How to Make Money in a Post-COVID Real Estate Market

It has been a long time coming, but there is hope that we are entering the endemic stage of the coronavirus. The lifting of mask requirements in many areas is just one of the many indications that life is back to normal – although it’s certainly a new normal.

Many sectors, particularly office, retail and hospitality, have been hit during the pandemic. There are signs of recovery, although the stock market has had more than its fair share of ups and downs. If it’s getting to be too much for you, it’s time to diversify your portfolio.

While real estate investing carries its fair share of risks, there are some smart moves that can pay dividends as we enter a post-pandemic real estate market. Here are four of them.

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1. Add REITs to your portfolio

Real Estate Investment Trusts (REITs) are the ideal solution for investors looking to diversify their portfolios without becoming a landlord. REITs own and operate real estate in a variety of sectors, spanning everything from healthcare to hospitality to residential.

There are two sectors in particular to watch post-pandemic: data center REITs and industrial REITs. The need for data and network solutions has increased, particularly with the shift to a remote and hybrid workforce. So is the need for industrial and warehouse space to build, store and transport all the products and consumables we buy in our ever-increasing dependence on online shopping.

Both types of REITs are considered recession-proof because the leases are typically long-term — some industrial leases have terms of up to 25 years — ensuring a steady stream of income. And since REITs are required to pay out 90% of their taxable income to shareholders, those dividends can add up quite nicely, depending on your investment strategy.

2. Rent out your holiday home

Airlines have lifted their mask requirements, allowing many to move around the cabin – and around the country – more freely. As a matter of fact, The New York Times reported that the World Travel & Tourism Council has forecast US tourism to return to pre-pandemic levels this year, equivalent to a $2 trillion economic boost.

Do you want to take part in this stroke of luck? Place the renter welcome mat in your vacation home. Yes, you deserve a break too, but if you don’t plan on using your vacation home all season, list it on a vacation site such as Airbnb or VRBO (owned by Expedia group) for Premium plans now that vacation plans are back in full swing.

3. Invest in multi-family real estate

High real estate values ​​combined with rising interest rates have resulted in many potential home buyers remaining renters. Apartment List reports that rents are up 17.1% year-on-year. Investing in apartment buildings offers multiple income streams as there is more than one tenant living under the same roof – be it a duplex or a multi-unit apartment complex.

If you don’t have the money to buy an apartment building, you might be looking at ways to convert your primary residence into one. Whether you’re renovating the basement as legal housing, building an apartment over the garage, or adding a backyard cottage, additional residential units (ADUs) represent an investment opportunity as well as a solution to the housing crisis.

4. Sell your house while the market is still hot

The high demand and low supply of housing continues, which has literally driven real estate values ​​through the roof. According to the National Association of Realtors (NAR), the median price is currently $375,300, up 15% year over year. Although buyer demand has eased somewhat, with sales down 2.7% in March, NAR reports, it’s still an excellent time to take advantage of a housing market that is heavily in the seller’s court.

If you’ve owned a property for a while and now decide to sell it, you can make a decent profit. But if it’s your primary residence and you’re looking to relocate, understand that most of that gain could be used up by buying a new home, unless you downsize or move to an area of ​​the country with a lower cost of living.

Whether you’re a landlord and own multiple properties, or you want to take a more passive investment approach and add REITs to your equity portfolio, real estate investing offers lucrative opportunities in a post-COVID market.

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