I’m lookin to move out of my apartment right now and start owning so along with my interest in real estate investments I’m also looking for a home and am scowering the markets looking for good foreclosure deals when a really nice deal was emailed to me from ziprealty. 2 days on the market i call to make an appointment to see the house and it just sold for above the asking price. This is discouraging!!! The last 2 houses I’ve decided on have been fought over by others.
How can I avoid competition? Is there some way to gain an edge over the crowds? I don’t even care I will pay money to get a jump on the competition. Obviously this goes for buying a home as well as actual real estate investments.
investors will be competing with owner-occupants now that the spring market has started. i would suggest looking at mutiple properties and submit multiple offers.
Some of the foreclosures are priced so cheap that they end up going above the list price. The foreclosure we just bought started in the 20’s and finally got marked down to 9k. Within a few days of dropping to 9k, there were several offers. Rather than just hoping an offer under the list price would beat the others, we decided to offer $100 above list. It worked for us.
You also need to start networking. Our banker knew a lady at his bank needed to sell her parents’ house. He gave her our number and that might very well be our next purchase. If you make the right connections, you could get some referrals.
Have you considered buying an owner-occupied duplex? That was the first rental property that my wife and I bought, and it was great!
In many areas you can get duplexes for the same price as SFH, plus you get someone to pay half your mortgage, plus you get all the tax benefits of owning rental property, plus you can get your feet wet as a landlord! You actually own a business, instead of just a home.
To me it totally makes sense to do this, and I recommend it to many people who are just getting started and want to start owning property- you can really kill two birds with one stone.
I know I’ll learn this eventually but is the market the best right now to rent to people instead of sell? What determines whether a market is better to sell than to rent? Are buyer’s and seller’s markets just reciprocal to rental market?
I also agree that you’ll have to contact a lot more. Even if you look at 20 until you get one deal, it would be worth it. You can work on getting more efficient later.
One question I’m wondering, though, is “are you married?” If so, I would just buy where she wants and pay full asking price for the only time in your life.
But an interesting point you bring up Alan. Why would I ever pay over the 70% rule even if it’s for a house I want to call my home? I assume the knowledge I learn in this trade can also be applied to my own home savings.
A buyer’s market and a seller’s market are the inverse of each other. When there is a lot of property for sale and few buyers, prices drop and sellers ask for and get discounts and seller concessions to get the property sold. In a seller’s market, there are more buyers than available property and sellers often get buyers bidding up the price to purchase the property.
A renter’s market and a landlord’s market parallel the buyer’s market and the seller’s market. In a renter’s market, there are more rental properties available for rent than there are renters. Landords are forced to lower rents and give rental incentives to fill their vacancies.
I have noticed that a strong seller’s market is also a strong landlord market. A strong buyer’s market is also a strong renter’s market.
Wow, Dave that is quite discouraging for me. I was looking forward to having the homes build + cash flow, have a decent vacancy rate, and build massive equity in the housing because of our market right now. But now that you said that it makes me have second thoughts. Anybody second that?
Take a look at what’s going on in your particular market right now. Are there tons of houses for sale? How about “For Rent” signs? Do you see a lot of them? Are there lots of ads in the paper advertising rentals? It’s hard to get financing now so some people will not be able to buy because of that reason. Others may have had a reduction in income by one spouse losing their job. Maybe they have to rent now instead of owning.
And one comment to Dave’s post: If everybody is not buying houses, and everybody is not renting either, Where the hell did everybody go??? So maybe this parallel you see is wrong.
if you learn how supply and demand affect pricing, then you should be able to understand how typical markets behave and the difference between a buyer’s market and a seller’s market. Once you get there, then it should not be too difficult to see the parallel to a renter’s market and a landlord market.
Yes I understand that. I’m just approaching this in my own rational sense although I am an investor newbie.
Can you please answer though, if there’s no demand for houses, and no demand for rentals, where is everybody? It seems like there simply needs to be a demand for SOMETHING to live in?
This question also applies for housing market, simply what happens when there are too many houses around? Where are the people going who were occupying them earlier? The population didnt drop 75 million, so where did the people go?
Bob sells his house, he buys a new one, either cheaper or more expensive. Supply and demand suggests bob is homeless or disappears? Perhaps it is all these company’s making more homes than people need, but that seems unreal.
Also what do you think of Justin’s thoughts on it about people who can’t get a house because of credit etc.
There is always demand for housing. The national population is growing, kids are leaving home, there are more immigrants than emigrants – these people require housing.
As a consequence of the recent housing boom, builders have overbuilt and now have unsold inventory. Sellers with more than one home (job transfer, second home, vacation home) don’t want to carry multiple mortgage payments and have their property on the market. Real estate investors and speculators have property to sell.
The problem today is that there is less demand than there is inventory available for sale. As a consequence, prices drop. Compound this with the credit crunch – fewer buyers can get financed – there are even fewer buyers qualified to buy. Renters who might have considered becoming homeowners don’t want to buy if prices are still falling. These unmotivated buyers are sitting on the sidelines waiting for the real estate market to hit bottom. Serious buyers have a lot of properties to choose from with almost no competition and are driving hard bargains. It is a buyers market.
Sellers who can’t get their property sold are opting to turn them into rentals. The inventory of available rentals has exploded in the past couple of years. The number of available rentals has increased much faster than the number of renters. Long vacancy periods have forced landlords to lower rents and offer rental incentives to get come cash flow. Renters have options and are not bashful about haggling for a lower rent. It is a renters market.
A weak retail market (a buyers market) contributes to a weak rental market (a renters market).
In a strong retail market, there are more ready and willing buyers than there is inventory to purchase. Buyers compete with each other and sellers often get their full asking price and maybe more. To cash in on a favorable real estate market, landlords take their property out of rental service and put it up for sale. As a consequence, the number of available rental properties declines, so the rentals that are left command higher rents and vacancy periods are shorter.
A strong retail market (a sellers market) also contributes to a stong rental market (a landlords market).
It makes sense. But the parallel is a contradictory here no? This seems to be in favor of renting: people can’t get financed and people are waiting out on the market to actually buy a home.
I guess you just have to get some rental ownership experience to fully understand. The school of hard knocks is a great teacher although your tuition can be expensive – no scholarships.