There’s no doubt that 2020 was a tough year for many investors in just about every sector, but with the uncertainty of the election behind us and in light of the news of numerous vaccines on the way, there’s a renewed sense of optimism out there. I know I am very excited about the opportunities 2021 will bring. Here’s the way I see it…
The economic transformation was already happening. COVID-19 just kicked it into overdrive. In many markets, particularly here in my backyard, South Florida, people are abandoning their high-rise apartments and condominiums because of the pandemic. Even though the vaccines may be on their way, the migration has begun and there’s no stopping the trend now. Renters want to trade in their confined surroundings for the open-space living that comes with the kind of multifamily properties that I invest in. Not even the fact that landlords have significantly lowered rents of those apartments has been able to stop the exodus. This means that while the value of large apartment buildings goes down the value of multifamily communities is projected to rise, possibly by double digits.
Also, the trend of people working from home is going to be permanent in a lot of cases. People who used to live in small apartments in the city just to be close to work are now telecommuting from bigger and more comfortable residences in communities that offer more luxury and more amenities at much lower rents than you find in New York, Los Angeles, Atlanta, Chicago and the other major markets.
Another factor that’s going to have a lot to do with the shifting real estate investment landscape is the concentration of new jobs in certain up-and-coming markets. 30 markets containing 40 percent of the country’s population benefitted from a 60 percent job creation influx since 2015. People go where the jobs go. That means a growing demand for housing and it will continue for years because the nature of jobs is changing. Most jobs are found in companies that provide some type of service or in offices. Demand for IT support, support personnel, and healthcare workers in particular has grown considerably. When demand like this occurs, businesses in the same industry tend to cluster in markets where these services already exist. This stimulates the job market which attracts potential renters. See where this is going?
What it boils down to is that demand for housing in these markets will continue to grow at a quicker rate than developers can build new residences. This is good news for investors like me and those who invest with me because demand will keep going up…and so will rents.
Last year showed us how vulnerable local economies in smaller markets were. Unemployment went through the roof while home prices skyrocketed as people left the cities. Thankfully the unemployment rate is down. This means that more people will be in the position to rent a unit in a multifamily property in one the many markets that have benefited from people leaving the crowded urban areas.
Many of these up-and-coming markets present interesting opportunities, especially for entry-level investors. These units are tangible assets, which almost always increase in value and are by far the best and safest way to generate passive income.
Cardone Capital is constantly watching these areas for new opportunities and already has some deals in the works so anyone interested in this type of investment should definitely consider investing with us as we do all the work. Cardone Capital has nearly $2 billion in assets under management and currently pays out nearly $2 million a month in distributions.
By Grant Cardone
