wish.

Workshare spaces are intuitive solutions for what many experts are calling the rise of the Hybrid Work Model. As such, they could stand to benefit as the economy emerges from lockdown – especially in the early phases of reopening.

Businesses, smaller ones in particular, will appreciate the savings on overhead expenses without passing up the benefits of strong team relationships and in-person collaboration.

Other companies endured major economic blows in 2020, and were forced to downsize as a result. A return to a half-full office might prove demoralizing and warrant a location change either way.

With uncertainty still ahead, they may opt for short-term, low-risk leases and smaller spaces until things stabilize.

All of these circumstances could translate into new demand for workshare spaces as a byproduct of the pandemic.

Industrial real estate are poised for double digit growth

2020 brought record growth in the e-commerce sector as stay-at-home orders and pandemic fears made doorstep deliveries the primary means of acquiring goods for large sects of the public.

Though the reopening of retail locations may trigger a pullback in e-commerce activity worldwide, it’s unlikely to fully recede to pre-pandemic levels. Its convenience and wide product availability is sure to have won over former holdouts.

Even prior to 2020, e-commerce was experiencing healthy growth year over year – the pandemic only gave it a boost on its trajectory.

All those orders need to be processed, filled, and shipped from somewhere. That’s why industrial real estate, fulfillment centers in particular, are slated to be big winners for years to come.

“It often pays to follow the money. Goldman Sachs, and other institutions, have started taking large positions in industrial assets,” Prince notes.

Unlike other types of real estate markets, the upside is all but guaranteed. Major retailers including Amazon, Home Depot, Chewy, and Lowe’s have already announced plans to open fulfillment centers.

That makes the industrial sector a highly attractive investment property option with low-risk tenants.

“Industrial services have proven themselves essential during the pandemic. From a cash flow perspective, the risk that your tenant won’t pay their rent is reduced significantly,” Prince adds.

Purchasing industrial real estate as an investment property is out of reach for many investors. But you can enjoy the upcoming gains with whatever capital commitment fits your budget through crowd investing apps like HappyNest, which has a fulfillment center currently leased by FedEx in its portfolio of properties.

Housing market will continue to gain value

Months-long lockdowns raised some big questions for city renters, who had mostly seen their apartments as places to sleep, change, and store things.

Prior to 2020, they willfully made concessions in square footage to be in the middle of the big city action.

But after just one month of sharing a 300-square-foot apartment in lockdown, ‘home’ began to feel like a prison cell. Suburbia and small town America never looked so good…and spacious.

Renters leaving the city for some peace and quiet is good news for the housing market. As demand for single-family homes increased in suburban areas, so too did housing prices. Some areas hit record highs.

“People are fleeing urban markets in search of more space for them and their families. It no longer makes sense to pay $5,000+ for a two-bedroom apartment during a lockdown,” Prince notes.

Interest rates are expected to remain low through Q1 of 2021, further stimulating the hot housing market. That will help prospective buyers offset the rising list prices of homes.

“Markets are super tight because building has slowed down while demand has increased. High demand coupled with low interest rates are a recipe for higher home values and top dollar for sellers.”

The 2020s

With the pandemic yet to be fully behind us, these real estate market predictions are based on trends we already saw emerging in 2020.

The vaccine has the finish line in sight, and the post-pandemic world may finally arrive in 2021.

But if 2020 taught us anything, it’s to always keep our heads on a swivel.

Download HappyNest today on App Store or Google Play.

 

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Top 3 Ways To Invest In Real Estate in 2020

Over the next 18 months, the vast majority of real estate investors plan to increase their allocation of capital into real estate. If you’ve made most of your investments in the past in the stock market, you may be thinking of diversifying your income through a real estate investment app. What options should you consider? Here are the top 3 ways to invest in real estate in 2020.

 

Buy A Rental Property

One of the best ways to increase your monthly cash flow is to buy a rental property. When searching for a property, do the math. Make sure the monthly rent you will receive is more than the monthly mortgage, property tax, and insurance combined. Some real estate investment apps allow you to search for properties for sale, and may even tell you the monthly rent and expenses associated with the property.

 

One drawback to buying a rental property is the upfront cost and day to day management. To ease the stress of dealing with tenants, you may want to consider hiring a property management service to oversee the rental property’s daily operations. Purchasing a rental property can be a lucrative investment for non accredited investors.

 

Flipping Houses

Flipping houses can be a risky but rewarding investment. You’ll need to hunt down bargain homes that require some work, but therein lies the upside in your investment. Once you make any necessary repairs, you can potentially resell the property for a profit. Finding a home in foreclosure may be your best bet to finding a great deal, and could cost as little as $500 down.

 

Real Estate Investment Trusts

If you’d like to take a more passive approach to real estate investing, you may want to consider Real Estate Investment Trusts (REITs). REITs are companies that own, operate, or finance real estate. Publicly traded REITs are bought and sold on exchanges. Public non-traded REITs are bought and sold through brokers or directly from the REIT itself. There are three types of REITs: equity, mortgage, and hybrid; Equity REITs own and manage properties. Mortgage REITs lend money to real estate owners and operators to purchase properties. Hybrid REITs are a combination of both. Generally, all of them offer high yields relative to other types of investments.

 

Real estate investing is an excellent way to build residual income. You can start investing today with a real estate investment app that you can easily download online. As with any investment, be sure to do your due diligence and understand the risks associated with investing.