REAL ESTATE UPDATE:
Members, BIG MONEY is taking the Real Estate market by storm. Investors all over the country, but especially in the Sand States, are complaining that big hedge funds are buying up all the houses and paying full price, depleting the inventory. I have been telling investors for a couple of years now that this was coming. As soon as these fund managers figured out they could buy directly from the bank, and cherry-pick the houses as well, it was inevitable. Here on the West Coast of Florida these big companies are buying homes in groups of 100 or more, sucking all the oxygen out of the market and leaving local investors fighting for scraps or overpriced retail homes.
Just recently an article in the Sarasota Herald talked about one fund manager that just bought 80 homes. The plan is to keep these homes for 6 to 8 years and get a 7% to 10% return on investment. The manger was very happy with this rate. Their investors love this type of gain and are buying the properties right.
Most smaller investors can't or won't work with a 7% to 10% ROI much less wait 6 to 8 years to sell the property. This makes finding houses harder and prices will continue to climb if these big funds keep buying all the future inventory. And with 80 new homes coming on the rental market rents may drop a little as these guys can lower their rents because they have so many and they are happy with a 6% ROI.
What's your strategy?
If the big hedge funds keep buying you're going to have to have a good strategy:
1. Consider increasing your market area. Some investors I know will only buy in 1 or 2 zip codes. If there are only a few houses in that area for sale and the funds are buying all the others that never even make it to the market you're out of luck.
2.
Get to know the Realtors in your market and work with them and be loyal. You cannot expect them to work for free. Make realistic offers that have a chance to get accepted.
3. Look at Short Sales: they may take a while but when you get a fair deal you've gotten a property that no one else had a chance at.
4. Call and work with probate attorneys: they always have homes that need to be sold. But a word of caution-they have had lots of investors call but most are full of BS and never close, or they make ridiculous offers. If you're going to play in this pond be prepared to make fair offers and close the deal. If you do you will have all the deals you can handle. Remember, attorneys are a club and they 'talk amongst themselves'. Do right by one and they'll tell the next guy who needs to sell a home.
5. Work 'For Sale by Owner' homes. Explain you can close fast and with cash but you will need to make a fair offer.
Good luck and let me know how you are doing. Paul
Doris Corner:
Hello Members!
Got lots of mail last month about the cost of insurance and selling older homes. It seems a lot of members are feeling the pinch of increased premiums and let's not forget the property tax issues. One member asked what she could do to lower her premium. I asked her what her deductible was and she had a deductible of $250.00 I suggested she call her agent and find out what the premiums were for a higher deductible and see what the saving are compared to the increased deductible. We carry a $3000.00 deductible on all our properties. Yes it's high but it's worth it since most of our homes are in low crime areas and are rented. And in most cases any damage done by the tenant is cosmetic so it's not a covered issue anyway. And if there is a major problem the deductible is minor compared to the rest of the home. Good luck and talk to you next month. Dori.
Pretend that every single person you meet has a sign around his or her neck that says, Make Me Feel Important. Not only will you succeed in sales, you will succeed in life.
Mary Kay Ash
If you love what you are doing, and always put the customer first, success will be yours.
Ray Kroc
So many fail because they don't get started; they don't go.
W. Clement Stone
