estate has an average annual return of 9.75%. That’s about on par with stock market returns, but multifamily housing offers investors much less volatility. No wonder multi- family investments from overseas individuals had been increasing before the pandemic. Ease of access With open capital markets, the U.S. makes it easy for foreign individuals to invest in stocks, bonds, real estate, and other assets. There simply aren’t the same barriers to foreign real estate ownership that some other countries have in place. This means that international investors typically don’t run into issues buying U.S. assets such as real estate. And when they need to liquidate the asset, they can do so effectively.
CONSIDERATIONS FOR SUCCESSFUL INVESTING
Consider passive investing. Geographic distance be- tween yourself and your real estate makes it difficult to manage the investment. There are plenty of REITs to consider. For instance, our DLP Housing Fund provides monthly distributions to passive international inves- tors. Understanding where the opportunity is. Ideally, you have a partner with boots on the ground. The Corona- virus housing market has changed things a lot, and op- portunities aren’t in the same places as before. Take a look at the hottest markets in the U.S. during the third quarter of 2020. The top three are Colorado Springs (CO), Reynoldsburg (OH), and Rochester (NY). Finding the best opportunities necessitates having a partner, as it’s hard for international investors to pinpoint good buys in this market when they’re not physically pres- ent. Staying updated on market swings. Now more than ever, investors have to pay attention to economic data, po- litical developments, and current events. The passing of stimulus, for example, could hold up the multifamily rental market. An improved third quarter could mean a quicker rebound for commercial real estate.
SOLID RETURNSWILL COMEWITH CHALLENGES
Perhaps even more notable is how American real es- tate has withstood this crisis. Home prices have risen in 96 percent of U.S. markets this year. Fundamentals are still strong and with low inventory, demand should continue to drive prices up. With that said, investing in U.S. real estate has be- come trickier. First, the Coronavirus has made market analysis and active investing in U.S. real estate more difficult. Inter- national investors simply can’t analyze the situation on the ground and manage properties in the manner they did before. Second, the market is moving in different ways than it did following the 2008 housing crisis. While we saw real estate prices skyrocket in major cities like San Francisco and New York City, it seems that the suburbs and second- and third-tier cities will see the biggest gains this time around. For example, the median sales price in Manhattan fell 18 percent in the second quarter of 2020. Howev- er, the median sales price rose 4.2 percent overall, according to the National Association of Realtors. Third, uncertainty exists around which direction the real estate market will take. There has been talk of an eviction crisis, which is saddening. Even if a stimulus package and greater economic recovery prevent a flood of evictions, more distressed assets should hit the market. This presents great buying opportunities for investors who know where to find them.
SUCCEEDINGWITH U.S. REAL ESTATE INVESTMENTS
Good investment opportunities exist around the world. However, given that the foundation remains intact, U.S. real estate continues to present opportunity for investors here and abroad. For real estate investors everywhere, refine your ap- proach to ensure you stay ahead of the market. If there is a geographic distance, or if you want expert guid- ance, partnering with a real estate investment company can lower your risk and put you in a better position to achieve solid, steady returns. •
DonWenner is Founder and CEO of DLP Real Estate Capital.
thinkrealty . com | 61
Made with FlippingBook Online newsletter