Who doesn’t remember their first paycheck? It’s a moment of pride and joy—we realize that we’re prepared to make it on our own, ready to become financially independent, and build towards our future (and present).
Then comes a second moment, when we realize that the money we earn can actually work for us. Enter investing.
Although traditional investing (stocks, bonds, and mutual funds) might have lost some of its popularity, it’s still very much real. On the other hand, some types of alternative investments are ever-present in today’s conversations (yes, we mean crypto).
Within the realm of alternative investments, some options are more grounded than others. Real estate, and specifically local real estate, is one of them. By local, we mean real estate around the area that you live in: from your neighborhood up to your region. Or, in other words, your vicinity.
There are a number of benefits to local investing—read on to discover them.
Building a Local Portfolio
A big part of being a successful investor is being smart and following a strategy. You might get lucky by putting your hard-earned dollars here and there just randomly, but investing like this is a good recipe for losing most of it.
A healthy investment portfolio is a diversified portfolio: the more you diversify, the more you can balance out risks and aim to maximize returns.
And especially in these unstable recessionary times, keeping at least some of your investments in mid-market, local real estate can be a good strategy to diversify. But it’s not only a matter of diversifying and standing firm against a recession: growing a local portfolio has other palpable benefits.
Investments in local real estate target above-market returns, and they’re also actually there for you to see; as real as it gets. They’re within your community, right where you can see them grow and bring positive changes to the place you call home.
Why Invest in Mid-Market Real Estate?
As the name obviously suggests, mid-market real estate sits in the middle of the commercial real estate spectrum. It comes down to a matter of size and value: they’re properties that are too big for single investors, and too small for institutions to get into. That’s why they’re also known as pre-institutional assets.
Mid-market real estate includes property that is used for offices, multi-family residences, retail—pretty much everything. Again, it’s not limited to what the property is used for, but rather how valuable that property is. Even a club pool, for example, can be a mid-market real estate opportunity.
Because they’re investing opportunities that fly under the big-market radar, mid-market real estate is often associated with local investing. To know they’re happening, you have to be there. Or rather, because they happen within your community, you have a chance to become a part of them.
This is precisely one of the biggest advantages that investing locally has: whether you are looking at your city, state, or even region, you know the area and you can judge by yourself whether a certain deal can work there.
No matter how good a local deal is, it’s very unlikely that you get overwhelmed by accredited investors rushing in from all over to get a piece of the cake. The cake is baked, sold, and eaten locally. And the people who do all that are human—they’re your own neighbors.
Benefits of Investing in Local Real Estate
Investing, of course, is about making money. You put money in, you expect to get more money out. Local real estate brings you this opportunity, and not just because we say it: the benefits are there for you to see.
There’s certainly the potential for economic benefits, but there’s more to it as well.
1. Real Estate Is Less Volatile Than the Stock Market
Whether you’re just starting out as an investor or you’ve already got your experience, it’s important to know that, historically, real estate values have always increased, even through economic turmoil.
Also, during a recession, primary, big city markets tend to be left out, as prices get too high for investors. The smaller, local markets remain less expensive to invest in.
This is even more evident in the local real estate market, where you can see and really know how the economy is doing. And as hard as times might get, you and your neighbors will always need a place to live, restaurants to eat out, venues to socialize, coffee shops with good wifi service.
2. You Don’t Need a Broker or Accreditation
When it comes to traditional investments or even large alternative investments, if investing isn’t your primary line of business, you need a broker to guide you and even manage your portfolio.
For many deals, you have to be an accredited investor to legally invest.
In local real estate (thanks to Reg CF), there’s no one standing between you and your investment. Transactions are as straightforward as they can be—if you find a deal that works for you, you can jump straight into it.
3. Small Amounts Are Welcome
Even keeping a small portion of your investment portfolio in local real estate can make a big impact.
You don’t need to be a millionaire to invest locally. With low minimum investments, you can redirect a portion of your savings or existing investing dollars into local real estate.
Opportunities are transparent regarding what they’re doing with your money, how they’re doing it, and obviously where. From start to finish you know what you can expect to gain and what the risks are.
The added value here is that with your investment, you’re potentially generating an income for more people within your community: the more that is built and renovated, the more jobs need to be filled.
4. Undiscovered Opportunities
As these opportunities happen in the area where you live, you’ll be among the first to hear about them. They don’t draw massive attention, and you always get a first-mover advantage: learn about the opportunity and decide to invest in it before anyone else does.
This gives you a big competitive advantage, because you don’t have to wait around for a good deal to happen, or even investigate for days on end to see where you can find a deal that entices you. If it’s happening in your vicinity, you can be a part of it as soon as it appears.
5. Proximity to Investment
Investing in local real estate offers you the chance to move from spectator to participant. You’re not just putting money in a bank account or an online portal: you’re investing in something that’s very real and tangible. You can see it, touch it, and feel it.
Once you’re part of the investors that get the deal funded, you can watch the project unfold in front of your eyes, very literally. Any day you want to see how the investment is doing, just drive by it. Real people are influencing and building it.
And you’re one of those people.
The bottom line is this: local real estate is an accessible, transparent, and tangible investment. It brings the potential for returns, and an asset that will always be around. As long as people live somewhere, there will be an opportunity to invest in real estate.
And with that investment, comes the satisfaction of knowing that you’re playing a part in your community’s growth. You’re creating jobs, houses, restaurants, commerce—an overall economic rise for you and everyone around you.
The investing potential around you, right in your community, is huge—it’s a matter of discovering it.
Turn Your Investment Into a Reality
Say you’re out walking your dog, and you see a construction site in a corner. You ask someone in a hard hat what’s going on, and they say they’re building a new brewery/restaurant. You think it’s a wonderful idea, and wonder why you didn’t hear about it before.
To invest locally, you need to know what’s going on: who’s planning what, how much money is needed, what are the project’s dates, and what’s the general impact. And as many doors you knock on and people you ask, some opportunities will walk past you.
Keeping in touch with other investors and issuers around your area is a good idea, but it’s still not enough. Granted, if you keep open ears and eyes, you’ll start to realize that local opportunities are plentiful.
What you need is a place that centralizes that information, and lets you know when local deals are happening.
Vicinity: Your Partner In Local Investing
At Vicinity, we want to make local investing available to everyone.
Our aim is to connect you, as an investor, but also as a neighbor, to the opportunities that are available in your area, so that you can invest where you live and build your local portfolio.
We believe that a thriving economy is only possible with a willing community, ready to invest, work, and grow together. To support this, we treat our platform as a homebase, where issuers share their vision, and investors jump in to make it happen.
You can be a part of that too, just by signing up.
We’re happy to help you make your first local investment—it’s right here for you.