Despite real estate being one of the safest investment pathways, it still presents unique problems. Without proper know-how or caution, you could underestimate your home improvement budget or deal with the consequences of months of vacancies.
However, you can prevent such a crisis by properly preparing to tackle it. And there’s no better way to prepare than by knowing your foe. Are you a newbie considering joining the real estate market next year? Or an experienced landlord looking to stay ahead of the trends? Whatever your reasons are, you should stick around to discover the top 3 challenges real estate investors face for 2023.
Top 3 Challenges Real Estate Investors Face for 2023
With international tensions still high, there’s no telling what effect it would have on the economy in 2023. Already, prices are beginning to surge in no small part thanks to the ongoing Russian-Ukraine. This global event has domestic implications on international economies, affecting the financial market of many locals worldwide. As such, many countries are now experiencing inflation as the price of gas, electricity, and other products rise.
Eventually, when this price surge trickles down the chain, it reduces people’s spending power. Thus, vacancy rates may rise as tenants find it harder to foot their rent bills. Although this reality is barely causing worry at the moment, it seems likely that a resolution to the conflict is not in view.
Higher energy cost has a domino effect on every industry. This hike directly correlates to an increase in the price of production, which eventually filters down to consumer goods and tightens the labor market. Earlier this year, US inflation hit one of its all-time highs at 7.5%. Consequently, the real estate market in 2023 could be considerably more volatile than it is now.
While real estate is renowned for retaining its value in times of inflation, hiked prices could present a problem for new investors. The limited money supply would undoubtedly make it harder to break into the market, and finding a well-paying tenant could be tricky. However, the latter could be easy to resolve with the right upgrades. You could consider investing in a comprehensive property management service to maximize ROI and navigate renovation updates.
Adopting New Technology
The covid-19 pandemic ushered in a new era of hybrid work that is undoubtedly here to stay. Many companies are now adopting a fully remote or hybrid business model that allows occupants to stay at home more. However, with this shift towards a more digitized world comes unique hurdles. The acceleration of decentralizing businesses and transactions could alter how most people invest in real estate.
By 2023, investors need to be more technologically aware of the latest development. And perhaps even consider investing in the multiverse. Outdated landlords that struggle with smart contracts, blockchain payments, and other digital innovations might find it adder to pull the younger crowd. Considering millennials, and even Gen Z, are quickly becoming the most dominant financial pillars of the economy, it’s essential to retain their interests.
Tips for Responsible Investing
1.Create a Business Plan
Before you commit to any investment, starting with a business plan is wise. Take some time to perform your due diligence, and create a strategy that’ll help you. Ideally, it would help if you started with your business goals, as it can be an effective tool in guiding your decision-making. If you want a steady income, you can play it safe and set out to buy a nice SFU in a good neighborhood. However, if some extra cash would be nice, you can look into renting out your second home as a short let.
2.Leverage Your Network
Another tip is to leverage your network. Whether it’s your physical or online community, it’s essential to have a group of like-minded individuals interested in your service. This term could imply establishing an online presence with a loyal following of potential tenants. It could also mean securing relationships with other professionals that could bring excellent referrals and give industry-related advice.
3.Keep up with Trends
If you want to stay in business, you need to know the latest in business. Now more than ever, the real estate industry is going through a metamorphosis, and you don’t want t to be left out of the equation. Thus, it would be best to follow some relevant blogs or social media channels that share the latest innovations.
4.Hire the Right Help
Finally, investing can be much easier if you hire the right help. Don’t underestimate how much financial trouble you could avoid with the proper legal counsel or how an agent can save you from months of vacancies and losing money. Do your research, ask the right questions, and find the best professionals to work on your team and protect your investments.
Achieving success in real estate can seem intimidating, especially when you’re new to the game, but it doesn’t have to be. On the contrary, it can be smooth sailing with the proper knowledge and help. As we highlighted earlier, the top 3 challenges real estate investors face in 2023 are:
However, knowing what challenges lie ahead and resolving them are very different things. Thus, it would be wise to utilize some of the responsible investing tips we’ve outlined, especially the point about hiring help. A professional property management company can guide you toward the best financial decisions for your property in 2023.