Expert Insights: Navigating the Real Estate Landscape

Article details provided by Kirby Holman, VP, Commercial Loan Officer

Kirby Holman, VP of Commercial Loan Officer, has over 20 years of experience in real estate investment, specializing in large projects and multi-million-dollar loans. Kirby shares his expertise on the benefits, opportunities, and challenges within the real estate investment landscape.

Why Invest in Real Estate?

Real estate offers the potential for higher rewards with more stability compared to other investment options. “While there’s always risk, real estate can be less volatile than the stock market, with steadier cash flow and better returns over time,” says Kirby. Additionally, real estate investments provide significant tax benefits, such as depreciation deductions and the potential to defer capital gains using a 1031 exchange.

What to Focus On?

For newcomers to real estate investing, Kirby recommends starting with lower-cost properties like rental housing or small apartment buildings. “These are generally more stable investments with a consistent demand for housing,” Kirby explains. He notes that residential real estate, particularly multi-family properties, often has lower vacancy rates, making it a solid choice for steady income. Moreover, investing in high-demand areas can increase the chances of long-term appreciation.

Common Challenges

Commercial real estate can be complex, and investors must be prepared for challenges. “It’s important to have a reliable income source outside of your investment to ensure financial stability,” Kirby advises. “Liquidity is key to your staying power in the market.” Understanding local market dynamics, such as zoning regulations and economic growth, is also critical, as these factors can significantly impact a property’s value.

Property management can be time-consuming. “Property management is often more demanding than people expect, so it’s important to decide whether you want to manage the properties yourself or hire a management company,” Kirby adds.

The Role of Financing

“Financing is leverage,” Kirby explains. “Rates, cash flow, and debt service all play a significant role in your decision-making process.” Building a strong relationship with your bank is crucial to securing favorable terms. Many investors use financing to scale their portfolios faster, leveraging capital to acquire additional properties. However, Kirby warns that excessive leverage, without proper cash flow management, can lead to financial strain.

Looking Ahead

As we move into 2025, the real estate market is expected to stabilize, but high interest rates may still impact activity. “It’s a good time to be cautious and strategic with your investments,” Kirby notes. “Look for steady opportunities, especially in rental housing and multi-family properties.” He suggests paying attention to external factors like inflation and rising costs, as these can influence long-term returns. Additionally, Kirby advises exploring emerging markets like suburban areas or smaller cities, which may offer growth potential as demand for affordable housing increases.

*All loans are subject to credit approval.