Despite a brief recovery in existing-home sales in July — with sales increasing by 1.3% and ending a four-month decline according to the National Association of REALTORS®, overall sales in the U.S. market are still 2.5% lower than last year. Plus, home prices are continuing to rise and inventory levels remain relatively tight.
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Real estate mogul and financial influencer Grant Cardone predicted last year that “America will become a renter nation,” and continues to warn about the challenges of the housing market.
We know that American homebuyers are facing elevated interest rates, persistently high home prices and an overall budget squeeze, but are things that much easier for renters? Despite the construction of 1.2 million new apartments across the U.S. since 2020, which Cardone argues should have alleviated rent pressures, there’s a widening gap between wages and rent. While wages have grown by approximately 20%, rents grew by 30% between 2019 and 2023.
So what’s the answer if you want to invest in real estate in a fluctuating market, with less risk involved? Here are four ways to navigate the challenging housing market without taking on substantial debt:
Real Estate Crowdfunding
Real estate crowdfunding is revolutionizing the way people invest in property. Instead of needing large sums of money to buy real estate, you can pool your resources with other crowdfunders and own shares in commercial or residential property.
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The major attraction with this is, of course, accessibility. With minimal capital, you can diversify your investment portfolio and potentially earn passive income, all while bypassing the traditional hurdles of real estate ownership and avoiding substantial debt.
Private Real Estate Funds
Private real estate funds offer a powerful way to diversify your investments across various real estate assets. These funds spread risk across multiple properties and sectors, meaning your money isn’t sunk into just one property.
Just as with real estate crowdfunding, you’re able to access more opportunities in real estate that you wouldn’t necessarily have been able to access as an individual. It’s definitely worth investigating, particularly if you already have an investment portfolio and are looking for an alternative way to balance risk and reward.
Commercial Real Estate Investments
If you want to put money into real estate and want a regular source of income as well as a long-term investment, commercial real estate could be the answer. Think of necessity-based properties like grocery stores — they’re less vulnerable to economic fluctuations and can offer steady, reliable cash flow. By investing in this type of commercial deal, you can benefit from consistent financial returns in an uncertain economy.
Focus on Financial Health
Whether you’re looking to own, rent or invest, maintaining strong financial health is vital in an unpredictable housing market. With costs in general on the rise, not just in terms of housing, having a solid financial foundation can keep you secure, even when the market wobbles. Make sure you’re following the basics like budgeting, paying down debt and saving what you can and consider diversifying your income streams through side gigs and/or upgrading your skills for advancing your career. This added financial flexibility can help you manage rising living expenses and give you the resilience needed to weather any storm that comes your way.
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This article originally appeared on GOBankingRates.com: Grant Cardone Has a Warning About the Housing Market — 4 Ways To Navigate Risk
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
