Real estate is generally regarded as one of the safest assets and investments available, no matter where in the world you are. The reason is simple. Land is a finite resource, unlike other investment options that can issue new shares with relative ease – such as stocks, bonds, or mutual funds. That’s not to say real estate is guaranteed in any way. It can fluctuate in value just like any other investment and is subject to cycles of up and down, but no matter what happens in the long term, you still own the physical asset, and people will always need a roof over their heads.
But even though the physical appearance of real estate (land, houses, buildings, etc.) has not changed much over the years, it would be foolhardy to think that prior investing strategies can remain static in an evolving world. Through our own investments and working with professional developers, we have compiled a list of the top six alternatives in real estate to the flipping, wholesaling, and multi-family rental options.
Much controversy surrounds the younger generations today and a perceived sense of entitlement or unwillingness to work hard. In reality, what has shifted is more mindset than work ethic. Younger people are looking at what their parents and grandparents worked a lifetime to achieve and are wondering if it is all worth it. Big houses you hardly spend any time in, more cars than you possibly drive at a single time, and enough personal belongings to fill a storage facility. But for what?
Minimalistic living is making a comeback as prices increase and the desire for material possessions decreases. Tiny homes started a few years back as a fad many thought would never catch on. Now there are more manufacturers and distributors jumping on the bandwagon than ever before. All you need is a small patch of land (or acreage if developing your own community), and your dream home can be delivered. If you decide you want a change of scenery down the road, you either have a smaller asset to sell, or you can pack it up and take it with you!
This is another relatively new alternative to traditional living spaces catching on in ways most would not have believed. If you are unfamiliar with the trend, it is exactly what it sounds like. The containers used for shipping cargo on freight trains and ocean liners are now getting repurposed for living. If you still can’t envision it, think about living in the back of a tractor-trailer. A used shipping container can be purchased online, with delivery included, for less than $10,000 depending on the condition. From there, the customization options are endless.
Depending on the municipality, the restrictions for making a shipping container a permanent residence may vary, but when done correctly, they are not much different from mobile or manufactured homes. But it takes vision, dedication, and know-how to pull it off. With access to the same qualified professionals needed to build or renovate a home (electricians, plumbers, carpenters, etc.), the finished product on a shipping container project would leave most hard-pressed to tell the difference between it and a traditional ranch-style home.
While the activity of glorified camping, or glamping, is not a specific real estate strategy, the opportunities it provides are. Traditional camping usually involves campgrounds, which can either be in a public/national park, or on privately owned land where campsites are assigned and a limited level of amenities provided – such as portable restrooms and running water. From a difficulty of operation standpoint, this is about as simple as it gets, and the barrier to entry is relatively low, but so is the return on investment.
Now, glampsites are something else entirely. The campers generally do not show up with tents and sleeping bags for a night spent under the stars. Instead, each campsite comes equipped with individual accommodations that more closely resemble tiny homes than tents. They might have a number of specific modifications like glass roofs for stargazing, mosquito netting enclosures around the outdoor spaces, and pre-built campfires where all one needs to do is strike a match. More substantial investment and level of care are needed here, but also much higher returns on investment.
RVs/Mobile Home Parks
These are nothing new, per se. Everywhere you look on social media or real estate-specific websites, there are purported gurus selling classes, webinars, and coaching on how to use their system to become the next millionaire mobile home park owner. The first step to deciding if this is a profitable investment opportunity is to realize the difference between an RV and a mobile home since the names are slightly misleading. RVs, or recreational vehicles, are completely mobile and can move from one location to another with relative ease. Mobile homes, however, are not nearly as mobile once set in place and connected to onsite utilities.
With that said, catering to the RV market lead to variable revenues as vehicles come and go. The mobile home park offers slightly more stability when leasing plots of land to folks who own their own mobile home and just need a community to tie in with. But the real money in mobile home parks in this modern era of real estate is in owning the mobile home park and the homes within it. Even though a mobile home will not appreciate in value to the level a traditional home would, they are a relatively lower-cost alternative to purchase and will still yield rents on par with the local single-family or apartment housing market, making some of the return on investment numbers top attractive to ignore.
Who doesn’t love a good jigsaw puzzle or Lego block set? Sure, there is a big difference between assembling something without tools on your kitchen table and building a home you would feel comfortable enough to let your family inhabit, but the premise is the same. Prefabricated, or modular, homes have existed for decades but in a very different way than what is available today. No longer must a consumer settle for a limited number of styles/designs and rely on the manufacturer to assemble them.
With several breakout companies like Boxabl and Arched Cabins now revolutionizing the process of building and shipping homes, options have never been more customizable than they are now. This is a huge opportunity for more affordable home ownership options and for developers and investors to complete projects faster and more cost-effective than ever before. It is also likely the industry will continue to grow at a staggering rate as popularity takes root in consumer and investor markets.
Commune Style Living
The word commune might make you think about cults or militias that have gone off the grid out in the middle of nowhere to get away from government oversight, but the word is more closely related to community, which is essentially what a commune is – a community of people who have come together for a common cause or purpose. Generally, all members of a commune share the same ideological beliefs and have common backgrounds and situations in life.
This style of living has become increasingly popular with the younger generations as the cost of living continues to rise. It takes the premise of having a roommate to share expenses with to the next level by organizing everyone living together to also share in the communal duties: shopping, cooking, cleaning, etc. For able-bodied elderly people who do not want to move in with their kids or assisted living facilities, this new trend offers a new option for living their golden years without sacrificing independence or quality of life. The opportunity to repurpose property for this style of living also provides new opportunities for investors and developers.
Whether you personally like any of these new trends or can’t see yourself doing any of them, the potential is still there. Not everyone likes the same style of house, drives the same kind of car, or lives in the same part of the world. The beauty of change is that you don’t have to adopt what you don’t like, but you need to be aware of it. Real wealth can be created when you are able to see opportunities everyone else is looking past. Remember, many thought Steve Jobs was crazy for putting a camera in the iPhone, thinking no one would want that feature. Now there is almost nothing we don’t want on our phones.
If you or anyone you know is considering a career in real estate or looking to learn more about the myriad of investment opportunities you might never have heard of, reach out to chat with us today.