Recently, there has been a pessimistic air surrounding the real estate industry. In light of the pandemic, several businesses have been negatively affected. As a company head, I know the struggles of keeping your business afloat despite the crisis.
Contrary to popular belief, there is an opportunity for growth in the real estate industry. What are practices that real estate thought leaders promote? Understanding the local markets, adapting to the changes brought by the pandemic, and looking at the long-term implications are just a few of the sure-fire ways to successfully engage in real estate.
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This article hopes to clarify your thoughts regarding real estate. Engaging in real estate isn’t easy, whether as a buyer, an agent, or a seller, but it’s worth the effort. It’s counterintuitive, but you can thrive in the real estate industry despite lockdown restrictions. You just need the proper tools to engage in this arena. With this in mind, here are 50 real estate tips from real estate thought traders:
The real estate business is a local game. Jonathan Schultz emphasizes the need to get to know the local market. This strategy includes getting to know the tenants, the community, and the neighborhood. Gathering information within the locality breeds familiarity. Real estate is where you live, work, and play. The method employed by Jonathan takes advantage of the fabric attached to people’s daily lives.
Being local and understanding the market allows you to be involved in more asset classes. With this, anyone engaging in real estate can invest in corporate, industrialization, residential, and retail assets.
With different real estate options to choose from, you can diversify your investment. However, to guarantee success, focusing on a local community should be the best course of action. This is especially true when you’re thinking long-term.
Safety, health, and wellness are now the most important considerations in real estate. It’s essential to the extent that wherever you go, you consider whether the place and the services they offer afford you such comforts. Therefore, real estate industries must be open to changes.
Thoughts you should keep in mind when dealing with real estate include the following:
1. If you plan to manage a national real estate portfolio, then focus on one asset class
2. If you want to be great at managing a diverse real estate portfolio and be in more asset classes, stay local, focus on getting to know people, tenants, neighborhood and community.
3. Never forget to inspect locations with due diligence – community, security, risk profile etc… Do not hesitate to point out the negative aspect of a place you are looking into. Find out past issues and improvements made on the property.
4. Remember that small and mid-size tenants comprise the bulk of the market.
5. You can’t make long-term decisions on short-term happenings – Sept 11th and COVID-19 are short-term happenings. It is important to stay true to the long-term mission and iterate with changes in customer behavior.
6. Step into the shoes of the seller/landlord to find out their motivations. Consider the other party’s position before negotiating with finality.
7. The pandemic has accelerated and focused minds on allowing tenants to feel safe and secure when they enter every building. Health and safety are the most important amenities every property owner needs to provide.
8. Think about the long-term implications of your property purchase/lease on the company.
9. Like most start-ups, whose product or service may not be what they initially set out to create, buildings evolve and will always need to evolve to remain relevant, but they may not be what they began their life as.
10. Don’t forget to look beyond the four walls of the building. Remember that the street location will impact a property’s worth to tenants, customers, and employees.
11. Proximity to nature will impact the value of insurance due to higher natural disaster risk.
12. Have a real estate broker present when making negotiations.
13. Hire a contractor to be present during inspections to offer you a sensible quote on necessary repairs and fitout.
14. Return to the property at different times of the day to check how the area is.
15. Think about big investment opportunities when purchasing real estate.
16. Don’t forget about building operating costs and property taxes.
17. Consider future developments happening in and around the real estate property.
Technology in Real Estate
We are currently living through the Fourth Industrial Revolution. It’s characterized by an increased engagement with technology and the digital world. Devices and other forms of technology are deeply integrated into our daily lives. We use them at home, in school, and at work. Therefore, it’s unsurprising to see many organizations take advantage of the latest technological tools to bring their services to the next level.
Real estate companies are among the organizations that are taking advantage of digital technology in conducting business. They invest in technologies and advances to make their customers feel safe and comfortable. Granted, there is still some headway to be made in this arena. In Pandemic Real Estate Has Gone Digital, Jonathan Schultz acknowledged that the real estate industry has always been slower in adopting anything. But, over the last seven years, the industry has taken active steps to be more relevant. That is to say, the real estate’s online integration was already underway when the pandemic hit.
Before COVID-19, there was a focus on front-facing technology. These are apps that would create a culture within spaces. It determines what kind of culture could be brought within the building regardless of the type of space.
But soon as the pandemic hit, spaces needed to adapt to the changes in the community. People now require a place to work, stay, and play that’s safe from the virus. Because quite a few were forced to work from home, they also want spaces to work comfortably.
Onyx Equities, a real estate company that Jonathan co-founded, curates spaces tailored to its customer’s needs. For instance, they now shifted their focus to air filtration and sanitary workplace strategy.
The following are some ways you can integrate technology in the real estate industry:
18. Invest in technologies that can help you and your tenants in their daily lives.
19. Adjust the services you offer based on what’s happening in the community.
20. Know the needs of the demographic that you’re catering to and look for technology to address this.
21. Utilize digital means such as signage, texting, and emailing to communicate with clients.
22. Keep digital communication channels open with your team to maintain your relationship.
23. Create virtual reality property viewings.
24. Consider going touchless in your spaces.
25. Establish ways to be flexible when it comes to delivering services.
26. Begin integrating your real estate portfolio digitally.
27. Understand technology trends such as blockchain, the cloud, and A.I. before investing in corporate real estate.
Want to know more about the future of the real estate industry? Check out our article entitled: Michael Ippolito on the Future of Work and Real Estate.
Real Estate During the Pandemic
Human interaction is vital in real estate. You need it to connect with your colleagues and your clients, usually through face-to-face meetings. However, the pandemic brought this to a sudden halt. As with other industries, meetings are now restricted to Zoom calls. And depending on how tech-savvy you are, it may take you a while to get used to this. But you must do so as technology is vital to a business’s survival.
In a discussion with Stuart Commins, we found out how technology has immensely helped maintain the real estate business. The industry now relies on pitching through Zoom. Meanwhile, landlords are conducting virtual tours to help clients get the feel of a location. They do these adjustments hoping that clients can make the necessary decision on the real estate when things return to normal.
Indeed, the pandemic has dramatically impacted the way things in the real estate industry are being conducted. Some other tips when looking into real estate during the pandemic are:
28. Find an experienced and knowledgeable broker and lawyer who is aware of the native market.
29. Contact this broker before making an offer.
30. Ask your agent to draft a closing value sheet before creating a suggestion.
31. If possible, use specific seller-buyer stipulations in your contract.
32. The buyer’s agent has to be in constant communication with a listing agent.
33. For corporate investors, residential lands may be more valuable than industrial lots in this pandemic.
34. Consider looking for viable options beyond what is in the listings.
35. Assess your new workplace dynamics before purchasing/leasing commercial real estate.
36. Ensure that your preferred city location has potential for growth.
37. Diversify long-term and short-term clients for mixed-income streams from your commercial real estate investment.
38. When declined once for a loan, don’t quit immediately.
For real estate brokers, the first five minutes of the pitch is the icebreaker. It allows them to get a feel of the room and what the client thinks. Brokers also do this to form a connection with the client. They get to know the client by asking what they do and how they are doing. Through this, they can craft a proposal that’s best suited to the client. These are just some of the things Zoom calls cannot provide. To know more about proper brokerage engagements, read our article: What is the Role of The Real Estate Broker?
Since the situation right now is quite fluid, company operations can change at any time. Certain businesses will survive the pandemic and will inevitably adopt new ways of working. On the other hand, some businesses will not get through this, as the pandemic has significantly impacted their cash flow. Stuart predicts that Grade B secondhand spaces will be more common as retail stores and offices become vacant. This influx into the market can create great value for a lot of occupiers.
With the pandemic, Stuart emphasizes that businesses will realize that they can afford to reduce headcount. They now allow more flexibility when it comes to where their employees work. When in the office, the practice of hot-desking or sharing computers will no longer take place because of hygiene and other safety measures. Spaces will also be modified to meet minimum health protocols.
Adapting for the Future
According to Stuart, the main challenge is to create a reasonable position for renters and landlords to find a middle ground. The pandemic shifted the mindset of both parties towards pragmatism. With economic restraints and uncertainty, they have to be practical if they are to survive. Landlords have offered deferred rental payments, options to extend lease terms, and help with deposit money. These measures are done to address cash flow issues.
Nonetheless, Jonathan Schultz noticed that even with the pandemic ongoing, occupancy has surprisingly increased. In determining the turnover rate for this, it is essential to know what buildings will look like post-COVID. The real estate business’s goal must be to make the customers happy and comfortable in where they live.
Because of the drastic change in the real estate set-up, businesses are unsure about what everyone feels. After all, people have varying fear levels. What can be frightening to one would not be as frightening to another.
Industries, especially corporate real estate, must ensure that they could cater to all these differences through a single and systematic process. Here are some specific tips on this:
39. It’s best to be conservative in these turbulent times and not jump to seemingly bargain prices immediately.
40. Pay attention to market shifts. In particular, look at where demand is increasing or decreasing.
41. Observe changes in volume of cars and people in the area as this may affect traffic.
42. Aim for commercial properties that are flexible and have a high potential for re-use.
43. Focus on the immediate upside to buy smart.
44. Compare the historical prices to know whether the estate is a decent long-term investment.
45. Do marketing research.
46. Buy what you can modify.
47. Establish a private reference for your seller.
48. Always provide counter-offers whenever the property is expensive.
49. Find the motivation of the vendor to ensure fair trade.
50. Note that the tertiary market is more robust.
Note that long-term goals should not be dependent on short-term events. Vaccines have been created and are being rolled out. This could impact what clients choose in the long run. Businesses should adjust accordingly and should not consider the pandemic as a long-term hindrance that could potentially hurt them.
In some ways, the pandemic may have positively impacted the real estate industry. Construction projects can now be done without worrying about tenants dropping in. The pandemic has allowed real estate companies to expedite projects that could otherwise have taken a long time to carry out.
The pandemic also allowed both employees and employers to rethink the importance of having an office. Businesses now understand the importance of having a dedicated office space to work. Real estate is now a top-of-mind issue that companies consider moving forward.
Because of the pandemic, the decision-making of people when purchasing real estate will be affected. Building on the work-from-home theme, people now realize the importance of a suitable work environment for productivity. They might not get this in a small apartment with roommates. And so younger people realize the value of having ample space to work and live. And they make their real estate decisions based on this.
Industries have taken steps to utilize technology in moving forward to the future. Given that real estate comprises a trillion-dollar market, there is a need for change as far as real estate is as an industry. For Jonathan, the most significant change in the real estate industry is the Cloud. This is particularly helpful for small businesses. They are now able to access data and information more efficiently. Do you have a small business? Here are the Six Real Estate Questions Every Small Business Is Asking.
Can I still invest in real estate despite the pandemic?
Yes. The value of properties will remain constant, and the housing market is currently stable. This will remain even if the market swings because of the pandemic. Investing in real estate is a form of stable security; it will flourish despite prevailing market conditions.
What should I consider when buying real estate?
The most important things you have to consider are:
• Location of the property: This affects the commercial property valuation as well as your experience.
• Property valuation: This is significant for financing and taxation purposes.
• Purpose: Be clear on your investment lest financial distress occurs.
Do I still need a real estate agent?
Yes. Although direct negotiations between the buyer and the seller are plausible, it is not advisable. Negotiations are often tricky, and real estate agents have the skills and experience to navigate these murky waters. Their expertise ensures that both sides are satisfied with the sale.