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Heading Into 2022: Can You Still Earn Passive Income From Real Estate?

While investing in more tech stocks and purchasing cryptocurrencies and NFTs have become the more popular destinations for investing and wealth creation, there’s no denying that the real estate market’s 2021 run wasn’t pulling any punches. And given the surging home prices of last year’s confluence of rock-bottom mortgage rates, low housing supply, and increasing demand for homes, it became the glory days for sellers worldwide.

However, now that trends are shifting and people are welcoming the new year 2022, the current outlook is still taking shape as the momentum slowly dives back down to a more realistic rate than most people expect. As a result, pending real estate investors can’t help but question whether diversifying into more properties is the smarter choice or if they should take their capital elsewhere.

Follow Demand and Consider the Location

Although most people would argue that emerging tech sectors and the unavoidable buzz around all things crypto should warrant enough decision to invest in these markets, the real estate space isn’t actually doing too bad going into 2022. And even if demand for specific properties is changing, you can easily follow where it’s headed to consider your next best location for a profitable real estate venture that can consistently earn you money over the years to come.

  • Moving Back Into the Big Cities: As the global economy continues to bounce back and offices welcome more and more people, relieving them of the remote work environment, moving back into the big cities is a trend we’ll see grow throughout 2022. Plus, considering that most people are craving social interaction and the government’s push for increasing economic activity, investing in metropolitan areas will see a rise in the next few months, so you must get in early.
  • The Rising Value of Rental Properties: Branching off the same argument mentioned above, it’s not surging home prices that will take the cake for 2022 but instead the rising value of rental properties as people start moving and priorities transform. For example, many markets suffered from the internal migration of people out of cities. But seeing as how even New York City’s housing market made a comeback, there are more upsets in store for the future.
  • Don’t Shy Away From Commercial: Self-employment, numerous startups, and the powerful presence of the gig economy gave way to the establishment of many up-and-coming businesses. And while a lot of these self-made enterprises are operating from the comfort of homes and garages, scalability will point them back in the direction of commercial properties. As a result, business tenants and partners will flock to guarantee space and establish themselves in prime locations as their business grows.

earning from real estate

Account for Possible Threats

Likewise, despite the many potential upsides waiting ahead for the real estate market, that’s not to say possible threats and drawbacks don’t exist. In order to provide a fair description of how things could play out in 2022, it’s only right that we observe some of the negative expectations and shortfalls that may dissuade you from investing in any new properties.

  • Cost Constraints vs. Low Inventory: We are still a far cry from fully recovering in terms of raw materials, supply chain disruptions, and the extremely low inventory of new housing projects. And depending on how this will impact your local real estate choices, it will likely introduce volatility that would be disastrous for newbie investors without extra pocket money to meet transactional expenses and unexpected costs. As a result, there’s the risk of you being priced out of the market before realizing any of your profits or barely breaking even in some regards.
  • Expensive Starting Investments: Apart from the costs incurred through active real estate investment management, we can’t overlook the expensive starting investment required to enter the current markets. While the rate of home price increases is experiencing a slight pullback, the numbers are still up there, which could prove onerous for those just dipping their toes in the water. Plus, you will still need to build a team around a real estate business, particularly an accountant to oversee finances and legal professionals who can provide service of process and get papers done.

Expand Your Investment Portfolio to Secure Future Earning Potential

The real estate market isn’t perfect, but that doesn’t mean there is zero money to be made if you look in the right places and put in an effective amount of time to research and plan. So for those looking to expand their investment portfolios, investing in real estate and accruing passive income through rentals is still an excellent way of securing future earning potential this 2022.

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