The pandemic has brought a lesson or two for everyone, and real estate investors are not an exception. While this form of investment continues to be a hit for creating passive income, you have to pick consciously. There are chances of things going south fast if you choose the wrong options. You need to be extra wise with your dollars in 2021 because investing in the wrong places can damage your portfolio. You may end up with something that takes more than it gives. It makes sense to do your research and due diligence before making any real estate investment in 2021. Here are the ones that experts say you should avoid this year.
Properties that do not make income
When you buy real estate as an investor, income should be on top of your mind. Of course, you will expect appreciation, but passive income is the key right now. Appreciation in value is theoretical and unpredictable, and you can never be too sure. It is vital to assess the investment in the rental perspective before signing the dotted line. Pieces of land and second homes aren’t the best choices in 2021 as they will not yield rental income.
High-end rental investment
While you must skip no-rent real estate, it is also wise to steer clear of high-end luxurious places. Owning a luxurious home or commercial rental space sounds alluring, but it may end up vacant this year. Money is tight for everyone, and people are in the saving mode. Office spaces aren’t in high demand because countless businesses may work remotely for the foreseeable future. So consider these factors before sealing the deal.
Negative cash flow properties
A timeshare sounds like a great place to invest, but it is the worst thing to own right now. Even popular ones like Sunset Group Timeshares are not the best bet. Consider it a negative cash flow property because you have to pay money out of pocket instead of making it. The high annual maintenance charges will surely pinch your wallet when vacation plans aren’t around amid the pandemic. Thankfully, you can get rid of Sunset Group Timeshare with the help of a timeshare exit company. But make sure you go through their credentials while collaborating with them.
Anything you cannot afford
The crisis is dire, and it may not be the best time to invest. As a rule, you must not make any investment you cannot afford, no matter how enticing it appears. You will regret the mortgage and expenses eventually, and the desired growth may never happen. The market is uncertain right now, and it makes sense to move with frugality. Never buy without budgeting and checking your wallet first.
Real estate development
Development properties involve buying land, building from scratch, and selling properties later for a profit. It is expensive and risky, even if you buy from a seasoned developer. Most small investors avoid them because it is beyond their means. While wealthy investors may prefer this form of investment, the pandemic is the worst time to pick these high-risk properties.
Real estate investment is a good way to make money, but timing is crucial. You have to think wisely, even more, during a crisis like the pandemic. Steer clear of losing investments and opt for ones that grow without pinching your pocket.
HedgeThink.com is the fund industry’s leading news, research and analysis source for individual and institutional accredited investors and professionals