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Real Estate Crowdfunding Projects — 9 Reasons it’s a Great Option for Investors

Investing in real estate requires big money, right? Every headline shouts of new developments that cost tens of millions of dollars, which makes it hard to imagine ever breaking into the investment game. But there is a way in through real estate crowdfunding — powered primarily by social media and word-of-mouth marketing. 

Crowdfunding consists of many people contributing a small amount of money to fund a goal. In real estate, the goal might be to pay for an apartment building, an industrial site or raw land for future development. The investors — those who contributed a little bit of money — then become shareholders in the investment. It’s similar to fractional real estate investing, where investors own a percentage of a property.

Real estate crowdfunding gives individuals and businesses access to a large amount of capital quickly, and the potential return on investment is impressive. Real estate crowdfunding generally outperforms the stock market, sometimes at double or triple the rate. 

READ: Start Investing in Real Estate — 6 Tips for Millennials

Even though every investment carries the risk of loss, there are 10 significant benefits of investing in real estate crowdfunding projects.

1. You don’t need much money to get started

Real estate crowdfunding is a great option if you’re just starting out and have limited funds to invest. The price of entry is very low, sometimes just a few hundred dollars. 

2. You can diversify your investments

You could use your nest egg to buy another investment property, but then you’d have two residential properties to manage. Real estate crowdfunding allows you to dabble in everything from commercial properties to medical centers. This diversity in your investment portfolio is always a good idea.

READ: How to Invest in a Rental Property with No Money Down 

3. Real estate crowdfunding creates passive income

If you are looking for a steady stream of passive income, real estate crowdfunding can help. Through rental income or smart development, it’s possible to generate regular income without hands-on management or daily involvement.

4. You get expert advice

Real estate experts typically manage the best real estate crowdfunding platforms. You can harness this expertise when selecting and managing potential properties. 

5. It’s easier to liquidate

There are cheap ways to buy a rental house, but if you ever need access to the equity you build when you rehab a foreclosed property or a vacant apartment building, you’re in trouble. When you invest in real estate crowdfunding, selling your shares in a secondary market is possible. It’s not as fast as heading to the ATM to withdraw money, but it certainly beats trying to liquidate a property.

6. The risks are clear

Crowdfunding platforms run by real estate experts also come with an analysis of a property’s potential risks and profits. This reduces the burden on individual investors and minimizes the risks. 

READ: How to Reduce Real Estate Investment Risks — 12 Expert Tips

7. Transaction costs are low

Buying a property on your own comes with tens of thousands of dollars in closing costs, plus whatever renovation or marketing costs are incurred. Real estate crowdfunding projects have a much lower entry price, with costs divided among investors. This is just one way that real estate crowdfunding encourages investors who were previously shut out.

8. Investors can get a foot in the door

Not everyone has angel investors like Elon Musk at their beck and call. For some investors, simply getting a meeting can be challenging. Investing in real estate crowdfunding democratizes investing for people who otherwise could not enter some investment markets.

9. There are global investment opportunities 

In addition to economic diversity, real estate crowdfunding projects can help you expand your portfolio geographically. Many projects are open to investors from across the globe. This allows you to take advantage of favorable exchange rates in other currencies. It also opens the door to emerging markets, where the profit margin can be much higher.

10. You have more control

Real estate crowdfunding and real estate investment trusts are similar, but REITs maintain control over the investment. Real estate crowdfunding is more in the hands of individual investors. 

You might give money to a REIT to decide where to invest, but with crowdfunding, you pick the project and jump in. On the other hand, crowd funders might decide to let a REIT manage the money they raise. This can be helpful for new managers who want someone with more experience behind the wheel.

Risks to consider

As with any investment, there are risks involved in investing in real estate crowdfunding projects. Although it’s possible to sell your shares in a secondary market, this type of investing is still harder to liquidate than investments in the stock market. 

In addition, managing investments through a crowdfunding platform requires due diligence. If your selected platform isn’t up to the task, you may experience project failure or poor returns.

Talk to a financial advisor if you’re considering investing in real estate crowdfunding projects. They can help you understand the risks and benefits of this investment strategy.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

Maximizing Investments: Harnessing Data-driven Real Estate Strategies

If you’re a seasoned real estate investor, you’ve probably used data analytics your entire career. Calculating cap rates, cash-on-cash returns or even putting together a standard comparative market analysis (CMA) are all forms of basic data analysis. And data-driven real estate strategies are more important than ever.

But as data analysis becomes more advanced, smart investors look for more creative ways to use analytics to supercharge their investment strategy. Every big industry player is already doing it, from the leading real estate investment trusts (REITs) to the websites offering real-time home values. So what are some unconventional ways that you can use data analysis to make smarter real estate investments?

READ: How to Get More Renters — 13 Ways to Optimize Your Airbnb Listings 

Look at nontraditional analytics

According to a report on real estate analytics from consultant firm McKinsey, 60% of the predictive power of real estate analytics comes from nontraditional variables. 

So while traditional real estate data strategies like analyzing vacancy rates, market performance and property features have significant predictive power when it comes to real estate investing, they collectively make up less than half of the total predictive power. 

So what are some of these nontraditional variables? The McKinsey report touched on data points like proximity to points of interest, such as the distance to a four-star hotel, and distribution of points of interest, such as the number of coffee shops in a 1-mile radius. 

The report also highlights metrics involving the number of swimming pool permits recently issued in the neighborhood, Yelp reviews for local businesses, the number and type of grocery stores in a 2-mile radius and a lot more. Again, when combined, these nontraditional data-driven real estate strategies were more predictive of an investment’s performance than conventional variables. 

So if you’re competing against other investors for a certain property, and you’re using both traditional and nontraditional variables in your analysis, while they’re only using traditional ones, they’re only getting half the picture. You have a huge edge.

READ: Identifying Emerging Real Estate Markets — Key Indicators for Lucrative Investments

Trust the experts 

Using data-driven real estate strategies doesn’t mean you have to gather up the raw data yourself, build an algorithm to analyze it and put together a comprehensive investment spreadsheet. Smart people have been refining real estate data analytics for years — and smart investors are happy to piggyback on their expertise.

After all, every time you check a property’s value on Zillow or Trulia, you’re using their industry-best automated valuation models, and when you use an online commission calculator, you’re performing a kind of user-friendly data analysis.

To take things a step further, you could invest in real estate through a real estate investment trust or REIT.

REITs are modeled after mutual funds, except they invest in real estate instead of securities. Similar to mutual funds, their portfolio is heavily determined by the use of sophisticated data analytics. They own and operate income-producing properties, and are publicly traded just like stocks, so they’re an extremely liquid investment, unlike physical real estate.

Investing in a REIT is a way to tap into some high-quality market analysis, and get your money into the market — without all the hassle of actually buying and owning real estate.

READ: Promote Your Real Estate Business — 5 Best Digital Marketing Strategies

Don’t just look at upside

Most investors are optimists, but you should try to avoid tunnel vision when you delve into data-driven real estate strategies. Looking only for the upside can lead you to miss some important risk factors — an oversight that you might regret later. 

When you’re carrying out an analysis, dig beyond the headlines to find variables that might portend trouble. Are there unique local factors that can lead to unusual property declines? If the property’s value has been buoyed by local businesses, how are those businesses performing? If they’re not flourishing, your investment’s value might be a mirage. 

You might also want to reassess “safe” investments that are already in your portfolio. What does a comprehensive analysis say about those investments’ markets? You can save yourself a lot of money and stress by getting ahead of an expected decline.

READ: Unlocking Buying Potential — The Ultimate Guide to Commercial Real Estate Investing for Business Owners

Finally, don’t assume that more is better, or that trends are linear — especially when it comes to nontraditional variables. Remember when we said the proximity of specialty grocery stores like Trader Joe’s can be a great predictor of rapid appreciation? That same study noted that this effect was limited, and that properties that were close to a high number of these establishments actually saw price declines. 

That’s why smart investors use analytics to predict risk as well as success. The more time you invest in researching your potential properties, the more informed and effective your decisions will be. 

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

How to Get More Renters: 13 Ways to Optimize Your Airbnb Listings 

If your real estate investment portfolio includes one or more Airbnb listings, chances are good you’ll want them to have as much rental traffic as possible. But with more people renting out their homes and spare rooms, how can you make your listing stand out in the crowded short-term rental market? Optimizing your Airbnb listing for search engines will ensure it ranks high on the first page of listings, leading to more clicks and bookings. Whether you’re an experienced real estate investor or listing an Airbnb as a part-time gig, here are 13 ways to optimize your Airbnb listings.

READ: Promote Your Real Estate Business — 5 Best Digital Marketing Strategies

1. Start with the right property

If you’ve not yet purchased a rental property, take the time to consider which one has the largest potential return on investment. Some investors look for condos or townhouses, while others focus on single-family homes. Others may even buy properties from a real estate wholesaler. Whatever property you want to buy, ask a real estate agent to complete a comparative market analysis so you know you’re not overpaying.

2. Give it a name

The title of your listing may seem insignificant, but it’s the first thing potential guests read. Make sure it’s eye-catching and unique. Focus on a specific element of the property that makes it stand out from others nearby.

3. Take great pictures

You don’t need to be a professional photographer, but photos are a critical part of your listing. Make sure the rental is clean and uncluttered, then take as many pictures as you can of the property, the location and any outdoor areas. 

Select the four best photos, and move them to the top of your listing. These will appear on the thumbnail.

READ: 8 Strategies for Weathering Real Estate Market Volatility for Investors

4. Focus on the description

What is unique about your property? What makes it the best choice for guests staying in your area? Perhaps it’s a great place to unwind, or maybe it’s perfect for large family vacations. Chances are good your rental won’t be for everyone, so identify your target renter and tailor your description to their needs.

5. List specific amenities

Adding your property’s specific amenities, such as gym equipment or breakfast supplies, is critical, especially if your rental isn’t in a “prime” location. This information can help make your listing more attractive and appeal to people who are searching for specific amenities.

At a minimum, you’ll need to supply what Airbnb calls “essential amenities,” including bedding, towels, toilet paper, and pillows. The more boxes you can check off under the amenities section, the better your listing looks and the more Airbnb likes it.

6. Be clear on the price

Price matters to travelers on a budget and to Airbnb. If you’re just starting out, look at similar successful listings near you. Consider starting your price 20% lower to attract renters, gradually decreasing this difference with each five-star review you receive. If you’re more than 80% booked a month ahead of time, your price is too low. If you have fewer than 50% of nights booked in the same period, it’s too high.

READ: How to Reduce Real Estate Investment Risks — 12 Expert Tips

7. Respond promptly

If a guest contacts you, responding within 12 hours makes it more likely they will book. In fact, the most consistently booked properties have a response time of an hour or less.

8. Be flexible

Cancellation policies across Airbnb range from flexible to strict. In the beginning, opt for a flexible policy, especially if you’re renting to families. You can always change your policy as your listing becomes more popular, but starting with the most lenient cancellation policy makes you more attractive to guests and Airbnb’s ranking algorithm.

9. Use instant booking

Homeowners renting rooms in their house might want to screen potential guests, but for those who are renting an entire unit, make sure Instant Booking is on. This allows guests to book without contact, and it’s a favorite feature of Airbnb. Your listing will likely drop in the rankings if you turn it off.

READ: Identifying Emerging Real Estate Markets — Key Indicators for Lucrative Investments

10. Consider discounts

The more nights your rental is filled, the more money you’ll make. Consider offering weekly and monthly discounts to improve both your search ranking and your bottom line.

11. Get verified

In addition to adding a host introduction that includes a description of you and a photo, become a verified host by uploading a government-issued ID. This security feature provides guests with peace of mind.

12. Review guests

At the end of each stay, Airbnb gives hosts the opportunity to review their guests and vice versa. Good reviews are what help a listing stand out and attract more visitors. Reviews are also a type of rental data that can help you improve your property and increase your profit.

13. Know when it’s time to get out

If you’ve struggled for years to make money on an Airbnb rental with no success, it may be time to sell your house and invest elsewhere. For new investors, it’s better to find a real estate agent and get out while you’re still breaking even than to hold on and lose money.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

Mastering Residential Real Estate Flipping: 10 Essential Keys for Success

Flipping houses has become more than an investment strategy. You can’t swing a hammer these days without hitting a flashy, somewhat glamorous depiction of beautiful flipped homes on television and social media. But flipping residential real estate is more involved and challenging than the half-hour TV shows and 90-second TikTok clips would have you believe. To succeed at residential real estate flipping, you’ll need to keep these 10 keys in mind.

READ: How to Reduce Real Estate Investment Risks — 12 Expert Tips

1. Research first

Successful residential real estate flipping begins with lots of research and planning. Don’t let the excitement of a new project cause you to leap before you look. Take the time to research the market in which you plan to invest, looking at property values and the types of housing that are more likely to sell. This research also should include looking for up-and-coming neighborhoods with the potential for a higher return on investment. 

READ: Identifying Emerging Real Estate Markets — Key Indicators for Lucrative Investments

2. Build a better budget

Flipping residential real estate requires more than the capital to cover a home’s price. Many new investors neglect to include the total cost of renovation (including a 10% margin for overage), taxes and utilities during the rehab, and how much it costs to sell the home once it’s done. Build a better budget by including these expenses and extra funds to cover unexpected costs.

3. Don’t pay too much

Don’t start your flip already in the hole. There are various ways to determine if a potential property is worth the money. Use the 70% rule (only paying 70% of a house’s projected after-rehab valuation for the initial purchase), taking into account the home’s location and size, as well as real estate trends in the area. It also helps to find the right loan for your property to ensure you aren’t paying too much as you rehab the house.

READ: 4 Biggest Risks of Real Estate Investing in 2023 and How to Minimize Them

4. Assemble your team

Teamwork makes the dream work, and nowhere is that more accurate than in residential real estate flipping. Even if you’re a skilled contractor who can easily envision the final product, you’ll need a team of reliable people working with you to bring that vision to life. This includes a real estate agent, skilled people in the trades, an accountant and a knowledgeable closing attorney. Once you have a team in place (and a couple of flips under your belt), you might start to expand your investments, buying multiple homes in cash to maximize profits.

5. Move quickly

You have a plan, and you have assembled your team. Now it’s time to move quickly. The faster you can complete a renovation or rehab and get your flip to market, the less you’ll pay in holding costs, such as utilities or taxes. 

6. Don’t skimp on quality

Although working quickly is key to maximizing your profits, it doesn’t mean you should skimp on quality or cut corners when it comes to your rehab or renovation. Many unscrupulous residential real estate flippers focus on cosmetic updates and ignore structural issues or dangerous problems with a home’s utilities. For best results, ensure your work balances quality with speed, and that all local codes and building regulations are followed. 

READ: 4 Biggest Risks of Real Estate Investing in 2023 and How to Minimize Them

7. Price it properly

Pricing a flip appropriately when it’s completed is essential. Price it too low, and you won’t make the profit you need to move on to the next property. Price it too high, and people will either choose to rent over buying or find another property altogether. 

8. Mind your marketing

It doesn’t matter how gorgeous the property is or how fine your craft is if you don’t market your flip well. Hire a professional photographer to take pictures and videos, then use a web designer and social media expert to create and promote interactive tours. Make sure your marketing targets your potential buyers, and make it easy for them to get in touch via email, DM or phone call.

READ: Promote Your Real Estate Business — 5 Best Digital Marketing Strategies

9. Negotiate carefully

You will, of course, need to have a number in mind when you price your property, but be prepared to negotiate that number and the terms of the sale. This might mean accepting a slightly lower price for a faster closing (which saves you carrying costs), or it might mean holding on to the property for a full-price deal. 

10. Learn from the process

Investing in real estate is a process of continuous learning. Those who are successful in residential real estate flipping know that the market is constantly changing, with new technology, trends and regulatory changes adding to its complexity. Stay open to the lessons each residential real estate flip can teach you. Successes and failures both offer a chance to get better at what you do.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

Real Capital Solutions Acquires $188M Medtronic Lafayette Campus

Real Capital Solutions (RCS), a real estate investment company based in Louisville, has acquired the Medtronic Lafayette Campus from Ryan Companies for $188 million. The acquisition consists of two five-story life science office buildings located at 200 & 250 Medtronic Drive, at the intersection of HWY 287 and Northwest Parkway. The 42-acre, 404,159 square-foot property was completed earlier this year and is Medtronic’s second-largest U.S. campus, which will eventually house about 1,200 employees. As the sole tenant of the property, Medtronic, the number one medical device company in the world, has guaranteed a 20-year triple-net lease.

READ: How Life Sciences Are Fueling the Real Estate Demand in Colorado

“This was a rare opportunity to acquire one of the only purpose-built life science assets in Boulder County,” said Marcel Arsenault, Chairman, CEO and Founder of RCS. “We have a long history of investing in Colorado real estate, especially when it’s in our backyard. RCS is focused on high-credit, single-tenant net lease deals and Medtronic fits this profile perfectly. This deal is extremely safe and ensures our investors receive a stable, safe cash flow over the coming challenging years.”

The timing for the deal comes at a point when commercial real estate is seeing values erode in nearly every sector. RCS has been positioning for this downturn for some time, selling much of its at-risk portfolio, amassing cash and investing in similar high-credit, single-tenant net lease deals for itself and other ultra-high-net-worth families who are concerned about preservation of their capital.

“Not many companies are able to do a deal this size,” said Adam Abeln, Chief Acquisitions Officer for RCS. “We can because of our financial strength and sellers know we are capable buyers. Near-term, we believe commercial real estate values, especially in multifamily and office, will fall and defaults will rise. The next six to 18 months will be tough for many owners, particularly those who will need to refinance. We have strong relationships with lenders and plan to be major buyers, especially here in Colorado.”

 

Real Capital Solutions is a highly entrepreneurial real estate company that invests smart capital and provides practical solutions for real estate opportunities. The company has purchased and managed more than 370 real estate assets, totaling approximately $3.5 billion in acquisition value. RCS currently owns 70 properties with over $2.0 billion of assets under management.

How the Construction Industry is Building a Better Future for Colorado

Colorado’s construction industry is facing a daunting task. The General Assembly’s housing task force estimates that our state will need an additional 325,000 housing units to accommodate new and existing residents over the near term. Fulfilling this mission requires workforce development, technological innovation and smart public policy. 

READ: How Modular Construction Could Ease Colorado’s Housing Affordability Crisis in 2023

Colorado’s shortage of affordable housing has been front and center for years, but the problem has become more acute since the COVID-19 pandemic. Earlier this year, Zillow released a report on housing needs in the 100 largest cities in the U.S. Denver’s housing shortage of 70,000 units ranked 13th in the country. Lawmakers at the state and federal level have responded with millions in public investment and high-profile legislation to address the housing supply deficit.

The mechanical, plumbing and HVAC/R contractors that make up the backbone of Colorado’s construction industry have heard the message loud and clear. 

To ensure that the industry is prepared to meet our state’s housing needs, we are working with our academic partners, including the Western States College of Construction (WSCC), to cultivate the next generation of skilled workers. All WSCC graduates can embark on journeyman education courses, which tee up alumni for a fulfilling — and increasingly lucrative — career in the construction trades. The construction industry is also hard at work to expand the benefits of these institutions to include associate degrees.

READ: The Economics of Housing Inflation in Colorado — Exploring the Supply and Demand Imbalance

Another key priority of Colorado’s construction industry is the development of new technologies to prepare member companies for the challenges that lay ahead. Construction firms across the state are already taking advantage of 3D modeling, virtual and augmented reality, and other tech platforms to improve efficiency and safety in their operations. Improvements in air condition and refrigeration systems, piping systems, drinking water and wastewater systems are becoming more critical as homebuyers and policymakers place more of an emphasis on energy efficiency and water conservation.

Advancements in technology will be happening faster over the next five years than they did in the last century, and we should be doing all that we can to embrace those advancements to support and build our workforce. In the skilled trades industry in Colorado alone, we are projecting a need for over 50,000 new employees by 2030. This comes at a time when the State Demographer is projecting a reduction in the available workforce more generally. Our ability to compete for this workforce will be largely dependent on technological advances and the benefits they provide to broaden our recruitment methodologies. We should be very wary of any legislation and litigation that would impair this industry as this could have a direct effect on our ability to build our next generation of tradespeople.

Colorado’s construction industry is investing heavily in the workforce and technological resources our state needs to tackle our housing supply shortage. Coupled with the support of our academic partners and elected officials, we can help build a future where all Coloradans have access to affordable housing.

 

Dave Davia serves as the Executive Vice President and CEO of the Rocky Mountain Mechanical Contractors Association.

8 Strategies for Weathering Real Estate Market Volatility for Investors

If there is anything certain in real estate investing, it’s this: nothing is guaranteed. One quarter, business is booming and properties are full. The next, the economy is slumping, tenants are fleeing and the bottom line is getting thinner and thinner.

Smart investors understand the sometimes-precarious nature of investing in real estate and plan accordingly. Here are eight strategies for weathering real estate market volatility.

READ: How to Reduce Real Estate Investment Risks — 12 Expert Tips

Why markets are volatile

Contrary to what some inexperienced investors might believe, real estate market volatility is not directly tied to renter demand. In fact, it begins well before a potential tenant comes to view a property.

Economic factors that can swing the market one way or the other include:

In short, anything that worries consumers about their paycheck’s future or savings account can affect the real estate market. 

READ: Surviving Food Inflation — How Colorado Restaurants Adapt to Rising Costs and Labor Challenges

9 strategies for weathering real estate market volatility

Fortunately, there are ways to protect your investments.

1. Don’t put all of your eggs in one basket 

Maybe you got into real estate investment thinking of creating an empire of multifamily units for rent. But what happens when new properties are built, the renter pool gets shallow, and rent is no longer paying the bills?

It’s okay to start with one type of property in the beginning, but smart investors whether real estate market volatility by investing in different properties that include:

Additionally, spreading your investments out across a wider geographic area can help mitigate unpredictability. When one area takes a hit, the other might be spared.

2. Kick the can down the road

No, this does not mean putting off dealing with current volatility. It does mean thinking of real estate as a long-term investment, not a short-term windfall. Even properties that are not lucrative in the beginning can have a big payoff as they appreciate over time.

Keeping this frame of mind means you won’t make any drastic moves when hard times hit.

3. Invest with other people

There are two basic ways to invest with other people.

  1. Real estate investment trusts (REITs): REITs allow you to invest in someone else’s property. This takes the burden of investment, property maintenance, and management off of you and enables you to diversify your portfolio with a variety of properties. Investment in a REIT can also be liquidated much faster than physical property.
  2. Get a partner: When you partner with another investor, you share that investment’s profit and burden. It’s essential that you make this a legal business partnership, not an informal contract between friends. 

READ: 8 Questions to Ask a Potential Real Estate Investing Partner

4. Protect your cash

Cash reserves are critical for unexpected expenses, including major unscheduled maintenance or a jump in vacancy rate. Another bonus of a stockpile of cash is that it’s possible to grab other investments at low prices when the real estate market takes a downturn. Cash deals are often favored during these times as other (unprepared) investors liquidate their portfolios.

5. Pay attention

When the economy slows or world events loom, don’t stick your head in the sand, hoping it will pass. Pay attention to market trends and changes in regulations that can eat into (or bolster) your portfolio. This helps keep you agile and ready to change course if needed.

6. Don’t ignore the flipper

Some real estate investors focus primarily on ready-to-rent properties. Don’t let this be you. Value-add properties such as total rehabs or properties that could be repositioned often generate a better return on investment (ROI) than those shiny new buildings.

7. Invest in technology

Old-school investors may prefer phone calls and paper deals, but digital technology can help anticipate and cope with real estate market volatility. Data analysis tools are critical in understanding:

  • Changes in property values
  • Market trends
  • Potential investments 

8. Make friends

Many people think real estate is about numbers, but it’s really about relationships. When times get tough, real estate investors who cultivate relationships with other investors, brokers, lending institutions, and contractors are better able to weather the storm. These relationships can offer a wealth of information, insights, and advice — as well as potential investment opportunities.

READ: Maximize Your Impact — The Power of Intentional Network Building

9. Think quality, not quantity

Remember Monopoly? There are two types of people who play Monopoly:

  1. Those who buy up every property they can, regardless of board position, cash flow, or how many other properties they have.
  2. Those who are strategic, waiting to buy blocks of property on the second half of the board (or all of the railroads and utilities).

To better withstand market volatility in real estate investing, be like the second Monopoly player. Think of purchasing quality properties that add to your portfolio, not just every cheap building that comes across your desk. This helps you build a small but stable portfolio that grows over time, right along with your bank account.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

AI-Enabled Real Estate: How Automation is Impacting the Housing Market

Many of us don’t readily recognize the role that AI is playing in real estate. Surprisingly, AI is already shaping nearly every aspect of the real estate market, from the way houses are being designed and constructed, to the real estate investment market. Believe it or not, in some ways it is even being utilized to customize and guide the home-buying experience.  

READ: AI Revolution — Unveiling the Transformative Power and Unforeseen Consequences

Home construction AI

Artificial intelligence design in home construction seems pretty futuristic but it may well become more mainstream in the coming years. One of the reasons is because of the sheer number of homes that will need to be built in the coming years to meet the demand. Think about the way that Colorado alone has grown over the past couple of decades. The world’s population is growing at an astounding rate — if all of those people are to be housed, literally hundreds of thousands of homes will need to be constructed. 

Already, AI-based tools are being utilized for things like the production of materials used in home construction. Other tools are already being incorporated into home surveys and inspections. Drones are commonly incorporated to evaluate the health of existing roofs or plumbing. Hundreds of companies are working to develop tools that may well completely change the home construction industry, making it both safer and more efficient. 

READ: The Economics of Housing Inflation in Colorado — Exploring the Supply and Demand Imbalance

AI-assisted home searches

All of this can ultimately add up to changes in how people look for homes in the first place. The incorporation of AI tech may drive down costs or make it easier to ascertain how much damage there is in an existing home. Some companies and real estate agencies are even launching products that help filter home characteristics and better drive customized home searches. 

Imagine looking for your dream home in Aspen or Boulder and being able to customize the search toward exactly the characteristics you’re looking for. Or perhaps being in Denver and being able to narrow your search to apartments that fit your specific needs in certain neighborhoods. Colorado’s real estate market has pushed up over the half-million dollar mark for the average home during the COVID-19 pandemic but is, fortunately, starting to come down a bit. AI-assisted home searches can help buyers find a wide selection of homes they’re able to afford. 

AI in home financial decisions

At a much higher level, home investment financial decisions are also being made with the help of AI technology. For example, AI can be utilized to help identify emerging markets that investors can make a killing in. A lot can go into these analyses such as where population growth is happening, home availability, how rental rates are doing, job growth and certain government policies that could promote growth. On the flip side, it can also be a help in determining when markets are becoming less lucrative. 

READ: Identifying Emerging Real Estate Markets — Key Indicators for Lucrative Investments

The tech can also do a number of other things that impact real estate investment decisions. Artificial intelligence can be used to value property, assess damages and review risk assessments. For instance, are increasing droughts in the West likely to cause risk with home investments? How are wildfires and other extreme climatic events playing into risk factors in the Colorado home insurance market? All of this information can be incorporated into a larger company investment strategy very quickly using AI-driven tools to help make better, more informed decisions. 

Of course, there are still a lot of risks with real estate investment in general. Markets are constantly changing and buying homes can be a bit too easy when you have the funding for it. The real work comes with managing the homes over the long term or putting in the money to complete the renovations that were planned. Artificial intelligence is a tool that can help inform decision-making — perhaps even a really great tool — but ultimately, the risk is on the person who makes the decision to invest. 

Artificial intelligence is making its way into every aspect of our lives, including the real estate market. The tech has the power to change real estate in nearly every way from home construction processes to how people search for their dream homes to how real estate investment decisions are made. It is a powerful tool, one that will forever change the housing market.  

 

Indiana Lee Bio PictureIndiana Lee is a writer, reader, and jigsaw puzzle enthusiast from the Pacific Northwest. An expert on business operations, leadership, marketing, and lifestyle, you can connect with her on LinkedIn.

How to Reduce Real Estate Investment Risks: 12 Expert Tips

Risk is part of any investment. Nowhere is that more apparent than in real estate. When you purchase a property, there’s no guarantee you’ll see a profit. Renters may stop paying rent, the economy might suddenly crash or the real estate market may shift. Here are 12 tips to reduce real estate investment risks.

READ: 4 Biggest Risks of Real Estate Investing in 2023 and How to Minimize Them

1. Diversify your portfolio

The golden rule of real estate investing is to diversify your portfolio. This means purchasing different types of properties so you won’t suffer too much financially if one investment collapses. 

For example, central retail locations, such as malls, have suffered a severe downturn as commerce moves online. Real estate investors who own other types of real estate, such as rehabbed houses or vacation rentals, will likely see better returns than those whose portfolios are stacked with brick-and-mortar shops.

2. Expand to other locations

Diversifying your portfolio is about more than just what you buy. It’s also about where you buy. This means owning property in urban, suburban, and rural areas and expanding property ownership to other states. Consider working with long-term tenants who are looking to move to another location. It’s a win-win if a landlord and a tenant can find a great new location together.

READ: Identifying Emerging Real Estate Markets: Key Indicators for Lucrative Investments

3. Monitor industry trends

Paying attention to industry trends can help you make better choices regarding new investments. Heed important industry data, such as:

  • Where people are moving and where they are leaving
  • Micro-markets, such as areas close to schools, transportation, amenities, and greenspaces
  • Cultural trends

Trends can be tracked through investing apps or by subscribing to major industry publications.

4. Make sure you’re insured

You’ll need comprehensive insurance for any properties you own. This is an industry standard and protects against vandalism, fire and other natural disasters.

If you are concerned about tenants defaulting or not paying rent, rent guarantee insurance is also an option.

5. Take care of your investment

It can be tempting to neglect maintenance and upkeep when money is tight, but resist this urge. Not only does proper care and maintenance protect the value of your property, but it also makes it more attractive to prospective tenants. Additionally, regular maintenance means you’ll catch small problems before they become big ones.

6. Rent carefully

Background checks that screen for criminal history and financial problems are important. These help you find the most reliable tenants for your property.

READ: Tenant Scams — How Landlords Can Spot and Avoid Them

7. Manage costs

Hidden costs can potentially increase real estate investment risks. On top of your mortgage payment, you should also expect to pay real estate agent commission, closing costs, taxes, insurance and maintenance expenses. 

If money is tight and the economy is uncertain, keeping track of every penny is important. Check regular bills — such as insurance, utilities and taxes — to ensure rates are competitive and you get whatever discounts you qualify for.

8. Find unique opportunities

Experienced and novice investors alike tend to stick with what they know: commercial, residential, medical and retail spaces. But they should also consider unique real estate investments, such as parking spaces and garages. Consider the number of times you’ve driven around a building looking for a parking spot, and you’ll immediately understand the value of these unusual investments.

READ: The Ultimate Guide to Commercial Real Estate Investing for Business Owners

9. Maintain a financial cushion

No matter how carefully you plan, predicting every twist and turn you might experience is impossible. For this reason, it’s important to maintain a financial cushion that you can spend in emergencies, which may include: 

  • Unexpected vacancies
  • Market downturns that lower demand
  • Unforeseen repairs

Every situation is unique, and there’s no specific rule dictating how much of a financial buffer you’ll need. Some investors might be comfortable with a few thousand dollars in the bank. Others advise against keeping too much cash on hand and recommend reinvesting every penny into a new property instead. If you’d feel more comfortable with an emergency stash, set up a high-interest savings account so your money is making money while it’s in reserve.

10. Follow the rules

Nothing torpedoes your profits faster than fines and legal fees accrued when you don’t follow the rules. Before purchasing or selling a property, make sure you have legal counsel specializing in real estate to review all contracts. You’ll also need to ensure the zoning is correct for your intended purposes. Changes in zoning can be time consuming and expensive if modifications are needed.

11. Make sure your timeline matches your goals

Some real estate investment risks are a long game. Do you have time for that, or are you interested in more immediate results? Few investments will be profitable overnight, but some will be more productive sooner. Commercial real estate has had historically high returns, while residential properties have had lower returns. However, a well-placed rental can produce consistent income. The property that’s right for you will depend upon your objectives.

12. Assemble a solid team

Teamwork makes the dream work. From your real estate agent to your property manager, assemble a solid team committed to you and your portfolio. Your team can help protect your investments, even in a challenging market.

 

Screen Shot 2021 12 28 At 113128 AmLuke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times and more.

Inside Denver’s Emerging West Side Story — Billions in Development Bring a ‘New City’ to Life in District 3

Early 265 acres of prime real estate in a once-marginalized neighborhood is slated for billions of dollars in development that will result in virtually a new city on the southwest side of downtown Denver. 

A handful of planned developments will bring tens of thousands of new residences, office space and shopping and entertainment to the Denver District 3, which includes the Auraria, Sun Valley, and West Colfax neighborhoods. 

“This was where nobody wanted to live,” said District 3 City Councilwoman Jamie Torres, a Denver native who grew up in the neighborhood. “It was built out later than the rest of the city because we were redlined for a long time. There was disinvestment in this part of town.” 

With so many developments teed up, it’s crucial that the city take a holistic approach to developing infrastructure including roads, bridges, utilities, water, pedestrian and bike paths and public transportation as well as services such as fire, police and paramedics. 

READ: How Life Sciences Are Fueling the Real Estate Demand in Colorado

The developments along the Platte River will be connected by light rail, pedestrian walkways and bike paths. They’ll also be stitched into Denver’s central business district to make walking from the 16th Street Mall to Sun Valley a pleasant experience. 

“Attention to connectivity needs to be a prime component,” said Kourtny Garrett, president and CEO of the Downtown Denver Partnership. “16th and Market to Sun Valley may be a 30-minute walk, but when you have a contiguous experience block by block, it’s the journey, not the destination. There’s an entire new quadrant of our city that’s about to pop, and that’s really exciting.” 

Urban Ventures President Susan Powers, a pioneer in the neighborhood who developed Steam on the Platte, said Meow Wolf was a catalyst for the planning activity that’s now happening in the area. 

“What needs to happen is that somebody needs to look at all of this together,” Powers said. “There’s so much development potential here, but somebody needs to be connecting the dots. The magnitude of all those projects being developed is like another downtown.” 

Projects in the works include the parking lots surrounding Ball Arena and Empower Field at Mile High Stadium; The River Mile, a mile-long stretch along the South Platte River that includes Elitch Gardens; Burnham Yard, which is owned by the Colorado Department of Transportation; and Sun Valley. 

The Auraria Campus is in the early stages of creating a new master plan; and ideas for reconfiguring Speer Boulevard and developing housing, a hotel and education and retail space are being floated. 

“The west side is the future of Denver for the next 50 years,” said Rhys Duggan, president and CEO of Revesco Properties, which is developing the River Mile project in the area. 

READ: Identifying Emerging Real Estate Markets — Key Indicators for Lucrative Investments

The River Mile 

A public planning process for The River Mile, a 62-acre development planned along the Platte River, was completed in 2018. The planning process resulted in a high-level vision for the mile-long stretch along the Platte River from Speer Boulevard to West Colfax Avenue. Developer Revesco Properties completed an Infrastructure Master Plan and entered a development agreement with the city. 

The plan requires reengineering the South Platte River, which will be partially funded with $350 million in federal money. 

As part of the plans and agreements set for The River Mile so far, at least 15% of future residential units will be affordable — some at the 0% to 30% area median income (AMI) level and some at the 30% to 60% AMI. The affordable units will include a range of home types, including larger three-bedroom units for families. 

The development will have a community recreation center. Because of open space requirements, everyone at The River Mile will be within a five-minute walk to a park and a three-minute walk to a public open space like a plaza. 

The area will also have new pedestrian and cyclist connections across the river and two light-rail stops to improve mobility throughout the area. 

Development planned for The River Mile includes 4.7 million square feet of commercial space, 520,000 square feet of retail space, 7,600 residences, including 934 affordable units, and 137,000 square feet of education and recreation centers. 

Revesco, the developer behind the art experience Meow Wolf, recently bought an additional 2.5 acres upstream from The River Mile. It will seek rezoning to allow more height on the property. 

READ: Grand Junction’s Opportunity Zones — A Prime Pick for Real Estate Development

Ball Arena 

Kroenke Sports & Entertainment (KSE) will connect Denver’s urban core with the River Mile and create a new “Sports Mile” on Wynkoop Street between Coors Field, Empower Field and Ball Arena. 

Last July, KSE submitted an Infrastructure Master Plan to the city to redevelop the 55 acres of mostly parking lots surrounding Ball Arena into about 12 million square feet of residential, retail, office, hotel and education uses. 

More than 20% of the land area, bordered by Speer Boulevard, the RTD light-rail line and Auraria Parkway, will be dedicated to parks and open spaces, and the redevelopment will make bicycle and pedestrian connections cross and over physical barriers that have stranded the site. 

KSE’s proposal calls for 6,763 residential units totaling 5.38 million square feet; 582,763 square feet of retail space; and five office buildings encompassing 2.9 million square feet. A 309-room hotel at the south corner of Wewatta Street and Speer Boulevard also is proposed. 

KSE is planning an ambitious sustainability program for the project, which prioritizes mixed mobility infrastructure and water management. A central utility plant on the city could form an energy loop that shares thermal energy within the district. 

Stadium District Master Plan 

Denver City Council approved the Stadium District Master Plan in June 2019. The plan provides guidance for a future mixed-use neighborhood hub on Empower Field at Mile High’s southern parking lots. 

The plan area is bounded by the South Platte River and Interstate 25 on the east, Federal Boulevard on the west and Lakewood Gulch on the south. The plan covers the southern portion of the stadium as well as adjacent properties, including the cloverleaf where Federal Boulevard and Colfax Avenue meet southwest of the stadium. 

The plan recommends that the northern part of Metropolitan Football Stadium District property remains flexible for game-day uses. 

The property is owned by the Stadium Investment Corp., a nonprofit venture between the Metropolitan Football Stadium District, the Stadium Management Co. and an affiliate of the Denver Broncos Football Club, which paused their redevelopment work in 2020. 

“Since this is privately owned land, redevelopment of these parking lots hinges on the property owner’s appetite to move forward,” said Laura Swartz, communications director for Denver’s Community Planning and Development department. “If the Stadium District wanted to resume a development proposal in the future, it would need to align with the community’s vision and recommendations in the adopted Stadium District Master Plan.” 

That vision is for a neighborhood destination that supports local arts and culture, provides a mix of uses in an environment that prioritizes pedestrians and bicyclists and activated and enhanced access to a variety of high-quality public spaces. The community also wants to see a variety of housing, including additional affordable housing, and jobs within the plan area for people of all incomes, ages and abilities. 

The plan is designed to encourage development that supports the Sun Valley community and surrounding neighborhoods by providing opportunities for small businesses and local employment. 

Burnham Yard 

The Colorado Department of Transportation (CDOT) acquired the 58-acre Burnham Yard property in 2021. The property is east of Interstate 25 between West Sixth and West Eighth avenues and extends a little more than a mile from 13th Avenue to Fourth Avenue. 

The site, which is zoned for industrial use, includes about two dozen buildings. 

At the time the deal was announced, the agency said it anticipated using about 17 acres of the rail yard to relocate train tracks, allowing for improvements to I-25 through central Denver while reserving right of way for Front Range Passenger Rail and an expansion of congested RTD light-rail lines. 

CDOT is studying all rail alignments to determine which would position the property for optimal development as well as provide the most efficient operations of freight and passenger rail through the site. 

The Colorado Transportation Investment Office, a CDOT enterprise, owns the property and is working with the city and other stakeholders to figure out which portions of the land must remain free of development so they can be used for surface transportation. The land that is not used for transportation will be sold to private developers. 

Sun Valley 

Over the past decade, the Denver Housing Authority (DHA) has been planning the redevelopment of Sun Valley, one of the city’s poorest neighborhoods. In 2016, the U.S. Department of Housing and Urban Development awarded DHA a $30 million Choice Neighborhood Initiative Implementation to implement the Sun Valley Neighborhood Transformation Plan. 

The redevelopment plan includes replacing 333 obsolete public housing units with new energy-efficient developments, including more than 950 mixed-income housing units. 

DHA completed the first phase — Gateway North and Gateway South at West 10th Avenue and Decatur Street — in 2021, and the buildings’ 187 units were fully leased by the first quarter of 2022. 

In February, it opened two buildings in the second phase of the redevelopment — GreenHaus and Thrive, which have both income-restricted and market-rate units that are now available to lease. 

“We’re doing one-for-one replacements for all original housing units — where we had five bedrooms before, we also have five bedrooms in the new structures,” said Erin Clark, DHA’s chief real estate investment officer. “We’re building everything to market-rate standards.” 

Buildings in the third phase — Sole, Joli and Flow — will open by early 2025. The third phase also includes a restaurant incubator space that will be managed by the Youth Employment Academy, which has a mission to serve young adults in breaking the cycle of generational poverty. 

DHA also is working with market rate developers who will buy parcels from the agency. 

In addition to housing, DHA is working with the city to build a 10-acre park that includes a civic plaza. It’s also opened Decatur Fresh Market, a grocery with an international flair, in the ground floor of the Gateway South building and is working with the Denver Botanic Gardens, which will help residents grow their own produce. 

“It’s so exciting that we’re finally embracing the South Platte River as an amenity after we’ve turned our back on it for so long,” Clark said. “All of these developments and redevelopments are us opening our eyes.” 

 

Margaret JacksonMargaret Jackson is an award-winning journalist who spent nearly 25 years in the newspaper industry, including seven years as a business reporter for The Denver Post covering residential and commercial real estate. She can be reached at [email protected].