Investor Opportunities
Three reasons to invest in real estate
In the early days of the pandemic, the Dow Jones Industrial Average lost 37% of its value in a little over a month. But in subsequent months, the stock market rebounded almost as quickly as it fell. This is volatility at its best, or worst, depending on your portfolio.
In contrast with the stock market, real estate can generally be much less volatile for three key reasons:
Real Estate Tends to be more stable than stock
According to Zillow Data during that same time period home values rose 30%. Research by Harvard, “The State of the Nation's Housing 2022”, shows that the supply of housing continues to be low. It also showed that vacancy rates are near historic lows in many markets.
Real Estate Is Local
While there are always exceptions to the rule, when the public markets are volatile almost every company takes a hit. Real estate values, on the other hand, are often more impacted by local market drivers. Apartment rents rise in metros that people are moving to. Ski resort reservations explode in the winter but often vanish in the summer. Industrial properties in port cities are bustling around-the-clock. It’s not to say that what’s happening on the national level won’t impact real estate values, but the local situation is often more relevant.
Real Assets, Real Values
Real estate investors can earn income in two forms: ongoing cash flow generated by income, or from a share of the property’s final sale price. Property values rise and fall during market cycles, but they tend to appreciate over time. More conservative business plans might assume less appreciation in the end, but anticipate more steady cash flow, while more opportunistic projects are hoping for significant appreciation over the hold period. For instance, an apartment building that is worth $28 million in year one might sell for $45 million in year six thanks to significant property improvements that ultimately increased the value of the building. Overall, commercial real estate prices increased by 24% in 2021 with significant price appreciation in most asset classes.
Volatility is something every investor will face, but real estate investments can be a valuable addition to your investment strategy and can help protect your overall portfolio from volatility’s effects.
- TCBC is currently looking to partner with individual investors and/or smaller private equity funds
- While the income-driven returns from traditional real estate asset classes and other yield-based investments may be deemed to have become more difficult to realize, allocations to residential housing in a traditionally strong Baltimore-Washington market should be considered.
- Targeted analysis of the Baltimore-Washington market related to the residential real estate’s industry economics continues to forecast as bullish.
- TCBC brings creativity and innovation through joint venture equity partnering and debt structures in residential development and home building operations. We suggest that people with capital previously earmarked for commercial real estate and other industries consider the strength of our market and company systems designed to deliver a calculated risk/return on investments.
- Local demographics and market conditions are extremely favorable in the Baltimore/Washington Market considering that we are underbuilt over the past decade. Job strength and consistent demand for new residential development creates consistent opportunities for invested capital with TCBC