Editor: This is a contribution from CrowdStreet, a partner of this website. Enjoy!
2020 was a year of uncertainty – and that’s putting it mildly. Of course, many different industries were badly hit by the pandemic, and the stock market was no exception.
After all the volatility we’ve seen over the past year, many investors are (understandably) worried about the future while others are optimistic.
Recently, the investment platform CrowdStreet wanted to know what individual investors think about the path ahead – especially how they approach the future of real estate investing.
CrowdStreet created a poll and received over 1,200 responses. That is a very high number. In fact, it is possibly the largest single real estate investor survey ever conducted.
What did they want to find out? CrowdStreet’s survey is designed to provide insights into:
- Your appetite for real estate investments in 2021
- Which asset classes, risk profiles and regions are you most interested in?
- How to evaluate future real estate investment opportunities
After compiling the answers, they discovered the following:
A full 96% of respondents said CrowdStreet plans to make at least one commercial real estate (CRE) investment this year. Almost 30% aim to make four or more new investments.
One investor told CrowdStreet, “We were conservative in 2020 due to the pandemic, but we were hoping to be more aggressive in 2021 when we come out the other side and get a better understanding of where the markets are.”
This is especially true for investors who have never made a commercial real estate investment before. I was a little surprised to learn that 95% of new investors intend to make theirs first CRE investment in 2021.
No wonder, however, that investors’ reasons for choosing commercial property were varied and that they had a keen interest in reaping the full benefits of investing in CRE.
Interestingly, investors told CrowdStreet that in addition to targeting high internal rate of return (IRR), they also value working with seasoned sponsors who have a well-designed business plan and strong track record.
After the 2020 roller coaster ride, investors seem to value sponsors who have gone through multiple economic cycles and successfully handled the ups and downs more than other factors. In other words, investors want a sponsor, so to speak, who is close by.
This makes sense because when it comes to CRE, the company behind the deal is the one responsible for seeing an investor’s capital through the ups and downs of a recession. Investors want to know that they can trust the people they are giving their investment to. One investor told CrowdStreet, “I like creating value with the right business plan and the team to keep it going.”
When it comes to Where Investors hoped to buy real estate, with the Southeast being the clear winner in the region, beating the Midwest and the mountainous region by 13%. This is especially true of pre-existing trends, with the pandemic-induced migration boom in cities like Boise likely to give the mountain region an additional boost.
It’s no coincidence that CrowdStreet’s list for the best investment opportunities in 2021 includes numerous cities in the southeast, including Nashville, Atlanta, Dallas-Fort Worth, and Tampa – and institutional investors seem to agree.
Invitation Homes and Rockpoint Group founded a joint venture Acquired and operated single family homes in the western United States, the Southeast United States, Florida, and Texas. Meanwhile, RangeWater started an 800 million dollar platform for building and operating single-family homes (as CrowdStreet calls it Build-to-Rent) in the Sunbelt region.
The impact of the pandemic was also evident in investor views of the asset class, with multi-family and industrial companies topping the most popular list and a whopping 75% of respondents showing no interest in retailing.
Overall, individual investors are optimistic. All along the line, investors appreciate the many advantages of real estate and use this asset class in particular to spread the risk in their portfolios and to protect their capital.
And instead of just focusing on getting high returns, they are interested in the stability that less risky opportunities present. They also want to invest in regions and asset classes that were on the rise before March 2020 and are likely to recover first, and want to work with the sponsors they can trust to get the job done.
Ultimately, I share the optimistic stance of most CrowdStreet investors and am excited to see that people are excited about the future.
2020 may have been difficult, but in 2021 we can continue to grow, learn and invest – regardless of your goals.
If you’d like to learn how to safely invest in passive real estate, the waiting list for our Passive Real Estate Academy course is now open. No obligation, just a chance for the waiting list discount.