Evolving Trends In Real Estate
Check out these evolving trends in real estate…
Understand how these changes are influencing the market, creating opportunities, and how you can invest to benefit from them.
Taxes, Taxes, Taxes
We already seem to be in a year of unprecedented tax hikes, the addition of new taxes, the stripping away of long used breaks and deductions, and proposed taxes.
One of the most notable of these new tax proposals has been the targeting of tax saving retirement accounts, including IRAs. Now, despite saying it won’t cost anything to pay for the new $3.5T spending bill, the government is proposing a new tax on unrealized gains.
That means you would pay taxes each year on the increased value of assets. While the ruling is still very cloudy, that would take away the interest or advantage into holding onto homes, retirement savings invested in long term hold real estate, stocks and even precious metals.
It may mean more cash being spent in the economy in the short term. Further supporting price growth. If you are going to pay the taxes each year anyway, then turning around house flips fast for lump sum gains just seems to make more sense.
Extreme Inflation
Hyper inflation seems unlikely to subside anytime soon. This certainly applies to construction materials and labor. Materials are costing even more due to shortages, increased delivery costs, and gas prices. Hyper inflation in gas and daily living expenses means construction workers need to get paid a lot more to justify going to work every day too.
This means the market favors real estate wholesalers far more than rehab flippers and house builders.
Soaring House Prices & Deep Discounts
If you haven’t noticed, the real estate market is in a really weird place too. In some cases house prices are up almost 100% year over year. In others oversupply means desperate owners and builders who are offering extreme discounts. Even though rents there may also be rising by 70% or more each year.
Financial Leverage
Real estate investment businesses and funds are trying to leverage even more capital now to take advantage of all of the opportunities out there, and to benefit from extremely low interest rates. Traditional mortgages may be virtually dead right now, but there is a ton of investment capital ready to be deployed.
Many real estate investors seem to be trying to create ‘pitch decks’ to raise capital like they see tech startups doing. Yet, few really understand what a modern pitch deck should look like, and how a good fundraising process is run.
With transactional funding wholesalers can skip all the hassles of borrowing and raising capital, optimize their leverage fast, and sell for cash quickly to those that have it.
