What Does Real Estate Investment Look Like?

By Scott Roberts

In the words of Andrew Carnegie, “90% of all millionaires become so through owning real estate.” The demand for real estate is always growing, as “they aren’t making any more land.” Fortunate for rising graduates, when it comes to real estate, there are many different career and investment opportunities. From commercial developers, to residential home-flippers, to ghost kitchen pioneers, the possibilities are endless. While there are plenty of unique ways to invest in real estate, there are a few core skills that are critical to success, no matter what area you specialize in. Over the course of the last two months, I have had the pleasure of hearing from eight different real estate professionals from various different parts of the real estate sector. This article will consider their personal testimonies and advice to those entering the real estate workforce. More specifically, I will discuss what their jobs entail, the biggest challenges they face, and what universal skills they believe are the key to success.

One of the most popular areas of real estate is development. This type of real estate career consists of seeking out undervalued land, or underutilized land, that can be built up into a profitable new building. Two employees from Carmel Developers explained how they work through the long process of acquisition, financing, zoning analysis, entitlement, execution, and asset management of their projects. One of the greatest challenges these developers chose to highlight was community backlash. In the words of one representative, “people are deals.” One piece of advice they gave that is applicable to all areas of real estate is the importance of community outreach. Community outreach is a professional, strategic, and profitable way to diffuse disapproval within a community. Allowing people to have their voices heard can lead to some very productive business relationships. Treating people like people, instead of a business obstacle, is key to distinguishing yourself as true real estate professional, while simultaneously increasing your projects success.

Another area of real estate that has become increasingly popular is residential home flipping. With the rise of Airbnb and Vrbo, many Americans are seeking to flip houses and apartments in pursuit of passive income through these rental sites. Whether flipping to sell or flipping to rent, this type of real estate consists of finding a property you can efficiently renovate in order to add value to the property. Two representatives from Wynn Sawaii Aston discussed a few easy ways beginners can get into residential real estate.

First, pooling funds with trusted family or friends is a great way to invest in real estate without taking on too much of a stake by yourself. If you find that you can’t sell right away, you can always rent out the property and depreciate improvements. Secondly, it is important to farm a certain area, or in other words, study a small area religiously. This will allow you to quickly pick up on emerging opportunities and pounce on new listings. Furthermore, it is important to plant seeds in this community and water them. This could look like joining a country club or getting active in community organizations. Establishing trust, comfortability, and name recognition are all avenues to future profits. Additionally, it is critical to pay attention to trends in consumer preferences and the buyer demographic when it comes time for renovations. Small details can make all the difference in creating an attractive appearance to buyers. For instance, since hipster millennials are entering the home buying phase of their lives, decorating with a trendy Mexican rug is a strategic example of using relevant trends to market to the evolving buyer demographic. One last piece of advice universal to all of real estate, is the sentiment of treating buyers/renters like family. It is strategic to reduce commissions and personal profit every so often in order to satisfy customers, as this creates loyalty and an unbeatable reputation. No matter what you do, making small sacrifices to make customers happy can move mountains for your investment business.

Another area of opportunity in real estate involves repurposing existing buildings into a more useful property type. An employee of JLL real estate shared how his healthcare investment team has been utilizing this strategy. JLL has profited from applying this strategy by converting old office buildings into medical facilities. In addition, given the rising prevalence of mental healthcare, they have converted former retail stores into mental health care offices for psychologists and psychiatrists alike.

By paying attention to the demand for mental healthcare, and combining it with this repurposing strategy, JLL was able to greatly profit. Furthermore, since these doctor offices are in retail spaces like malls, it creates a “sticky” ecosystem. In other words, this environment creates complimentary business traffic for both the medical and retail tenants. Building on this, the advice for graduates from this representative was centered on swimming toward blue water and finding a niche. In more plain terms, new real estate investors should be looking for areas of opportunity that haven’t been fully exploited yet, and finding a specific, unique way to profit.

For example, consider the opportunity that lies in the emerging ghost kitchen industry. Essentially, a ghost kitchen, or cloud kitchen, is a kitchen that solely operates to make food for mobile take-out orders, that are then delivered by services like Uber Eats, Postmates, GrubHub, and DoorDash. There are no customers or wait staff in these buildings, rather they are just a place to cook. This cuts down on costs and greatly increases efficiency for fast food chains. The potential for this industry has grown tremendously, especially as online orders dramatically increased during the pandemic. According to Grand View Research, the cloud kitchen market worth is expected to reach $139 billion by 2028.[1] This real estate investment applies the repurposing strategy to old restaurants, and combines it with the popularity of mobile food ordering services. Clearly, there is opportunity for real estate investors in this trendy area of real estate.

No matter what you decide to do, there are plenty of opportunities awaiting in the real estate sector. Whether you are graduating college student, or a are a working individual looking to make some passive income, real estate always has plenty to offer. By finding your niche and applying the strategies discussed above, hopefully you too can become like Andrew Carnegie, and make the real estate market work for you.

[1] “Cloud Kitchen Market Worth” GVR, June 2021, https://www.grandviewresearch.com/press-release/global-cloud-kitchen-market