The housing segment is shifting. Mortgage rates are on the upswing, inventories are changing and buyers aren't as eager to find properties as much as they were even several months ago.
Typically, real estate investors are following foreclosed houses and other affordable homes in order to find the best deals, but the number of distressed properties isn't as great as it has been. Therefore, enterprising investors should rely on mortgage records and other property data to find ideal opportunities, as well as possibly look into some other beneficial tactics to keep making a profit.
Less foreclosed houses means shifting strategies
During the past year, real estate investors were called upon to help boost the housing market's recovery, according to the Los Angeles Times. Foreclosures were high, and those who bought properties, flipping them for re-sale, sitting on them for later or converting homes into rentals helped inject revenue into the sector.
However, conditions changed fast, the news source noted. Larger investment firms are dropping away, and smaller bidders are increasing - many focused on home flipping. In addition, there is a rise in regular buyers in the market, meaning that investors now are competing directly with first-time and repeat buyers looking for their dream homes, not fellow professionals.
Despite fewer foreclosed houses, home flipper Jonathan Zadok still feels comfortable investing. He explained to the news source that he now buys slightly more expensive homes - more risk, but a better chance of making a significant profit later.
Investors are also shifting how they upgrade homes, the Los Angeles Times reported. Bigger renovations are gaining popularity, such as room additions. Less likely are the days when simple upgrades had the best chance for a big pay-off.
Deals might not be as numerous, they are still out there. Investors looking to find the best properties could use Courthouse Retrieval System to access real estate records, property data and more.
Cash purchases could help investors
While market conditions are fluctuating, those who want to invest in real estate might want to consider making all-cash offers on properties. This tactic might make it easier to get a deal, or to convince a seller to accept an offer, according to RealEstate.com. Leverage is easier to attain with just cash, and skipping over the loan qualification process might be more attractive to a certain seller.
In addition, precautions should be taken before moving forward with an all-cash offer. Information is critical to make sure that the property is the best possible choice, so a home inspection might be a safe bet, the news source reported. The sale and post-sale costs should be calculated well in advance, and just because money could be saved on mortgage interest and listing price doesn't mean every cash-only bid is the smart choice.
However, cash deals provide investors a solid bargaining chip, RealEstate.com noted. For example, as a contingency buyers could negotiate that the home seller pays for the closing costs or takes care of more home repairs ahead of time, reducing the amount an investor has to spend.