Current Market

Hello All,

I’m a beginner in this whole REI thing. I’ve yet to purchase my first investment property, but plan to do so this year. But I was wondering everyone’s thought about the market in regards to investors? I’ve noticed already in listings how they are reducing prices, offering closing help, money for carpet, etc here in the Maryland area. Does this means the market is getting bad? I know it has slowed down a little, but what does this mean for investors? Will it still be as profitable? Will it be better to hold and rent the property instead of flipping?

Again, I’m new to this, but would like to read your thoughts and advise on this topic. I believe it will help me when I begin my investing. Or am I begginning this new venture too late?

Thanks in advance!!!

Keke ???

In the upswing market it almost didn’t matter whether a person did a purchase-to-rent or a six-month rehab… either way appreciating values made for a nice level of cushion to ensure some profit.

My personal opinion (I’m a realtor) is that erosion has already begun on the overal, national housing market. But that’s a general statement since there are still ‘hotspots’ around the country where the demand is still high enough to continue appreciation. Like you, I’m seeing more sellers offering incentives, longer days on market and lowered prices after only 3 weeks on market. Compare that to just three years ago when a house could easily sell within one day at more than the asking price with no seller incentives!

For those who know how to work the numbers for a short-term rehab… they’ll know what projects to turn away or take on. For beginners, I’d advise getting into a rental property that turns a positive cash flow so that, over time, there’s both a short and long term return. But if it’s bought on a creative, high interest loan even that will work against the investor over time. I believe it’s best to get the most decent fixed rate you can so there are no surprises as interest rates increase.

Here in Southern CA, demand is still pretty high but the prices are starting to really get out of reach for first-time buyers with little cash. Most making purchases of homes above $400k are using equity from a previous home. I foresee the ‘soft-landing’ of maybe a 15% correction that flattens out over the next three years. Some people will probably be able to refinance out of their variable rate into a fixed rate on their overpriced homes… but unfortunately, for others, their variable rate is going to throw many into foreclosure.

As an investor, I plan to keep an eye of the foreclosure market.

I’m starting out as well. I’ve looked at the markets in our local area’s extensively. That’s great to hear what Real Estate Agents have to say. I have market concerns as well. The market in my local town is quite flooded, but there’s some neighboring communities where it is still pretty good.

Study your target area carefully and buy in good neighborhoods. Remember that you make your $$$ when you buy and that people shop neighborhoods first and homes second. Look for places close to schools ect. Put yourself in the shoes of a buyer and think of what you would want. Don’t only shop on price. If a property is super cheap then you need to find out why.



Investment is all about the market, regardless of the commodity. Real Estate is a commodity so it too should be regarded in relationship to the market you are in. Sometimes a market can slow on the residential side but be lacking in supportive small commercial. You may find what may not be successful with a residential rehab might be great with a commercial rehab. Know the market trends and stay in front, not behind.

Even though there is doubt in some markets, there is promise in others. We currently stay away from the suburban and second home markets where we were very active the last few years. We now focus our attention inside undervalued urban markets. Baltimore is a place to look as there is promising opportunity in that market. I would have my doubts about Western Maryland. Around DC can still hold opportunity but the buyer profile in that area is much different that in Balitmore and the need and type of housing is on different ends of the scale. If acquired at a workable price, I am sure a good nice property on the Eastern Shore with water access will still be marketable.

Our thoughts are this, every market will hold opportunity you will just need to be more selective and knowledgable about the market to be sure you can come out or what you go into with gain. One techinique we use is simply to secure our end buyer before going into the investment. Look to you local local housing initiative groups and counseling groups. We work with one in our local market that has more that twenty folks each month solicite them for help in becoming homeowners. When the folks are ready, the counselling group will let us know and we will start to look for the right home in the areas they want to live.

Great ideas and thoughts! Thanks, I will keep this all in mind when shopping for my first investment property and when looking at the markets in my area!

Thanks again…

I’m also a realtor and I’m also seeing some weakness in the market. There were lots of listings that didn’t sell in the winter and they’re just starting to come back on the market as new listings. Some of them have reduced their asking price and others have just stuck to the same price they originally wanted in the hopes that there are just going to be more buyers as we move into the spring selling season.

If you’re buying an investment property, just make sure your numbers work. Around here it’s impossible to buy a single family or a condo as an investment and make the numbers work unless you have a really big down payment. Most 100% or 90% financing schemes won’t work with higher interest rates and while prices have come down, they haven’t come down enough to make it work. There are bargains out there though, there seems to be about 5% or so that keep dropping their price as they attempt to move the property and eventually it does. Some of them are pretty big drops, but to be fair, their original asking prices were way too high even in a hot market. Saw one guy go from $350 down to $265 but maybe it was never worth much more than $300 to begin with.

One advantage to either having a friend who’s a Realtor or being a realtor/investor… is that you can view the DOM (Days On Market) for a particular listing. The longer they’ve had this house on the market without a buyer is an indicator of at least two things;

1.) There may be something incredibly wrong with the property. (neighborhood, leaking roof, clouded title, etc.)
2.) The Seller is getting more desperate and more willing to take an offer below asking price.

In California, anything that’s been on the market more than 45 days is a possible bargain just waiting for re-negotiation.

My suggestion would be to have a Realtor (as an investment-Buyer) since he will be getting paid by the Seller, not you. Then ask the realtor to only find homes that fit your criteria. (price, DOM, area, etc.) Unless you have some special gift of gab that can talk a Seller down several thousand dollars, having a realtor’s resources working for you as an Investment-Buyer is the way to go.

I am not really sure what you guys are using for your business model, but where I am I don’t buy retail houses. I buy houses that won’t sell for some reason and are discounted. I put the work into them to bring them up to the condition that they can then be sold at retail prices. It sounds like you guys are buying retail, waiting for time to raise the price and then sell at a profit. I am only concerned about the market because I need to know average days on the market to calculate estimated holding costs. That is because when the buyers buy they will consider mine every time because I have wiggle room on the price (since I started off with wholesale price) and my houses are the nicest on the market.

I call buying and selling using market forces to gain appreciation speculating not investing. I say that because when the market turns against you, you will not be able to continue with that business model.

During the 1980’s Houston had a deflationary period and investors still made money. Although the house prices were going down, buying the right houses at wholesale prices fixing them up and selling them at retail prices, you were still able to make money. Speculating on appreciation would never have survived that.

As long as you have the 3 "D"s (Death, Disease, Divorce) you will always be able to make money.

I agree, buying on speculation… especially at this juncture in the market, is no better than a roll of the dice. The advantage I point out with using a realtor for DOM is simply to know who to lo-ball with an offer. It’s still gotta be an incredibly low (65% FMV) offer to have that wiggle-room you mentioned. Using the DOM is simply a statistical way that differs from the usual where you drive around looking for dead grass, abandoned homes or scanning the Obits, Divorce filings, etc.

More than one way to skin a cat.

Depends on what area you are in. I’m in Missouri where properties are still undervalued, values don’t jump out of the roof like a lot of areas have over the past few years.
I would look at you goals as an investor, and look at your overall demographics; you can’t go wrong if you look for properties that entry level prospective buyers can afford. Quality of work is also key. I see buyers all the time purchase properties from me, because the detail and quality are supreme.