Real estate investors bought 18% of all homes sold in the U.S. in 2021, nearly one out of every five homes. This marked a 12% increase in investment purchases year over year — the highest it’s been in over two decades — and twice as much as 2020. In total, single-family residences made up three-quarters of all investment purchases.
The figures are staggering, but what do they mean besides “2021 was a great year to be a real estate investor?” And why were single-family homes such a hot commodity in the investment market?
For starters, COVID created the perfect storm of market factors to yield these results, starting with historically low-interest rates. Despite the panicky atmosphere that COVID created, investors, unlike the average homebuyer, were frequently more willing to take a risk. At the same time, they had the funds to do it.
Further data showed that investors in the U.S. targeted major metropolitan areas in COVID’s wake, including Atlanta, Miami, Phoenix, and Nashville. But that isn’t to say that they left suburbia for dead. On the contrary, as work-from-home culture swept the nation, many people opted for more space and better value in the suburbs or even further out. Investors banked on this shift from city living and put their money into suburban single-family residences, driving up prices in these markets as well.
Which leads us to our next point: the insanely high cost of real estate in 2021 priced out many middle-class homebuyers eventually. Either that or it sparked bidding wars that favored investors, who could pay all cash. In turn, these would-be homebuyers withdrew their offers, started their search anew in a different neighborhood or state, or switched gears toward finding a rental that offered them more bang for their buck.
Investors were well aware that the middle class comprised the rental industry’s main growing sector. Once they started snatching up a record number of investment properties in suburban markets, they targeted those who flocked to suburbia in search of a better value: the very people who could no longer afford to buy a home or were hesitant to do so after the pandemic.
Add to that the inflated cost of most basic goods and services in the U.S. and it’s no wonder that many in the middle class are still feeling the market’s tight squeeze, which has been unprecedented in recent memory.
Today, property values are continuing their year-over-year rise, with forecasted annual growth rates ranging from 6% (pre-COVID) to 16% (post-COVID). Rental rates are also growing alongside property values, with no end in sight to the residential investment strategy that’s been so successful after COVID.
But what does this mean for you — the starting investor, real estate agent, or industry professional — who wants a piece of the post-COVID pie? How can you take advantage of this rapidly changing market?
How To Leverage the Current Real Estate Investment Market
As the old saying goes, if you can’t beat ’em, join ’em.
If you’re looking to work with an investment group or management company, or if you’re developing an investment portfolio of your own, here are some key strategies to help you succeed:
1) Outpace the competition with high-end marketing
One way to outperform your competitors in the real estate investment market is to see what’s working for them and then do it better. Research the most popular rental sites. Study their platforms and learn how to use them effectively. Get familiar with their fee structure and what they’re currently listing on the market.
Also, check what media is allowed for marketing any given property. Most rental listings, as with sales, will show only photos of the home or commercial space. More often than not, property owners or their managing agents will take these pictures themselves with a smartphone and without regard for quality.
This means you can easily soar above the competition by adding compelling aerials, 360 tours, or walkthrough videos that are cost-effective and leave the viewer wanting more. High-end marketing will make your property look that much more attractive to potential renters and help you command top dollar for rent.
2) Create a winning formula for high-performing locations
With so many postponing their forever-home purchases and trading in the city for suburbia, proximity to restaurants, schools, and parks is more important than ever. In most cases, the home’s condition will rank low on the renter’s wishlist, behind the space it offers and the access it provides to neighborhood amenities. In other words, location is key, especially in today’s rental market.
For a streamlined approach, you can easily search these stats online and establish metrics for the areas you’re interested in. For example, you might choose to target school districts with a 6-rating or higher, shopping opportunities within a one-mile radius, or vacant lots within a certain range of the listing.
3) Keep a professional real estate photographer on standby
Last but not least, having access to a nationwide network of professional real estate photographers means that you can shoot any property you like, anytime, anywhere.
We all know that the best opportunities in real estate go fast, so you’ll want to work with a real estate photographer who’s also ready to go. With your marketing plan outlined in advance, and your financial parameters already established, missing out on a great real estate deal simply because you don’t have someone to shoot it is no longer an option.
With a real estate photographer in your pocket, you can confidently pounce on any property that meets your criteria. That’s the power of high-quality real estate photos in today’s digital era: they attract a higher viewership, generate more leads, and help you close more deals.
To find a professional real estate photographer near you, visit our homepage.