Dozens Of Buyers, Hot Market - Best Strategy?
I've been cross-referencing FSBOs in the paper with the county tax records, and I'm finding literally 2 dozen investor owners (when combined with the investors who advertise their homebuying services, as well). I'm also finding some really amazing success/failure stories when looking at the difference in prior sale price and current listing - one company, expecting to make almost $100K in 6 months, which is just about a 100% increase in the house value.
It's a hot housing market down here, and unfortunately, the majority of the investors I'm finding seem to focus on the same area I'm coveting. Of course, I can move my focus elsewhere, or into a higher pricepoint property...
I've started working through the list of buyers and making initial contacts, but do any of you guys have experience in a hot market, with numerous investors/wholesalers in competition? Any guerrilla or just proven tactics that you'd care to share?
The main area where I invest has been very hot the last few years. it is slowing a bit now. We rarely saw FSBOs and so I used a Real Estate Agent who was prospecting. He found the properties before they came on the market and got them. These were fairly conventional purchases although I did have some seller carrybacks. If I didn't get them before they hit market, they were gone.
A close friend who is very skilled at acquiring properties told me that he had a difficult time finding no money down deals in this market other than pretty junky stuff.
Between the choices you set forth I would probably move to another area rather than buy pricey (I am not talking about a 50 unit building but more expensive comparable housing). I say this because my target renters are usually in top half of lower middle class and the rental demand is usually good and you are below own or rent price ceilings. We are experiencing substantial rent reductions in the pricey rentals. My rents are going up.
You make your profit when you buy. Find the compeditive advantage over your competition and buy properties before they do! You could move to another area but do what you are comfortable in. GOOD LUCK
Yeah, I'm trying really hard to do as much prequalifying of the property as possible before I even contact the owners. I've got a file of about 20 properties to work on over the weekend (all preforeclosures), complete with all tax data and neighborhood comps...
Time to play, "She who talks first loses."
My biggest concern right now is that most of the properties I'm finding are in the $300K range (at last sale - for most of them, at least 3 years ago). That's in the thick of the market down here, but I sure wish I felt more comfortable with the legalese of optioning/assigning prior to dealing with those kinds of numbers.