The Construction Industry is an industry booming with investment potential. It is home to a lot of companies, or properties, to invest in. Keep an eye on the big names in the industry, like manufacturers or rising technological advancements, to find your investing niche. Here are a few reasons why you might want to invest in the construction industry, which is becoming more efficient and profitable each day.
The Industry is Plentiful
There are many avenues of the construction industry engaged in a project from start to finish: starting with the initial planning of a project all the way to the installation of the windows, doors and painting of the walls. If you pay close attention to the market, and to big construction jobs, this industry boasts a lot of areas to invest.
Caterpillar, for example, is a major equipment manufacturer company with a long record of high-quality equipment production. Adams Drillers is a Boring & Drilling Contractor with an extensive background in drilling, grouting, and building high-construction wells. D.R. Horton is a leading residential homebuilding company with an impressive history of low debt, and consistent cash flow.
These examples barely scratch the surface of the wide array of areas in the construction industry.
Multiple Areas of Construction
The construction industry is divided into multiple sectors: residential and non-residential, including heavy industrial, commercial, institutional and engineering types of construction projects. These are concentrated areas of investment potential, especially with more technological advancements on the rise.
When you invest in a commercial property, the earning potential is exponential. According to real estate agent, Matt Larson, you can generally expect a 6% to 12% annual return from the purchase price of a commercial location. Compared to a residential location, which can yield a 1% to 4% annual return, a commercial property is a statistically sounder investment choice.
If you can invest in a private construction project, or a construction project not funded by the government, there is an even higher chance of monetary reward.
Location, Location, Location
The investment potential can deviate depending on the location of the construction project. For example, you might have the means to invest in the stocks of a large, luxury apartment building company. Maybe you read online they are about to break ground on a massive development in Manhattan, and you wanted to take the gamble with your funds. This type of project could generate an impressive revenue that could send the stock skyrocketing.
A property’s potential investment return is almost directly tied to its location. You hear it with real estate every day: location, location, location. A resort being built on an island off of the Caribbean is a better investment opportunity than perhaps a new public school in Illinois. However, this also applies to the biggest cash supplier in the construction industry: raw material goods.
Find out where the booming concrete companies are located, or the granite construction companies and invest directly with exchange-traded funds and mutual funds. These reduce the risk factor of an economic downturn, or a house market downturn, if that’s where all of your investments are situated.
Construction will never stop – it is an industry constantly in motion looking for the next available real estate. Technological advances, like drones, and “smart devices,” make for a lot of growth in the industry. Construction sites want to get their projects done quicker, efficiently and safer.
Once you find your niche in the industry, after ample research, you’ll find the stock market loaded with potential investing opportunities. These stocks are relatively stable if you invest at the right time in the right place, rather than on a project that’s been paused for a year. Take a minute to consider the possibilities when you’re looking for an industry to invest in!