'Excitement, eagerness, and opportunity' will return, predicts RCN Capital’s Nathan Zielinski
Excitement, eagerness, and opportunity will be returning to the real estate investment industry in 2025 thanks to recent news coming from the Federal Reserve back in September. The Federal reserve cut rates by half of a percent or fifty basis points to support the economy which has led to lowered interest rates for the first time in a few years. The decision to do so can be credited to welcome progress on its dual goals of restoring price stability and achieving maximum employment. This ultimately means that interest rates finally dropped enough for there to be a noticeable change. With rates now expected to hover around 5% and potentially lower, it is expected that this decision will have a ripple effect and increase activity in the real estate investment industry.
How does this affect real estate investors? With lowered rates a few things happen as a domino effect – not only does inventory start to become more readily available, but investors are also gearing up for a return to the market with more favorable pricing and more deals to pursue. It’s vital for these investors to have a plan in place so that when competition again reaches a significant level, they are not caught off guard or overwhelmed by increased opportunity and workload. Let’s discuss a few priorities investors should be considering to start 2025 off on the right foot.
More team members, more bandwidth
Starting simple is a great place to begin for investors. Adding members to begin a partnership or building out a team can be beneficial for when workflow starts to pick up can make a substantial difference. Brokers can be an instrumental part of this strategy for investors as they can position themselves between investor and lender and facilitate deal flow at a much more efficient pace. While investors are focusing their energy on the next property or discussions with a seller, brokers can organize documents, attain quotes and prioritize a different angle of the deal.
Other industry professionals that serve as part of an investing team can include a property manager. Property managers can be the perfect contrast to a broker depending on an investor’s preferred approach. All three can certainly coexist, and property managers can be important to investors that prefer the documentation, organization and the transactional side of every deal process. Property managers can screen tenants, collect rents and handle any potential issues that arise with tenants that reside on an investor’s property.
Investors can also partner up with other investors to double or triple their efforts when it comes to securing more properties for their portfolio. With more people aligned towards the same goal, these investors can be positioned to handle the competitive market and the surge in inventory. When investors partner up and commit to common goals, more showings can be attended, money can put together faster for a down payment, and with more lines of communication the deal process has fewer chances to falter.
Opportunity breeds diversification
In terms of specific real estate investment strategies for a more competitive market in 2025, diversification is the best route for investors. As for property types, investors should keep an eye towards diversity and use this opportunity to safeguard against future constricted markets. Fix and flips, long-term rentals, ground up construction, vacation rentals and multifamily buildings are all viable options that investors should consider. Having a diverse portfolio not only allows for cash flowing options no matter the market conditions, but also provides experience in different industry avenues that can lead to longevity in the industry.
If the last year or two has taught investors anything, it’s that this market and industry is cyclical. Different properties thrive in different market conditions, so when investors check their portfolio, they can have proof of what is performing well and capitalize on that going forward for as long as that property type is the most profitable.
AI & technology aid expansion
One of the best assets investors can use to help their careers prosper is AI and technology. Since the last time we saw an open and competitive market (late 2020/early 2021), AI has made major improvements and advancements as it relates to helping real estate investors nationwide. Investors may not even be aware of all the opportunities they’re missing out on by not looking into AI and the services it can be used for. As a potential member of an investor’s team, brokers can use this scenario as a chance to offer value to their client.
Useful reports and information AI can be used for include: lead generation, market research, virtual tours and property valuation. Whether it’s prior to securing an investment property, during negotiations with the seller or even after a tenant is in place, AI can be a support system for an investor.
Once investors get a better sense of how they want to use AI, it can become an extension of an investor or act as an extra employee. There’s always a word of caution that needs to be stressed when talking about AI. Investors need to be careful about what types of information they’re including when utilizing AI services, and ultimately who has access to that info. Many investors use AI to help their business reach the next level but doing it with a calculated approach is necessary to remember.
2025 goals
As investors approach the new year, taking stock of the opportunities that are available and strategizing on how to accomplish them is crucial. The real estate industry is primed for an uptick in activity and competition so those investors that aren’t preparing today are setting themselves up to be disappointed in the new year.
Being an asset to an investor client with tools, expertise and actionable strategies that they can put in place puts brokers in the industry in an indispensable position. Success in 2025 is just a few steps away.
