How to deal with today’s Buying Challenges.
written by Judit Daniel, CEO of SIMP
These days many investors are having a hard time making progress when buying rentals. High competition and low inventory are two of the main challenges.
In many markets, today buying is very difficult. Good opportunities receive multiple offers, and when inventory is low this becomes even more difficult.
Here are some tips we have put together that can help you improve the process. These tips may not be relevant to all investors, but we hope some of you will find it valuable.
1. Cash Offer- cash offer can give you an advantage, so if you have that option you should consider it. Giving cash offers will speed up the process in many cases and there are many landlords that will prefer cash buyers. It doesn’t mean that you are giving up on financing, it just means that you will use financing in a second step. This act is also known as delayed financing — you will need to speak to your lender about it to make sure he can do so.
2. New investment strategy- Most investors use to work in one investment strategy, usually a one that works for them in the past. When markets are changing or when you reach out to a new market, changing your strategy can sometimes be a game-changer. Let’s take an example. In the past, you were purchase houses that need a maximum of $ 5,000 to make them ready for rent. Now you are looking for opportunities in Tampa and there are lots of houses that need updating such as new painting, new flooring, new roof. It’s not going to be a full renovation, but it will cost between $ 10,000–20,000. The value is getting higher rent and also increase the home value. Obviously, this approach doesn’t fit every investor, but if you have the ability to handle such a mini project you should definitely consider that.
3. Flexible investment parameters- Every investor has some baseline when he starts searching for opportunities. When markets are changing, investors who know to be flexible with their investment criteria for each opportunity will earn big! More opportunities will open to them and would be facing a more diverse market. The parameters that can be flexible for example are the price range, year of the build, neighborhood, different sub-segments, etc.
4. Increase of the interest rate- Good or Bad for Business? Most investors think that when the interest rate is going up its bad news. Lets us present to you a different point of view on how it affects the market. Reports are showing that there is less application for mortgages when the rate increases. The meaning is many buyers are sitting on the sidelines. Fewer buyers on markets mean that for a short while there will be a shift from seller’s market to a buyer’s market- the power is in your hand now!
5. Don’t lose Hope- although the market is though these days, we still see many great opportunities around us. If you have the right tools and a working method there is no reason why you shouldn’t succeed in purchasing great properties.
We hope this information helps you rethink or re-calibrate your next purchase.
We wish you success with your investment, hope that this reading was valuable for you, and we would love to hear your thoughts.
