These simple considerations will help you get more out of your investments.
I have been following reporting about the changes that have happened in the real estate investment property market.
Partially I do that anyway, pandemic or not because I constantly work on growing my residential real estate portfolio to work towards my economic independence goal I call the Time Freedom Point. It’s the point where I don’t need to exchange time for money anymore and do what I love. Some will be exactly the same as now and a few things will be what I haven’t been able to do without money.
I also follow this so I am up to date for the mentoring I provide to people who like to join me in developing a growing passive income stream.
The third and latest reason is to see what developments are in the market and how to potentially adjust to them. Those developments indicate to me that investment properties will be more desirable if they have certain features that may not have garnered as much attention in the past.
A recent study showed that more and more people are leaving cities, some permanently and some say temporarily until they know what the new world after Covid will look like.
28% of people who moved in 2020 said:
… the most important reason was to reduce their risk of contracting the virus!
Does that mean that they will all move back when vaccines are widely available?
I don’t believe so because when given the chance to live in a house versus an apartment, most people choose the house. The need for social distancing and the ability to keep things sterilized just helps to push in that direction.
Then there is a change in work that I myself have been experiencing, and honestly, enjoying for several years already. It’s now much more mainstream: work from home. Stanford’s Institute for Economic Policy Research has looked into what they call “the work-from-home-economy”.
Nicholas Bloom the researcher who conducted the research was asked and responded as follows:
Why do you think working remotely is morphing into a more permanent reality?
The stigma associated with working from home prior to COVID-19 has disappeared. And working remotely is now extremely common, though under very challenging conditions, as I’ve written about earlier.
And a number of corporations are developing plans for more work-from-home options beyond the pandemic. A recent separate survey of firms from the Survey of Business Uncertainty that I run with the Atlanta Federal Reserve and the University of Chicago indicated that the share of working days spent at home is expected to increase fourfold from pre-COVID levels, from 5 percent to 20 percent.
Of the dozens of firms I have talked to, the typical plan is that employees will work from home one to three days a week, and come into the office the rest of the time.
We see an incredible 42 percent of the U.S. labor force now working from home full-time. About another 33 percent are not working — a testament to the savage impact of the lockdown recession. And the remaining 26 percent — mostly essential service workers — are working on their business premises. So, by sheer numbers, the U.S. is a working-from-home economy.
To me, that begs the question of how I as an investor, and the clients I serve, will have to adjust. What things have those who now worked from home for about a year will be looking for when they move into a new place the next time their lease agreement expires?
I think the living space real estate investors offered in their single-family residences were not always really prepared for a permanent work-from-home economy.
In some cases where a couple is renting a 3 bedrooms/ 2 bathrooms house from me, it’s perfect because there is enough space to designate one or two of the bedrooms as office space. As soon as there are a few children in the picture things are not so easy anymore.
Here is a list of 8 things that I am looking for in the properties I aim to purchase and add to my portfolio in 2021: (maybe include some right into the renovation efforts before I buy)
- Better equipped kitchens that make cooking more enjoyable and providing as much counter space as humanly possible. The pandemic “bred” (pun intended) a whole new generation of bakers and we want to help them in their new craft of baking and cooking and providing to the family.
- Add another bedroom. My main aim will be to find properties with 4 bedrooms and 2 bathrooms so one room can permanently serve as an office.
- Add a partial bathroom (1/2 bath). When a family is at home more and often there is one bathroom on each floor of a house, having an additional bathroom designated for the “smelly stuff” is a huge benefit and advantage for the quality of life. (It’s also a nice differentiator when you, as I do, love to provide excellent value to your tenants.)
- Add more power outlets in the bedrooms. It used to be common that bedrooms had the lowest number of power outlets because all that was really needed was the main light and maybe an outlet for a nightstand light. Now we should consider that any of the bedrooms might need to serve as an office and anybody whoever set up an office space in a bedroom immediately learns that there are way too few outlets. That needs to be fixed.
- Pay more attention to lighting and ceiling fans. Yes, ceiling fans, especially the ones with the dimmable light have been a good addition or feature for several years. Now they are even more important if a bedroom is used as an office. I might even add a few of the can lights in the ceiling to improve lighting choices to use when using a room as a bedroom or an office or a playroom for kids.
- Another new emphasis is fencing. Yes, we always had fencing around our properties but now that kids might be at home more and parents might be with them at home, knowing that a really good quality fence is protecting the property so you can let the kids or the pets out is an added benefit that doesn’t cost much to add or improve.
- Outdoor patio area — both to be able to enjoy the property more when the weather is nice but also to serve the fact that tenants who work from home will most likely use a laptop. When we have nice weather in my area I love to grab my laptop and sit on the patio to work. Yes, I don’t take business calls there yet, but just being in the fresh air and sun just makes work so much more enjoyable — if you have a nice spatial area and an external power outlet close by.
- Starlink. Yes, that’s something I really want to get into all of my houses as soon as it is available nationwide. It’s high-speed internet that will work in any location without any dependence on a cable connection. My houses will have a router connected to the Starlink dish and the monthly fee will be integrated into the rent. I want my tenants to know that the house comes with high-speed internet so they can both enjoy it for entertainment but more importantly can actually work conveniently from the property. I really believe that is another great value-maximizer.
As you can see, a residential investment property will have a few more features to look for than has been common for a long time and the value and level of rent an investor can request from tenants will be, at least partially, depending on how many of these things have been considered and integrated during the renovation of the property.
Who would have thought that there could be so many exciting new additions for investment properties that will also strengthen the relationship between us as investors, the tenants who we want to enjoy our properties, and the Turnkey provider who manages the portfolio on our behalf?
I find it exciting and I hope anyone else looking at real estate investment does too!
For a guide on how to focus your mindset for success, Download your free mindset manual