Over the past few years real estate investing was the thing to get into. Many of the gurus became quite wealthy selling their courses and coaching pro...
Over the past few years real estate investing was the thing to get into. Many of the gurus became quite wealthy selling their courses and coaching programs and boot camps. The number of investors or wannabe investors was growing by leaps and bounds. The big money of real estate investing was attracting them even more in the early part of this decade because of the rapidly rising property values. However, with the declining market values nationwide, they are now dropping like flies. They do not understand how to buy and sell in this market. Are they right with sitting this out for a while?
Similar things have happened in the stock market. When the market was good we got all these wannabe stock investors in there. When the bubble burst they disappeared. They backed off because you needed to get creative to survive to make money. So, again, are these investors right with sitting it our for a while until the market comes back? NO, would be my response.
A good investor in stocks or real estate will make money in both a good and bad market. Why, he changes his strategies. That is why there is a great opportunity in today’s market for the astute investor. One article I read called this the “Perfect Storm of the Real Estate Market.” Just like the movie with George Clooney, we find 3 things happening in this market simultaneously like the perfect storm. These have never occurred all at the same time.
First, there is less competition. There are a lot of investors active today because the profits aren’t there like they were and investors don’t know how to make money in this market.
Second, in most areas we find rising rents. With a record number of foreclosures and people needing a place to live and also the lending standards tightening up, fewer people can qualify for home loans. As a result there are more renters out there. It becomes a simple law of supply and demand. So investors today can take advantage of the rapidly strengthening of the rental market.
Thridly, record foreclosures. With a record number of foreclosures out there and still rising, there is going to be a ton of properties available to purchase at a discount. This is also affecting the average homeowner to lower their price to get their house sold. We expect banks to start really discounting even more this year to get rid of some of these properties including reo’s.
So how do investors today take advantage of the perfect storm? With the supply of discount properties on the market today and the lack of competition we should be able to achieve discounts like never before. A couple of years ago an investor may have been able to get a 15% discount can now get a 30% discount in this softening market.
So what about the selling end? We are seeing that buyers do not have the 3-5% down that we could get on a lease/purchase anymore but you should be able to take advantage of the rising rental market. An investor cannot count on being able to flip a wholesale deal as easily as a couple of years ago. You can still flip but you must buy better in this market because wholesalers are looking for bigger discounts also. We have started to use option agreements more and look for retail buyers selling on a discounted price between 75-80%. This is what we call wholetailing. This is a great strategy in today’s market.
Today there are more good opportunities out there to buy like never before. You have to buy right in today’s market and it is easier to get a discount in today’s market. You need to have confidence in yourself and be a great negotiator. Some tips for this market are make sure of your exit strategies before you buy. Do rental analysis wherever you buy. Get better discounts than a couple of years ago. Establish and keep establishing your network of property contacts in real estate. Always continue your education with books and seminars and if you can get into a good coaching program for real estate. I have one that I can recommend and that I am involved with. You can find more info about this program at www.roopdoran.com.
