Controversial Real Estate Investing Strategies For 2024
Famed investor Jim Rogers who made a fortune during the 1970s and early 1980s is famous for his contrarian approach to investing. While everyone is concentrating on one thing, he’s looking somewhere else.
His approach is deeply unpopular. Yet, time and again, he’s been proven right. Investors who do things a little differently from the crowd are often those who come out on top.
Interestingly, though, his strategies apply equally to his specialty - commodities - as they do real estate. It’s the people who have the knowledge and do the contrarian things that often wind up with the best results.
But what, exactly, are these contrarian strategies in real estate investing for 2024? What is nobody focusing on? Let’s take a look.
Investing In Office Space
Many people in the real estate market currently believe that office space valuations will soon crash into uncharted territory. But as in other crises, that could make them the perfect buy, just like housing in the depths of the financial crisis in 2009.
Offices are currently experiencing a double-pronged attack on their prices. The first part of the equation is falling demand. Businesses simply don’t need as much office space with more people working from home and cities effectively shutting down since the pandemic.
The second part of the problem is supply-side. Before the pandemic, developers went on a building spree in many major cities, constructing gigantic office blocks to house thousands of people. Now that’s gone away and it doesn’t look like it’s going to return.
Investing In Retail Units
A similar structural nightmare is affecting the commercial retail real estate sector. Businesses are moving out en masse because of higher rates, lower footfall, and incessant demand from online rivals. Most goods-based firms are leaving downtown areas and instead setting up operations online. Consequently, only a few types of business remain, like nail salons, and bars, and these don’t require as much square footage, reducing overall demand substantially.
Retail units are not an opportunity in themselves – demand probably won’t recover. But they are in excellent areas for residential redevelopment. Most are in central areas where the potential for generous resale valuations is high. Investors could potentially swoop in and buy qualifying buildings, convert them, and sell them as apartments or studios in attractive areas.
Investing In Forgotten Cities
Another unpopular but potentially effective real estate investing strategy for 2024 is to invest in forgotten cities. These are parts of the country that receive less attention from the investment community.
Finding real estate in these areas often means higher returns. That’s because it is significantly cheaper than the hotspots in coastal regions, so it has further to rise. Investors are also competing less for properties, leaving more to local demand.
There’s also the possibility that other investors are overlooking the strength of the local economy. That means that people with capital don’t understand how a city might develop and improve in the future. These cities often emerge from nowhere, and most people are late to the party.
Fort Lauderdale is a good example. Everyone knows that prices in the city are high now, but that wasn’t the case thirty years ago. Real estate was cheap, and most people preferred to put their money into other locations, like Tampa and Miami,
Today, you would expect these forgotten towns to be in the midwest. Cities here have far less housing pressure than coastal regions, partly because of economic decline. However, that’s set to change as the US onshores more of its manufacturing and revitalizes these areas.
Choosing Undesirable Neighborhoods
Another strategy that isn’t popular but might work in 2024 is to choose undesirable neighborhoods. These areas are often run down and have crime problems, but property prices are cheap.
A maxim in the real estate investment community is to buy a crappy house in a nice neighborhood. Then, you can renovate it and sell it for the prices going for the other homes on the street.
However, everyone is adopting this approach, making it hard to find profitable properties that are worth your time. That’s why it might be worth looking at undervalued neighborhoods as a whole.
When these areas transform, it always surprises everyone. Regions of cities can transform from no-go zones to safe, gentrified communities in just a few years, like Camden Town in London, or parts of upper Manhattan.
If you can spot these areas before they change, you can bag low prices today and sell much higher in the future. You can also avoid taking on too much debt, which could be a significant risk in 2024.
Using Crowdfunding To Buy Properties
Using crowdfunding to buy properties is another controversial and unpopular real estate investment strategy you could try. It involves going to the public, asking for money, and then repaying them (and yourself) from the profits you make.
These platforms can free up funds if you are struggling to get the capital you require from the bank. Many official lending institutions won’t provide you with any money if there are questions about your credit score or if they don’t like your redevelopment project.
That’s not always the case with crowdfunding. The community is constantly looking for ideas that will generate returns, which is why something tangible, like real estate refurbs, can be so popular.
Exploring New Ownership Structures
Related to this, you might explore alternative ownership structures. Trialing things like joint ventures, fractional ownership, and syndication can be a great way to gain more exposure to the property market and take on larger projects.
Ideally, you want all your real estate assets inside an LLC. This approach means you pay less tax on earning upfront and you can protect yourself from downside risk.
However, these other ownership structures let you get access to larger buildings without having to risk all your capital or go bankrupt in the process.
Of course, you will need to choose suitable partners if you adopt this strategy. Working with the right people is essential if you want to come out of the venture profitably.
