If you’re looking for high returns, go against the flow. Why clamor for deals everybody else is pursuing?
Warren Buffett is teaching us to generate wealth by avoiding the herd mentality. This idea especially holds true for real estate. To make money in real estate, avoid what everybody else is doing and what everybody else is doing right now is single-family real estate.
In no other real estate segment is there more demand or does a market plateau quicker than in the single-family fix-and-flip and buy-and-hold sectors. This is because market information is readily available and the barriers to entry are low.
The golden child of the real estate seminar circuit, single-family assets are the most often touted and promoted real estate segment because of the relatively low cost of entry and because of the widespread availability of market information. Single-family residential real estate requires less money to acquire and the lending requirements on residential properties are less restrictive than on commercial properties.
And with ubiquitous commercial listing services and real estate sites such as Zillow, Trulia, Redfin and Realtor.com that focus almost exclusively on single-family real estate, information on single-family properties placed on the market is readily accessible to the investing public, fueling demand and making residential real estate a favorite target for investing.
Generally speaking, real estate is an inefficient market. In other words, there are still opportunities to find bargains and make significant profits by utilizing informational advantages.
For example, you have a personal friend who works with a local builder that’s planning on developing a large residential community at a particular locale. Your local ties give you an informational advantage over your competition and can open up opportunities not privy to others. In this case, you might consider developing commercial real estate in close proximity to this new community to meet the needs of its future residents.
Because informational advantages in the single-family sector are hard to come by and big profits even harder to come by, investors are wise to pursue niche real estate opportunities that are not as widely known or sought. As single-family real estate becomes increasingly competitive, yields become increasingly scarce.
Niche real estate that hasn’t developed a bandwagon yet offers the best opportunities for high returns because competition and demand haven’t overrun profit opportunities yet.
Once a segment becomes crowded with competition, we move on to the next niche. The niche we’re currently pursuing is near and dear to our hearts and offers significant potential for profit.
It involves the development of inpatient residential mental health facilities for children in the Spokane area where the need for these facilities is particularly dire. Having lived here for years and with our fingers on the pulse of our local real estate market, we know there’s a significant shortage of behavioral healthcare facilities to address the myriad of mental health needs of the area’s youth and children.
Children who get past the initial crisis stage are in desperate need of inpatient residential facilities to help them on the road to full recovery. There just aren’t enough of these types of facilities available to these children and their families at this time.
The shortage is not imaginary. In Washington state, the lack of proper mental health facilities available to children reached crisis levels in 2016, so much so that during the state legislature’s session in March 2016, physicians with the Washington Chapter of the American Academy of Pediatrics converged on Olympia to present statistics and request funding for improving mental health care for kids. We are excited to be involved in the solution.
Niche real estate offers the best opportunities for high yields.
We’ve learned that by staying away from crowds, we find gems generating real profits. Niche investing, like with behavioral healthcare facilities for children, is all the more rewarding when there is an opportunity to make a social impact.
Discover more today how partnering with Global Summit Management can help you make a social impact while generating wealth.