FIX-AND-FLIP PROPERTIES With supply low, fix-and-flip
Real estate entrepreneurs should take note of this inventory issue. If you have experience in residential construction, there are lots of oppor- tunities. As you know, prices are a function of supply and demand. Right now, supply isn’t keeping up with demand. Those who invest in increas- ing the housing supply through new construction stand to gain. INDUSTRIAL AND E-COMMERCE REAL ESTATE Online shopping rose 44 percent in 2020, and while that growth rate may slow, e-commerce will still grow overall. This has impacted the real estate game. It’s why we’re see- ing all types of properties turn into industrial warehouses, from old golf courses to office buildings. In 2020, demand for industrial warehouses, such as distribution centers, rose 25 percent. Investors would be wise to capitalize on this bright spot in com- mercial real estate.
FINDARELIABLE CAPITAL PARTNER We saw lenders tighten require- ments during the pandemic as they sought to mitigate risks. For real estate entrepreneurs, that meant lower leverage, a higher cost of capital, and a need for more cash reserves. As we have more clarity on the road ahead, such requirements may become less strict. However, one thing remains true for borrowers: You need a lending partner you can count on. Traditional banks may offer great terms, but take longer to process applications. If you spot a great opportunity, the deal won’t last long in this market. That’s why you also need a lender who can execute fast. WINNING INTHE NEW REALITY There’s no one-size-fits-all approach to risk management in real estate. In 2021 and beyond, those who stick to their best risk mitigation practices and leverage their exper- tise will win. As you look for deals, have a conservative capital plan and do your market research. This will ensure you can be opportunistic when the time comes. Finally, don’t forget to always have a reliable lend- ing partner at your side. By sticking to that playbook and having the discipline to execute, you’ll propel ahead as we emerge from the pandemic. And that will put you in a position for long-term success. •
remains a bright spot for investors too. As data from ATTOM shows, home flipping profits reached a new high in the third quarter of 2020. Given that home prices are expected to increase in 2021, home flipping profits should continue to be impressive. REOPEN PLAYS The COVID-19 pandemic was tough on hotels, restaurants, and other service-oriented businesses (and therefore tough on those who owned that sort of real estate). As vaccine distribution continues and it becomes safe to fully reopen, good investment deals may present them- selves. For instance, a PwC report predicts a rebound for the hospitality sector in the second half of 2021. If you discover a good deal, it makes sense to get out ahead of such reopen plays.
HOME FL IPPING PROFIT TRENDS
Gross Profit
Gross Profit
$80,000
60.0%
$70,000
50.0%
$60,000
40.0%
$50,000
$40,000
30.0%
$30,000
20.0%
$20,000
10.0%
$10,000
DonWenner is Founder and CEO of DLP Real Estate Capital.
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0.0%
30 | think realty magazine :: june 2021
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