Real Estate Remains Among the Best Cash Flow Investments for 2021
Why Real Estate Is One of the Best Cash Flow Investments 2021?
1. More Resilience
2. Ability to Earn Passive Income
3. Capital Appreciation
4. Better Control Over Your Cash Flow
5. Predictable Real Estate Cash Flow.
The Bottom Line
If you are thinking about how to invest your money in 2021, investing for cash flow is a great way to achieve your financial goals. With many investment strategies available, it can be confusing which route to take. Should you invest in stocks, bitcoin, real estate, or another business? Based on the reasons we’ve discussed above, it is evident that real estate is among the best cash flow investments for 2021. If you are intrigued by the prospect of owning a rental property, be sure to use Mashvisor’s real estate investment software to find income properties in the US housing market and analyze them.
Ralene Nelson, REALTOR®
JUST LISTED – 917 Bridgeport Way, Rio Vista, 2bd/2bth/1800sf
Located in Trilogy at Rio Vista, the active adult community. Well established home, den w/bay window, great room with gas burning fireplace. The kitchen has Corian counters, oak cabinets, white appliances, and tile floors. New carpet in living areas and the baths are tiled. Master bath has been renovated with wheeler chair access shower & has jetted tub. Patio w/privacy screen & cover. An extended garage makes room for your golf cart. Just bring your furniture & join the activities. READ MORE
PENDING SALE – 522 Silver Ridge Dr. Rio Vista, 2bd/2bth/1160sq.ft.
Active Adult Community, Trilogy at Rio Vista presents a bright & cheery Carmel model with prepaid solar by the builder, Shea Homes. No rear neighbors nor left side neighbors, very private backyard. Tile floors throughout, bedrooms have upgraded pad/carpet and faux wood blinds & vertical blind at sliding glass door. Sierra beech natural cabinetry, granite slab counters, black/stainless appliances. Bay windows in the nook & master bedroom provide for the extra space that makes this home so comfortable. READ MORE
PENDING SALE – 176 Cedar Ridge Ct. Rio Vista,
Located in the Active Adult Community, Trilogy at Rio Vista. Don’t miss out on this gorgeous home, completely renovated, from the kitchen, bathrooms, flooring, window coverings, all fixtures, all new interior & exterior paint. Painted in soft colors, new tile flooring & heated flooring in master bedroom & bath. The kitchen was gutted, new cabinets, quartz counters, sink, and appliances. Large fenced backyard for your pets leased solar & patio. Two-car garage with golf cart space. All appliances convey. HOA has 2 pools, spas, gym, tennis bocce, etc. READ MORE
JUST SOLD – 406 Riverwood Ln. Rio Vista
This delightful Pebble Beach offers beautifully upgraded and soothing Earth-toned interiors on a lush mature lot with no immediate rear neighbors overlooking a lovely open space corridor. Features include gorgeous engineered hardwood floors throughout with upgraded carpet in the beds, nice fireplace with tile surround, roomy den with double doors for privacy, wide slat wood blinds, custom shades, and master bed plantation shutters, and stylish lighted ceiling fans throughout. READ MORE
FOR SALE – Delta Diamond Farm Estate & Event Center,
15175 Hwy 160, Isleton
Delta Diamond Farms is a very unique property, built in the late 1880s, fully renovated by currents owners in 2005.
- 4 story, 3850 sqft Victorian home
- Operating as a wedding event compound & family/corp. events, & is permitted.
- 3 self-contained cottages.
- Barn (8000 sqft) & metal workshop
- 50’s Replica Gas Station remodeled as operational restrooms.
- 2300 sqft 6 carriage house w/half bath.
- 4200 sqft metal building set up for catering
- 3200 sqft metal newer building, equipped with workshop, office, bdrm & bthrm
- 60 ft custom dock & waterfront observation deck.
Real Estate News
Top 10 Features of a Profitable Rental Property
- Vet the neighborhood thoroughly—its livability and amenities are key.
- A neighborhood with a high vacancy rate is not a good sign.
- Know the area’s selling prices to get a sense of local market value.
- Research the average rent in the neighborhood and work from there to determine if buying a rental property is financially feasible for you.
How To Calculate ROI On A Rental Property
- Return on investment (ROI) measures how much money, or profit, is made on an investment as a percentage of the cost of that investment.
- To calculate the percentage ROI for a cash purchase, take the net profit or net gain on the investment and divide it by the original cost.
- If you have a mortgage, you’ll need to factor in your downpayment and mortgage payment.
- Other variables can affect your ROI including repair and maintenance costs, as well as your regular expenses.
The 5 Biggest Real Estate Investment Opportunities in 2021
If I’ve learned anything in my career as an investor, it’s that the real estate market is constantly changing. An investment strategy or market area once ripe with opportunity can quickly dry up. A big part of being a successful real estate investor is being able to identify present market opportunities and having the flexibility and forethought to pivot to take advantage of them.
2020 was a really tough year for real estate, but even in down markets, there’s still opportunity for prime real estate investing. Here are the five biggest real estate investment opportunities I see for 2021.
Adaptive reuse of unwanted retail, hotel, and office space
Adaptive reuse, the process of converting and redeveloping unwanted real estate into a different type of real estate that better serves current and future market demand, will undoubtedly be what saves many commercial investors in the wake of the global pandemic. Hotels and entertainment venues, office buildings, and retail were severely impacted by the coronavirus crisis. Recent reopenings have helped subside the impact a bit, but unprecedentedly low demand has resulted in a number of businesses closing their doors or filing bankruptcy.
Recovery is inevitable, but it will take time, and suffering property owners will need to get creative in the meantime. Affordable housing and industrial real estate are two sectors in high demand. Turning an old hotel in the heart of the city into an affordable housing project or converting an old retail building into an industrial distribution center or warehouse may be a more profitable long-term solution. While there are definitely a number of hurdles to overcome in this process, including zoning and city regulations, I think there’s a lot of opportunity here.
Industrial real estate
Industrial real estate has been one of the top-performing sectors of commercial real estate for the past several years based on returns and demand. In many ways, the global pandemic accelerated the demand for industrial space, putting pressure on cold storage, warehouses and distribution centers, and data centers in particular. While this recent demand is likely just a temporary surge, it’s very likely this sector will continue to have a strong year and opportunity for continued growth in 2021.
There’s talk of a potential foreclosure wave coming in 2021, pending no national foreclosure moratoriums or protections enacted by the incoming Biden administration. As of October 2020, 4.57% of all residential loans are 90 days or more delinquent, which equates to about 2.258 million, according to Black Knight (NYSE: BKI). This number doesn’t include the 202,000 forbearance plans that were set to expire in November 2020.
There’s tremendous pressure on lenders and servicers to maintain these debt obligations, which is why the government has been using quantitative easing, the slow and steady influx of cash into the financial markets to help keep them afloat. But that can only last for so long.
Eventually, banks will be forced to reconcile their books and either foreclose on the delinquent loans or sell the loans at a loss. Neither scenario plays well for the banks, but in most cases, the mass sale of delinquent loans is the easier route, giving them the cash they want and need now while reducing their overall burden.
Before the foreclosure wave that followed the Great Recession, millions of nonperforming mortgages were sold on the secondary market. Investors large and small were able to purchase these loans at a steep discount, working to find a long-term resolution for the delinquency, which can include a forbearance plan, modifying the loan, a deed in lieu, or foreclosure.
Foreclosures take time, and investors hoping for a sudden spike in foreclosure properties to hit the market in 2021 are missing the real opportunity. I personally got my start in real estate investing with nonperforming notes (NPNs) just after the Great Recession, and I’m preparing myself heavily for the wave of NPNs that are sure to hit the market both in the residential and commercial markets.
Rental property in depressed markets from tight-strapped landlords
While many rental markets are seeing an uptick in demand and rental rates, others aren’t so lucky. High-density urban areas are experiencing a mass exodus of residents fleeing the expensive and populated metro centers for more space and budget-friendly accomodations in the suburbs. Eviction moratoriums have left hundreds of thousands of landlords in the dust, unable to evict nonpaying tenants but still responsible for maintaining the property and paying taxes, insurance, and their mortgage.
Many tight-strapped landlords will eventually be forced to sell. Investors with the patience and capital to ride out the current wave can possibly pick up these rental investments at a discount.
Fix and flip
The fix-and-flip market has been super active in 2020. Initial worries about another real estate bubble were quickly put to rest as home values increased dramatically and demand outpaced supply in most markets. At the end of 2019 and the start of 2020, fix-and-flip activity was up, but profits were down. Things reversed in the second quarter of 2020 as some investors took a step back from the market to see how the coronavirus pandemic would play out.
Considering demand remains high for newly renovated homes, I believe 2021 will be another active year for investors looking to fix and flip. Investors will need to be diligent with their numbers, as I predict the hot real estate market will drive investors back into the business, increasing competition and pushing returns down.