Finding A Little Market to Call Your Own: Niche Real Estate Investing
Don’t believe what you see on HGTV. Real estate investing isn’t just driving to foreclosure auctions and knocking down drywall.
In fact, what you do depends entirely on the assets in your portfolio.
While buying distressed single-family homes and flipping them might be what the public thinks real estate investors do, the reality is much more complex. Your investment options are as diverse as all of the different property types out there.
Some investors base their portfolios on profitable niches they’ve found in their local markets, and some choose niches for more personal reasons. We asked investors what niches they’re involved in, and what led them down that road.
Here are niche real estate investors, in their own words:
Business Advisor and Executive Consultant
“My interest came after watching other landlords neglecting low income residents and leaving properties with used cabinetry, appliances and rodents. My philosophy is ‘How can we expect to help them elevate by treating residents substandard, yet cashflowing?’ I create environments they love.”
“The motivation to get into mobile home investing came after several years of being in the single-family home arena. For me personally, I found the mobile home investing niche to be a simpler and rewarding experience. I enjoy working with mobile home parks and residents who are proud of the communities they live in. As an investor, mobile home investing is more of a team effort which makes me and those I work with feel they are part of something.
“Regarding special considerations, the mobile home investing niche is very specialized. There is a lot of field work and outreach involved in the local community to get to know people in the business. Mobile home investing has somewhat of a mystique to many investors unfamiliar with this particular asset class. It is a business model heavily built on relationships over time and can be very rewarding.”
“Apartments are a great place to invest given their income-producing nature that can also protect against inflationary pressures. As the nation continues to move away from a homeownership-centric society to more of a renter nation, apartments should benefit from this shift. Beginner and long-time real estate investors can benefit from exposure to this type of real estate. Some prefer to take a more active role in managing their own property and personally dealing with tenant issues while others see the benefit of passively investing in companies that specialize in acquiring properties and professionally managing them.
“Another type of real estate we like are vacation rentals in high demand areas where it is fairly easy to find vacation renters. Depending on an investor’s goals, in some cases investors can rent out their vacation properties for a portion of the year and collect more than enough rental income to pay for the mortgage, property taxes, and insurance on the property for the entire year, giving them the ability to use the property for their own personal enjoyment for the rest of the year. All while allowing the value of the property to appreciate over time.
“Finally, condos and townhomes within proximity of transportation corridors have proven to be desirable properties given their high levels of accessibility. There are typically a large number of jobs near or accessible through major transportation hubs, which increases the probability of finding an individual or small family with a reliable income stream to pay rent. In addition, properties located within more expensive single-family housing areas should benefit from increased rental demand for these lower cost units while tracking their appreciation as well.”
Goran and Lisa Forss
“As we sell homes we come across many investment opportunities where we go in and buy homes for cash, and then fix them up. Sometimes we end up renting them out on a longer term basis. We prefer to focus on what we do best, which is residential homes in nicer neighborhoods.”
Head of Global Trading at Petkov Capital Management
High-end residential real estate
“I am seeing a lot of opportunities again in a very niche segment in where the top 1-3% live. In every city. Price points can vary a little. But, in general, it is a high end niche that caters to the affluent. It takes a certain eye and attention to detail usually honed by years of experience, that I have acquired over a lots of trial and error in the real estate space. As part of a diverse portfolio I am Bullish on higher end real estate. The lower end is still feeling the drought in the lack of liquidity in the market place. If someone finds us a high end ugly house with margin as part of our portfolio our fund is a buyer.”