- July 10, 2019
- Real Estate
Real estate has been considered a reliable wealth generator for centuries, and continues to be an ideal investment instrument. Investing in real estate comes with numerous benefits, such as building equity, generating wealth through property appreciation, steady passive income from rental houses, and a hedge against inflation. Identifying the right real estate investment opportunities, however, requires extensive research, extensive market knowledge, and the right timing. That is why it is always advisable for investors to partner with a trusted investment management firm such as Fig Tree Capital ventures. While no one can say for sure that 2019 will be one of the best years for real estate investments, critical market pointers seem to say that we’re almost there. Continuing on the subject, in this blog post, we present four reasons why the time to invest in real estate is NOW. Read on.
The steady growth of the economy and increased job creation is continuously pushing real estate prices above the roof. This increase is directly attributed to the sustained growth of NOI (Net Operating Income) amid steady rate caps and steady demand for real estate investments. Several property sectors have been gaining since the start of the year.
Ample Room for Expansion
According to history, the real estate cycle averaged about 18 years while the current one is just at 10 years. Still, the current cycle has had a rather sluggish growth, posting comparatively low gains in its phases of expansion. In the 1970s and 1980s, the real estate expansion ran for 155 months (1976-1989) with an annual profit of 18%. The next cycle began in 1991 through to 2007 (190 months) with an average yearly return of 15.8%. As for the current expansion that started in 2012, the annual yield has been a paltry 9% -61 months into the cycle. This inspires a lot of optimism in two ways. Firstly, the expansion phase is expected to hold for some time. Secondly, better gains are expected from the remaining part of the cycle as the market recovers from the current negative perception.
Lowest Rental Vacancy Since 1990
The limited supply of rental units, which is the lowest since the 1990s, is pushing up the prices in the current rental market. Also, some cities such as San Francisco seem to have hit their pricing ceiling. The average rent in the San Francisco Bay area increased by $578 between the second and third quarter of 2019. These two factors are squarely behind the double-digit growth of rent in several mid and low tier houses across the country.
Sustainable Long-term Returns
Every investor can build attractive returns from different real estate investments. It is particularly a great long-term investment irrespective of the recent turbulence in the industry. Three decades ago, real estate was less valued than it is today. Additionally, if your tenants are paying your mortgage, real estate investment becomes even more profitable. Other reasons to consider real estate investment opportunities are tax savings, the hedge against inflation, and affordable mortgage rates.
Investing in real estate is great for diversifying your portfolio due to low or negative correlation with major asset classes. At Fig Tree Capital Ventures, we believe that the looming recession notwithstanding, real estate investment opportunities are worth the consideration of accredited investors and HNIs. Not every piece of real estate, however, is worth your money, and you must be absolutely sure when going ahead with any real estate investment opportunity. This is where our real estate investment consultants can help guide the way. To learn more about our real estate investment fund, write us at contact us or call (866) 300-2170.