A Guidebook to Making Moves in Today’s Challenging Market
by Amy Daniel
It is a tale as old as time, at least it feels like it these days. Relatively high interest rates coupled with increasing home prices have left investors in a holding pattern. With so much at play, including supply chain pressures and a move toward build-to-rent, many investors are hanging tight and waiting to see what happens next before making a big move, whether that’s buying or selling.
But with the right playbook, there are still ways to make smart moves in today’s challenging market and optimize your portfolio. With the right strategy, you can find those rare deals that are waiting to be had. Instead of staying in a holding pattern, now is the time to strategize, find the right partner and shift your focus toward areas of potential growth.
The Importance of a Strategic Partnership
Having the right partner in place is vital to your success in finding those much sought-after deals. Investing is a niche space. There are a lot of nuances and details you and your partners need to be aware of if you want to keep the ball rolling smoothly. That is why finding a partner with experience in the space is crucial.
One of the biggest hurdles that we see with investment purchases is a failure to pay attention to rental restrictions. For example, if you purchase a property and there is a rental restriction in place, you could end up throwing your money away because you might not be able to do what you intended to with the property. That’s why teaming up with a partner that knows the rules, what to look for during a title search and how to approach these situations is so important.
When you’re looking for the right partner, it is important to work with one that has experience in this space. You also need a partner that excels at communication, listens to your goals, asks questions and works closely with you to achieve your desired outcomes. It is important to lay the groundwork, explaining your goals and timelines upfront, so your partner can help mitigate any potential issues before they arise.
You need a partner you can trust to make the right decisions with your goals in mind, guiding you through the process, keeping you informed and helping you navigate each unique situation as it arises.
Also, seek out a partner that utilizes technology to increase efficiency and reduce potential risks. Not only does a technologically advanced partner provide offerings that will make the signing and review of documents easier, but they also should have enhanced quality control measures to ensure your records are recorded in a timely fashion and the right documents are getting where they need to go.
Know Your Market
Learn about the market from people who have boots on the ground. Whether it is an experienced real estate agent, broker or someone who is involved in the day-to-day goings-on in the area, you need to work with people who have a pulse on that specific market. Even if there are not formal rental requirements in place, it is important to know the community sentiment. Get involved locally where you plan to build your portfolio. Get to know the community representatives and, where needed, help educate the residents and key players about the benefits of these assets in their community.
Also, location, location, location. Think about your end user — the renter. What do they want to see in a home and nearby amenities? Put on your renter hat for a minute and think, “If I was living in this community, what would be important to me?” If you purchase a dream property that is not convenient or does not meet the needs of today’s renters, you might have problems finding a tenant. Think about your long-term strategy. Will your tenants be a part of a community? What does that look like? Think of what matters to them and it should matter to you.
Research the Data
While you zoom in close to look at the location, also be sure to pull back out and look at the overall area from a distance. How are rental properties doing in that part of the country in today’s climate? Look at the data. Are values holding in the area? Is it already oversaturated or is there a good balance with a mix of owned and rental properties?
Also, look at the historical data for the home you are looking to buy. What are the taxes? How about water and sewage? Make sure that you are pulling these data sets ahead of time so you know the true cost, including operations, when you are about to make a purchase.
Auction: An Opportunity
As foreclosure activity continues to rise, the auction space provides an added opportunity for investors to purchase a property at a potentially lower cost that fits within their current budget restraints. Finding the right auction partner is vital to this success. Working with an auction partner to set up alerts, becoming pre-qualified and getting a first-look at properties coming to auction is key. With a tight market, being in the know early can help you snag a deal.
With online platforms, you can also expand your search to anywhere in the country. If you have purchased a property at auction before, you are familiar with the benefits. From cost and time savings throughout the homebuying process, to more transparency and the ability to bid remotely, investors have benefited from this method of purchasing.
If you’re on the other end and looking to sell a property, auction could be a great choice for you, too. Auction is not the last resort you might think it is. When you team up with the right partner, you get nationwide exposure with buyers being able to bid remotely — and you could get top dollar for your property.
When it comes to investing in today’s tricky market, focus on the people and organizations you are teaming up with, the processes you implement and having the right tools to be successful.
