Real estate investing has undergone a dramatic transformation in recent years, changing the way people invest and creating new opportunities. To prepare you for the future of real estate investing, the real estate professionals here at Gatsby Investment have analyzed emerging real estate market trendsand are ready to explain their implications for the real estate industry.
In this article, you’ll learn about:
- Technological advancements in real estate,
- The move toward green and sustainable development,
- Forward-thinking “smart cities,”
- Demographic shifts into different locations, and
- User-friendly online options for investing in real estate.
We’ll also explain how you can use these insights on the future of real estate investments to inform your own investment decisions as you build a real estate portfolio.
Technological Advancements in Real Estate
The term “proptech” has been coined to describe the many innovations in property-related technology. This general term covers everything from smart home technologies (such as automated climate control and lighting) to property management software and real estate sales tools. And real estate investors are finding new ways to use these transformative technologies every day!
Here are a few examples of how investors can use today’s proptech to make their real estate holdings more profitable in the future:
- Using “Big Data” to drive investment decisions. Real estate analytics software enables investors to make data-driven decisions by analyzing market trends, identifying growth markets, and comparing housing prices.
- Appealing to renters with smart home tech. If you are investing in rental property, you can reduce your vacancy rates and increase your rental rates by incorporating home appliance networking (commonly called “Internet of Things” or IoT). Doorbells that can be answered remotely via smartphone are already in use in many rental homes. Heating and cooling, lighting, door locks, and even kitchen appliances can be connected online to allow the renter to control the home from their phone, giving renters an impressive incentive to choose your rental over the competition.
- Selling real estate investments more effectively. Property owners have been using 3D models to present their listings online for decades. We’ve also seen video conferencing used heavily to provide “virtual tours” to prospective buyers remotely. We’re even seeing real estate agents use “virtual staging” to add digital renderings of furniture and decor to photos of vacant properties. The digital home tour experience will continue to become more immersive as virtual reality (VR) gains more traction. The future buyers of your investment properties may view the property through their VR headsets rather than visiting in person.
- Managing renters through online portals. Electronic rent collection, digital maintenance request processing, and Docusign leases have become normal operations for tech-savvy landlords and property managers. The services these online portals can provide to renters continue to increase. You might even have rental increases calculated by algorithms and lease renewals automatically drafted for your renters’ signatures without any human involvement.
- Conveying title through Non-Fungible Tokens (NFTs). Since the 2022 bust of the digital artwork NFTs, NFTs have gotten a bad rap in the general public. But the tech has legitimate real-world applications far beyond digital artwork. Without getting too technical, an NFT relies on the “blockchain”, which records transactions using unique bits of digital code. This transaction is instantly recorded on literally thousands of digital ledgers spread across servers all over the world, which is intended to prevent anyone from being able to tamper with the record (as the other copies continually check each other to confirm the legitimacy of each transaction). Each unique NFT then, can be used to prove ownership of an asset at any given time. Consider, then, how we prove the transfer of ownership when we buy and sell property. Through an NFT, the deed could be transferred digitally, bringing us a giant step closer to a “single-click” real estate transaction. In fact, multiple homes have already sold via NFT.
Furthermore, proptech is impacting the future of real estate investments directly by creating opportunities to invest in real estate real online. But we’ll save that for later in this list.
“Green” Properties and Sustainable Development
We are seeing real estate development trends focusing more on green properties and sustainable development. This growing focus, which we expect to see continue into the future of real estate investing, stems from environmental concerns, changing regulations, and the recognition of the long-term value associated with sustainable materials in property construction.
Green buildings, characterized by energy-efficient systems, renewable energy sources, and eco-friendly materials, have gained significant traction within the industry. Governments across the globe have enacted legislation to encourage sustainable development, offering tax incentives to green builders and imposing stricter environmental standards. These measures not only contribute to a greener future but also enhance the value of sustainable properties.
More homebuyers and renters in the housing market are prioritizing homes that have a lower carbon footprint and are made from materials that don’t deplete the planet. Similarly, more investors are sharing in the concept of being good stewards of the planet. So we are seeing a growing number of investors consider the environmental impact when evaluating real estate investment opportunities.
Smart Cities through Urban Planning
Urban planning is transforming with the emergence of “smart cities.” Smart cities are cities that integrate technology, sustainability, and community-driven design principles.
Smart cities are characterized by
- Efficient and sustainable methods of services like waste removal, water treatment, and electricity distribution.
- Higher-density housing to make areas more walkable and encourage diversity.
- Convenient public transportation systems to reduce the need for personal vehicles.
- Green spaces like public parks and nature preserves.
- Structures constructed with sustainable materials.
Smart cities are designed to meet the changing demands of the younger generations, who value connectivity, convenience, and environmental consciousness. By investing in smart cities that appeal to the renters and buyers of the future, investors can tap into high-growth markets and create sustainable returns for generations to come.
The work-from-home revolution, made possible by remote technologies and expedited by the COVID pandemic of 2020, has prompted mini-migrations of certain populations.
Pre-pandemic, most workers needed to live close to their place of employment. And most of the employment hubs were located in the downtown areas of major cities. This required people to live in urban areas.
But today, many traditional office workers can work remotely, reducing the need to live near the office. They now have the option to move to the suburbs and commute to work just a few days each week, or they might be fully remote, with the option to live on a ranch in rural Wyoming while working in NYC.
As the high housing prices of certain markets have made housing cost-prohibitive, we are seeing more interest in suburban neighborhoods. These areas offer more square footage for less money, greater quiet, and a less-frenzied pace of life.
However, as we found when taking a closer look at the exaggerated Los Angeles Exodus, many people prefer to remain in metro areas where they have access to the amenities that can only be found in a large city. The top 10 fastest-growing real estate markets of the past year might not be the largest cities in the country, but they are still major metros. The Hartford, CT metro area, for example, which saw the greatest growth for 2023, has a population of over 1.2 million residents. And, let’s not forget that many jobs do require workers to show up in person. And many buyers and renters prefer to live near friends, family, and amenities. So don’t expect urban areas to empty.
Populations may be shifting a bit, but real estate investing is still a hyper-local exercise. So future real estate investors will continue to evaluate neighborhoods and individual properties on their own merits rather than ignoring entire community types.
New Online Options for Real Estate Investing
In 2012, the JOBS Act changed real estate by allowing for online real estate investment platforms, which make it possible to invest in real estate online. These platforms have essentially democratized real estate investing, giving everyday investors access to unique deals that were once available only to the wealthy elite.
Take real estate crowdfunding and real estate syndication for example. These similar models of online real estate investing pool capital from multiple investors to fund a real estate project. The project could be anything from a short-term single-family flip to a long-term multi-family rental. The project is supervised by a real estate sponsor, who manages the entire project on behalf of the group of investors.
Because crowdfunding and syndication are backed by real-world assets, they are much more stable than other online investments, like cryptocurrencies. In fact, despite the potential for exceedingly high returns on volatile crypto investments, real estate beats crypto on every metric.
Online property investment platforms are the future of real estate investing. As more investors become aware of the benefits of real estate syndication, including the potential for high returns, reduced risk, and passivity, this investment model will continue to grow in popularity in the future.
Invest in Your Future through Real Estate with Gatsby Investment
While real estate syndication is the future of real estate investments, it’s also available today for investors who know where to look.
Gatsby Investment is a real estate syndication company with a unique strategy for maximizing returns and an impressive track record. From 2017 through 2022, the average annualized return for Gatsby investors was 24.22%!
And with flexible investment offerings that can serve both short-term and long-term investors, you’ll be able to find a real estate investment that meets your current financial objectives and secures your financial future.