The current economic crisis forces real estate investors to innovate, be creative in their business models, and adapt to the changing market conditions. The economy contracted for two straight quarters, so to survive, you must find ways to cut costs, land clients, and increase efficiency.
Businesses often overlook creativity in times of crisis. However, it is what makes businesses successful. Only real estate investors that think outside the box and look at things differently will thrive in these challenging times. Here’s how you can survive a crisis using innovation and creativity.
1. Understand the Crisis
The first step to being creative and innovative is understanding the economic downturn and how it will affect the real estate market. You need to understand what is happening at that moment and how things have changed over time. You won’t create something new if you don’t know where you stand.
2. Innovative Marketing
Here are some creative and innovative marketing ideas for real estate investors to survive and thrive during this time:
- Lead Generation: This is the first step toward any successful marketing campaign. In the real estate industry, lead generation unearths potential buyers and sellers interested in buying or selling property. A good lead generation strategy ensures you contact the right people at the right time.
- Social Media Marketing: It uses social networks to reach current and prospective clients. According to the National Association of Realtors (NAR), 74% of realtors use Facebook to market their businesses. Social media helps companies build relationships with their target audience.
- Virtual Tours: These are a simulation of the property. They are excellent for showing prospective buyers what a property looks like inside and out. You can take photos of the interior and exterior of the house and then stitch them together to create a virtual tour. Alternatively, you could use videos. Listings with high-quality photos have a 44% higher chance of selling for the asking amount or more.
3. Devise Payment Plans
When there are economic downturns, most people face financial difficulties. Sure, the cost of housing is coming down in some cities, but the high mortgage rates mean a new home is beyond most people’s reach.
You could devise payment plans to attract property buyers and encourage new purchases. For example, you can allow clients to pay in installments, provide lease-to-own schemes, or lead them to lenders providing lower mortgage rates than prevailing industry rates.
4. Use Technology
One use of technology is leveraging data analysis for decision-making. You can use data to analyze past events and trends and use that information to help plan for the future.
Data collected from website visitors’ interaction is also great for gauging users’ experience. That should help you tailor the content and provide a better online experience for clients visiting your website.
Another way is to utilize technology to automate processes, making them more cost-effective. Software-as-a-service (SaaS) has enabled investors to optimize property management. You can use it to digitize tenant agreements, keep track of rental income, and send auto alerts for unpaid rent or lease expirations.
AI and augmented reality alter how potential clients engage with a physical environment. That enables you to provide virtual tours or virtual staging.
On the other hand, an investor can use realtor websites and social media pages to find deals on properties. A recent boom in PropTech technologies has streamlined the home buying process. An investor can utilize the platform to optimally research, market, buy, and sell properties.
Additionally, there is real estate crowdfunding, an alternative to REITs. Here, investors can pool their resources with an even lower entry requirement.
5. Give Offers and Discounts
You could introduce discounts and offers to attract clients. A loyalty program can incentivize homebuyers to reserve a unit during a crisis by offering them a substantial rebate on the purchase price. Motivating homebuyers with referral bonuses is another fantastic option.
6. Repurpose Your Properties
In times of crisis, creativity often takes the shape of finding new uses for existing things. For instance, as the need for warehouse-style stores diminishes, you can convert the space into a self-storage facility.
With most people working at home, buildings that served as offices can house families as their occupants vacate. Alternatively, create innovative dining options by shifting the focus of a food establishment toward a take-out culture.
There has been a high demand for industrial space, so you can convert any of your feasible properties to suit this. The COVID-19 pandemic accelerated e-commerce, hence increasing the demand for industrial space.
Rentals are an excellent way to earn extra income. The constant need for stays in short-term rentals resulted in a 21% increase in demand in the second quarter of 2022. Their demand may likely increase as only a few people can afford new homes.
If you have difficulty selling stock, you could list them on Airbnb or VRBO and charge guests a certain amount per night.
7. Innovative Building Materials
The push for carbon-neutral structures is inspiring innovative green construction methods and materials. New off-site construction management approaches give rise to novel models and ideas using cloud computing and remote collaboration tools.
Opportunities for innovation among builders, property managers, and tech firms have opened up with the proliferation of 3D printing and prefabricated components, lowering the cost of construction.
You’re not alone if you’ve noticed a decline in sales or inquiries. The entire real estate community is currently facing financial difficulties. If it is possible to partner with other industry players, then do it.
Offer to promote each other’s projects if a potential buyer is interested in a property, you do not have in your portfolio. That should increase your market reach and provide valuable insight into running your business.
Every indication points to tough times ahead, so you must develop innovative and creative ideas to stay afloat. Some ways you can achieve this are to collaborate with other investors or real estate agents, use innovative technologies, repurposing properties, and provide payment plans.
By Gurpreet Singh Padda, MD, MBA