Property has long been a great addition to an investorâ€™s portfolio. Generally regarded as more stable than investing in stocks, the property is a valuable commodity to those looking to create an investment portfolio for themselves and their families.
In the wake of the coronavirus pandemic, something that seemed like a stable investment is now appearing as anything but. However, by taking the time to research the investment process, youâ€™ll see that the post-pandemic is still a good time to invest in property.
When investing in property post-pandemic, itâ€™s important to note that commercial and residential needs have changed forever. With this in mind, choose investments, in both the residential and commercial sectors that are complementary to our post-pandemic lifestyle.
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The role of property in an investment portfolio
History has shown that property to be a great investment. The stock market is prone to experiencing dramatic highs and terrible lows. However, the property market has generally been regarded as a safe bet.
This is because people are always going to need somewhere to work and a place to live. By investing in either commercial or residential real estate – investors reap the rewards of things like rent, which provides a stable supplementary source of income.
Ways to invest in property post-pandemic
When it comes to investing in property post-pandemic, itâ€™s important to be prepared. Research everything, making sure to account for lifestyle changes post-pandemic. You may even find that a kit home is a better real estate investment in this post coronavirus world.
Commercial real estate
As many industries have sent their workers home to work, businesses are beginning to realise they perhaps donâ€™t need a big office space or even an office at all. This is an important thing to consider for commercial real estate investors.
Post pandemic, instead of investing in big office spaces that will house one business, consider purchasing flexible spaces. This means spaces that can be occupied by multiple companies in case businesses realise they donâ€™t need huge office spaces anymore.
Residential real estate
The possibility that many businesses may realise they donâ€™t need commercial properties also affects residential real estate as well as property management. If people donâ€™t need to commute to work as their home is their new office, suburbs that were once in demand may be ghost towns and vice versa.
This means that when investing in residential real estate, research is king. Children will always need to go to school and people love being near the shops or attractions like beaches and parks.
Instead of investing in properties close to workplaces, choose suburbia. If people donâ€™t have to factor in travel to work, they are more likely to look for homes in the suburbs. By investing in an area where there is demand, you put yourself in a great investment position.
How to measure property performance
Once youâ€™ve chosen a property, be it residential or commercial, itâ€™s important to always stay on top of your investment. This includes everything from maintaining the standard of the property to measuring the propertyâ€™s- and therefore the investmentâ€™s- performance.
Net cash flow
One way of measuring performance is by determining the net cash flow of the investment. There should be detailed records of the propertyâ€™s rental income and expenses. This will show how much money has come in and gone out.
From this report, the investor will be able to determine the net cash flow and therefore the reward, or lack thereof, that the property is providing. By staying on top of income and expenses, investors know exactly what they stand to earn.
Another good way to measure a propertyâ€™s performance is by determining its economic vacancy rate. This means looking at the average percentage rate that similar properties have in the current market for vacancies.
The goal for a successful investment is to match the economic vacancy rate. Itâ€™s important to note that you donâ€™t necessarily want 100% capacity in a building with multiple tenants as this may mean that youâ€™re charging what is deemed to be below-market rent.
Investing in your dream home
The global coronavirus pandemic has changed a lot of things. However, this pandemic doesnâ€™t mean that people should turn their backs on investing in real estate. Instead, investing in a post-pandemic world simply requires more research.
In order to have the best investment opportunity possible, potential investors should look at both commercial and residential properties and determine what each propertyâ€™s likelihood is of turning a profit. Factoring in that the needs of workers and individuals have now changed.
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