Many people continue to live in fear as the world grapples with the effects of COVID-19. Millions have lost their jobs and their sense of financial security. Stock markets are crashing, and entire economies are shrinking. In the face of so much uncertainty, most have grown cautious about money and how to protect it. There is a noticeable shift in priority from casual expenditures to more prudent financial planning and investing.
When it comes to investments, the pandemic has shown us that what was once considered lucrative may not be so. Typically, wealth management portfolios include investments in stocks, bonds, and currencies. However, in February of this year, just as fears of the pandemic were on the rise, nearly 6 billion dollars of stock market values in the United States were erased in the span of a week.
Economic landscapes are shifting as businesses close, and new enterprises take flight. However, it may still be some time before we see the economy stabilize. Even if you are awash with cash, diversifying your investments can help you navigate this uncertain time, and redirect your resources to more historically stable alternatives. One way to potentially provide high-performing assets to your portfolio is to invest in real estate. Of course, such investments also come with a good deal of risk. This is all the more reason to engage the help of a financial professional with experience in this asset class. If you are looking to place some of your wealth in property, here a few ways you can do that:
1. Invest in raw land
Open lots are the most affordable and low-cost means of building your real estate portfolio. Raw land is a finite resource, so it has a great potential to increase in value in the long run due to its scarcity. Presently, most developers have pushed pause on their plans of constructing new projects. Once businesses reopen and the economy learns to adjust to this new normal, there will potentially be an uptick in property growth and you may be able to ride this wave. Purchasing land may be a lucrative investment property because it requires minimal maintenance spend, low taxes, and no depreciation costs. When the time is right, you can plow more money back into it to develop it, or you can sell it off for a higher price.
2. Acquire condominium properties
Rental properties have the chance to be excellent investments because they are self-liquidating. An apartment building may give you recurring income enough to cover its mortgage costs or possibly more. Strategic location is vital in selecting rental properties, as its proximity to retail establishments, essential services, and commercial districts are key elements to driving demand. Be sure to choose your property carefully to pick a highly desirable building that will help attract many renters.
3. Purchase single-family homes
Houses and lots, especially those in the high-end segment, can offer the potential for significant capital appreciation in the long term. There has been some softening in the housing prices across America. While this may not sound like good news to most people, to investors, however, it means acquiring property at a cheaper rate. The beauty of the real estate market is that it is historically cyclical, and markets usually correct themselves after a dip of one to two years. There is an estimated decline in housing prices, but it is generally believed that it could be on the road to recovery by 2021. Of course, the continued pandemic may alter this outcome.
What we have learned is that even high net worth individuals and families are not immune to significant fluctuations in the economy. Experts agree that a diverse investment portfolio is essential to the goal of sustaining and growing wealth through considerable uncertainty. Real estate is a valuable and, more importantly, tangible investment property that may help you mitigate short to medium-term risks and put you on the path for long-term gains.
Do you need expert guidance on investment property? We offer comprehensive financial planning and wealth management services that help you grow your portfolio and secure your future. Call us today and let us help you achieve your investment goals.