Opportunistic Plays In Today’s Housing Market
Even if you don’t buy into all the hype about how strong and sustainable the US economy is right now, there are fantastic opportunities in the real estate market.
We are seeing more discounts and more negotiability with sellers than have been available in a long time. At the same time, it is true that everything retail seems to be booming in price, from groceries to rents.
This is creating a window of opportunity for investors to create great gains in this sweet spot between distress and success.
Stressed Sellers
It’s not just regular homeowners that are finding themselves under pressure and in distressed financial situations. That goes all the way up to apartment building owners and operators and developers of new multifamily and single-family home communities.
There are many reasons that these owners are finding themselves highly motivated and interested in selling swiftly.
This can range from not anticipating changing dynamics when they have commercial loans maturing, to a tighter and more costly credit market, carrying too much overhead, and no longer being in a position where the numbers add up. As well as simply anticipating they are better off restructuring their portfolios now.
This can mean deep discounts and attractive terms for investors who are ready to make more acquisitions.
Unlocking Value
Fresh capital injections into these properties and developments, and stronger equity positions often makes all the difference between distress and highly profitable properties.
This can include taking over existing underperforming income properties, or converting communities being built for sale to rental communities.
Then bringing in superior operational experience and management can turn lackluster numbers into high margins and yields.
Better marketing and bringing units up to market rate rents alone can make a world of a difference.
Then, intelligent use of today’s technology can create much more efficiency in operations, and minimize expenses, overhead, and time drags.
In some cases it is simply using the right words in messaging, which keeps tenants paying and on time. Or updating or optimizing for currently in demand amenities.
Once stabilized with better numbers, these properties can be held for ongoing passive income and high yields, as well as organic appreciation. Or they may be sold on for significant profits to other players with different investment strategies, and who are happy with smaller yields.
Connecting these dots in this market is all about being qualified and having the resume and relationships to access the best deals and discounts, as well as the experience to understand where to cut costs and increase income, without sabotaging your own investments with too short-term thinking.
