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”.
I am seeing seven major behaviors that successful investors are doing in 2016, here are three:
Be the first on a broker’s list: A great majority of the time, sellers connect with the brokerage community, then choose a representative, then the property hits the market. It is difficult, albeit impossible for any one buyer to see 100% of the market at a given time.
One strategy is to research brokers who work in the specific market (size, location, class, etc) and choose one broker who will call you first. In a hot market, first look is really, really important. The mistake I see all the time is when buyers try to be first on every brokers’ list.
Secondary and Tertiary Markets are the new “Close in”: While cap rates are often similar in markets like Canby, Oregon City, Wilsonville, Salem, Silverton, often the rents are just now starting to increase, which translates to returns increasing after the purchase. The negative traits the secondary markets had in the past (higher vacancy, lower rents, fewer tenants) are now decreasing. Many of the best deals are in the secondary market.
Make Unsolicited Offers: We are seeing sellers accept unsolicited offers, and that is a way of avoiding a bidding war with the rest of the buyers in the market. Do not be afraid to make offers on properties that do not have listings, they might just take your offer or counter with something that works for you!
Next article: “Finding a Deal in an Over heated Market” Part II