On-Trend Real Estate Investing

One’s ability to seek trends, global or otherwise, is key to any prudent investing. Real estate investing supports an innate degree of risk along with an inherent level of reward. Thus, a real estate investor’s “risk aversion” is determined by the level of each of these requirements. This is considered to be a “rules-based” approach seeking knowledge to answer the question: “Why should I invest or not invest in this asset class?”

real estate market research fro investing

Make intelligent real estate investments

A key component in making sound real investment decisions is deciphering the misinformation from accurate statistical data. Conversations at the country club should not be a driver in the process. Investing should be viewed as a game of chess, not chance. The player/investor needs to be alert, aware of his or her weaknesses and strengths, mindful of the opposition and most decidedly enter the game with a plan.

Here is a look at some of the moving parts of the real estate investing market to help author an investment plan. Little in the U.S. macroeconomic data suggests overheating. GDP has settled in at about 2 percent and job growth is running at about 1.7 percent pace (2.5 million annually). The Fed has been overly cautious about raising rates due to volatility of data, financial markets and the geopolitical climate. Therefore, the veritable “punchbowl” remains.

“SKATE TO WHERE THE PUCK IS GOING, NOT TO WHERE IT IS” ~WAYNE GRETZKY

Now, let’s drill down a bit and look at a couple of cross sections of Americana. Jobs are no longer careers and millennials are not yet looking for the commitment of owning a home. They are footloose in the job market and reticent to establishing roots in any community. Understanding this trend, developers are building “condo” quality rentals which, when the market dictates, can change in mid-stream and become a sales driven opportunity. Also being considered is the multigenerational developments that allow millennials and Baby Boomers to coexist. Both have similar amenity and size requirements, which generates huge development options.

With over 10,000 Baby Boomers retiring every day and understanding the related socioeconomics, asset classes that were once taboo are now becoming the investment of choice. Approximately 19 percent of retired Americans have more than $250,000 set aside for retirement, while 34 percent of retired Americans have less than $250,000 and 47 percent have zero savings set aside for retirement.  What we have here is an aging population that will mostly be dependent on Social Security and Medicare. This opens the floodgates for interesting chess moves.

Affordable Housing

Affordable Housing is probably the last bastion of home ownership. Developers are now recognizing this option and have begun aggressively acquiring and upgrading Parks across the United States. Warren Buffet, as an example, moved into this space by acquiring Clayton Homes, the world’s largest builder of mobile homes. This type of housing is affordable, new parks are clean, safe and loaded with amenities. Most importantly, however, is the limited supply of available Parks. There are only about 40,000 such parks left because many have been acquired and redeveloped as urbanization has overtaken rural America.

retirees enjoying their real estate crowdfunding investments

Retirees are lending power to the real estate market

Assisted Living

As we live longer and become more dependent on others for our daily care, seniors are in greater need of assistance with daily living activities. Assisted living includes meal preparation, medication management, house cleaning, laundry and bathing. Although many seniors value their independence, they may require help with some of their daily activities. Many do not have family available to help care for them or it might be a matter of location, time and commitment.

This creates a unique opportunity to serve this age group. There is a large and growing demand for quality, comfortable residential assisted group housing for the elderly that provides caring assistance for daily living. Assisted group housing in a residential home is an emerging trend throughout America.

Many families prefer an alternative to institutional type living facilities for their parents. Many are looking for a home-style group residence that is affordable, safe and comfortable. Residents enjoy 24-hour caregiver support, private bedrooms with attached baths, fantastic home-cooked, dietitian-approved meals, housekeeping and laundry services, social activities, physical and mental exercise opportunities, as well as the optimal staff-to-resident ratios in the industry. This solution provides for a vibrant, happy community.

These are just some of the ideas behind on-trend real estate investment. Remember to look at things both from a macro and a micro level. Look for real estate segments that have reasons to exist and flourish. Pay attention to the details.

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On-Trend Investing: Affordable Housing

Warren Buffet provides one of the best answers as to whether investing in the mobile home community arena is worthwhile. He bought Clayton Homes more than a decade ago, seeing the housing crisis that was fixing to befall the nation. The foreclosure disaster is still affecting the market and causing former homeowners to scramble in search of affordable housing options.

Roots of the Mobile Home Market

The roots of the affordable housing market

The roots of the affordable housing market

The modern mobile home began as a travel trailer used by wealthy people to live comfortably as they roamed the countryside on family vacations. The military grabbed onto the usefulness by stationing these temporary housing units near factories that were producing products for the troops away in combat. They continued use for GI’s that returned and decided to go to college with their earned benefits. By the 1950’s, mobile housing was finding a permanent spot in the American landscape of affordable housing options.

The mobile homes of today are nearly unrecognizable to the predecessors. Most have pitched roofing, high-levels of insulation and stylish interiors. A few offer built-in storage areas, kitchen islands, fireplaces and garden tubs. They can be moved from one park to another, but it is generally cost-prohibitive to do this. Most tenants look for a great park to call home and stay planted there to avoid a $3,000 or more charge to move.

The popularity of mobile home park living has increased for several reasons. The housing bubble and foreclosure waves left many people with no housing and decimated credit scores. Those on annual fixed incomes can rarely afford the rental prices of traditional homes or apartments. Many people enjoy the feel of community and like the idea that they do not have to deal with lawn care and maintenance. The idea that once the mobile home is paid for, all they are responsible for are lot fees and utilities. This is something that is incredibly appealing for growing families. The 2013 census showed that there were 8.6 million mobile homes scattered in a variety of locations across the United States.

The affordable housing market today

The affordable housing market today

Who Lives in Mobile Home Parks?
Mobile home communities come in many varieties. There are more luxurious areas that offer clubhouses, pools and community centers, while there are also bare-bones parks that have been neglected and remain in poor condition. A well-managed park moves out the older trailers and sets rules and regulations to control disruptive activities or behaviors from tenants.

The primary residents of mobile home communities are those that are at or below the national poverty levels. They are generally the ones that are unable to afford down payments for traditional home ownership. The 2016 U.S. Census Bureau statistics show that 14.8 percent of Americans live at or below the poverty level of $24,300 dollars for a family of four. This translates to 46.7 million people. This leaves a lot of potential growth in the market for affordable housing options.

Benefits of Staying in a Mobile Home Park
The reasons people choose to stay in a mobile home park are individual, but most revolve around housing stability, economic factors and a feeling of community. If an individual or family has sought out affordable housing and found a solution, they are reluctant to try reaching forward to more expensive options right away. Having housing that is affordable and leaves a little money at the end of the month becomes a dependable way of life. Long-term tenancy breeds familiarity. People get to know one another and tend to look out for each other. The sense of community is tight in an enclosed park environment.

 

Growth Potential for the Mobile Home Park Market

affordable housing developments

Growth potential for affordable housing developments

With 8.6 million mobile homes in the U.S. as of 2013 and the estimated 46.7 million people at, or under the poverty level, the potential for continued growth is astounding. As baby boomers continue to age, retirement can mean living on a fixed-income, which is often shockingly low. There are plenty of available mobile home parks that are in desperate need of upgrades, whether it’s in plumbing, interior work or trailer upgrades. Creating a pleasant and affordable housing option will always bring back a great return on your investment.

There is no time like the present to get out there and explore your options in mobile home park ownership. Visit parks that are already functioning well. This will give you an idea of the goal mark to reach when purchasing ones that need a little extra TLC.

Dollar-for-dollar, mobile home parks are one of the easiest real estate housing markets to invest in, offering quick and steady returns. This is an option you should fully explore if you like the idea of a more hands-off approach to tenancy and property upkeep.

The post On-Trend Investing: Affordable Housing appeared first on RealtyeVest Crowdfunding News.

Baby Boomers Nearing Retirement Drive New Markets in Affordable, Assisted Living

As the percentage of retired Baby Boomers is expected to explode over the next decade, the demand for assisted living and long-term care facilities will naturally have a parallel effect.

Today, the senior housing industry is considered one of the fastest growing real estate investment opportunities in the national housing market.

Even self-help coach Tony Robbins is getting in on the action, by listing senior housing as the second safest place to invest in a recent blog post on his website.

In 2003, Warren Buffett proved to be way ahead of the curve, when he purchased Clayton Homes — now the largest builder of mobile homes — for an estimated $1.7 billion.

The senior housing industry has an estimated market value of more than $300 billion annually. And the PEW Research Center has shown that the average return on investment for the senior housing industry, significantly outperforms all others within the real estate sector.

In the past, senior housing has been a very resilient part of the housing demand, with occupancy rates trending around 90 percent. Even during the recent “Great Recession” occupancy rates in the senior housing industry remained consistently above 85 percent.

On average, assisted living homes costs between $3,000 to $5,000 per month, per tenant, and can accommodate from 8 to 16  residents per unit, depending on state regulations.

But even with their generally higher education and income levels, many of these future residents will be unable to afford the luxury of paying for quality assisted care.

The average Baby Boomer household, ages 56-to 61-years-old, has about $164,000 saved for retirement, according to a report by the Economic Policy Institute. That amounts to around $8,200 a year, or only $680 a month, to supplement Social Security or other retirement income.

However, the median Baby Boomer retirement savings for the same age group is only $17,000, which is far less than the average household. So in reality, the future for many Baby Boomers approaching retirement is much more grim.

In the same report, an estimated 41 percent of households (ages 55-to 64-years-old) have no retirement savings set aside, whatsoever.

Although the Boomers approaching retirement are generally too young to need assisted-living, (the average resident age being 84) they are already having an impact on that market.

“Assisted living facilities have a projected 30 percent growth rate over the next 10 years, and are selling 18 percent faster today due to a lack of inventory,” said Daniel Summers, CEO of RealtyeVest, a real estate investment company that specializes in raising capital for assisted living and affordable housing.

Invest in Mobile Homes

While the above average income Baby Boomer will continue to push the assisted living capacity demands through 2030,  the remaining will be searching for an alternative to assisted living by downsizing to affordable homes.

“Developers are recognizing the growing demand for affordable housing, and have begun aggressively acquiring and upgrading communities across the United States,” Summers said.

“And many retirees are trading in their homes for RVs and moving into 55-plus mobile home communities.”

“If you’re a Baby Boomer on a fixed or limited income you can rent or sell your larger site-built home and purchase an RV or mobile home and move to the retirement location of your choice,” Summers said.

 

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