I just recently concluded the Joseph Bernard Investment Real Estate’s “Apartment Investor Series” annual buyer’s seminar: “Finding a Deal in an Over-heated Market”, which focused on what successful investors are doing in 2016. Over the past five years, there has been building market pressure that is increasing the number of buyers in the market (access to low cost capital is a major change) and making it more difficult for buyers to find a “good deal”.
Get Comfortable Feeling “Uncomfortable”: Buying in a hot market is not easy, and the quicker buyers “get to reality” of the situation the better. It absolutely will be uncomfortable! In this market, the discomfort will come directly with the price. The silver lining is once investors accept this, they can focus on what else is important, i.e. condition, management plan, how to address dysfunction of the property, etc.
Here is a quote I heard recently from an investor in Salem, Oregon:
“I can’t believe I was uncomfortable buying at $45,000 per door.”
Know Your Situation Accurately in the Market: In poker, there is a term for a player called “overplaying the hand”, when a gambler believes their cards are stronger than they actually are. Another silver lining to buying in a hot market is you can get ahead of the majority of the market by NOT focusing inaccurately on your situation, instead focusing on your plan.
Here is the summary of the Buying in an Overheated Market:
- Be the first on a broker’s list.
- Secondary/tertiary markets have potentially good deals.
- Make unsolicited offers.
- Make offers quickly.
- Make your strongest offer first.
- Get comfortable feeling “uncomfortable”.
- Know your situation accurately in the market.