At one time, most individual investors thought it was impossible to add real estate to their portfolios in a personalized way. They knew they could choose stocks and funds that had real estate components. However, they were locked out from making more thoughtful property investments because of expenses.
Now, thanks to digitalization, the world is seeing a remarkable democratization of real estate investment opportunities. In fact, several trends are occurring now that should be exciting for investors. Even if you’re not involved in the real estate or investment community, take heed of these massive disruptions. They may be more relevant to your industry now—or soon—as well.
1. An embrace of fractional property ownership.
Forming partnerships to invest in large real estate entities, such as commercial properties, is nothing new. But being able to invest comfortably without knowing the other partners? That’s only arisen lately.
Thanks to technology and platforms such as RedSwan, investors can become fractional property owners. With fractional ownership, investors can more freely invest in larger commercial structures. Each investor owns a percentage of the property, which is represented as a token. After a year, when investors want to sell a token, they have the ability, without “rocking the boat.” To its credit, RedSwan makes use of blockchain technologies. It’s a bold, but smart move. After all, blockchain ledgers can’t be altered, ensuring they’re authentic, transparent, and current.
Takeaways from this trend for all businesses:
- Consumer personalization has become the buzzword of the 2020s. Finding ways to allow consumers to individualize their experiences makes them more loyal and satisfied.
- Blockchain isn’t just for NFTs. It’s an emerging solution to ensure that contracts and other legal documents can be easily verified and never altered.
2. A rise in homeownership among Millennials.
The Millennial generation is heading toward middle age. With this level of maturity come some natural life changes, including the desire for home ownership and property management. According to the National Association of Realtors, 43% of homes are now being bought and sold by Millennials. Some homes are being used as personal dwellings, whereas others are meant for long-term investments through tenancy.
Accordingly, many realtors are actively focused on appealing to the Millennial home browser. For instance, agents are offering more online opportunities for their clientele to view homes. Some are even dabbling in virtual reality (VR) as a way to help Millennials “tour” properties. This enables these 30- and 40-somethings to invest in homes with ease, convenience, and assurance.
Takeaways from this trend for all businesses:
- Millennials as a whole are entering into years of maximum buying ability. They have more disposable income, making them an effective target for marketing from companies of all types.
- Even though real estate prices may be fluctuating, people are still investing in real estate. With that thought in mind, all brands need to remember that they can still sell, even in times of inflation.
3. A move toward paying for real estate with Bitcoin, Ethereum, etc.
You may not be exploring the cryptocurrency scene. Plenty of real estate investors are, though. And they want to be able to pay for their investments with digital currency. As Benzinga explains, structuring a cryptocurrency real estate deal still isn’t simple. It’s just a matter of time, though, before someone cracks the code.
What’s the most straightforward path to investing in real estate with cryptocurrency in 2023? Some investors will likely just sell off their Bitcoin and Ethereum holdings. Consequently, they’ll have fiat money. Nevertheless, some intrepid cryptocurrency owners who want to unload real estate are looking for like-minded crypto-comfortable folks.
Takeaways from this trend for all businesses:
- Before long, many people will have digital wallets “filled” with cryptocurrency. If you’re not accepting any type of cryptocurrency, you may want to reconsider your reasons why.
- Everyone’s talking about businesses entering the metaverse. A good way to test web 3.0 waters is by embracing cryptocurrency in some way.
4. An uptick in rental prices.
Landlords who have already bought their investment properties are relishing 2023. The outlook looks very good for exploding rental rates. While that might not be good for renters, it’s exactly what investors want to see.
How high will rental rates soar? That’s to be determined. Rates rose by several percentage points in 2022. Yet many experts believe that there’s still a lot of wiggle room before they flatten out. Plus, with Gen Z moving into rental housing year after year, there shouldn’t be a lack of interest in apartments and condos.
Takeaways from this trend for all businesses:
- Facing a recession, many people may have an interest in making smaller purchases rather than large purchases. Consider ways to sell your products or services as “components”. Customers will pay less immediately, though potentially more over time.
- Consumers are interested in shorter contracts, such as a one-year lease versus a 25-year mortgage. If you have contractual agreements with clients, consider moving to monthly or quarterly arrangements.
The world of real estate investing is adapting to social, digital, and technological realities. It’s worth studying what’s happening (and exciting!) there to inform your upcoming strategies.
Interesting Related Article: “Successful Real Estate Investment – 4 Essential Things To Have In Place“