Winning in the Current Market
With interest rates higher than they’ve been in a very long time, many buyers are finding themselves frustrated with the challenge of finding a property within their budget. It hasn’t helped that prices of properties have not dropped to pre-2021 levels. So, just how does a buyer “win” in this market? This article will offer a few suggestions on how you can still win with an offer that meets the sellers’ expectations based on market value.
What a challenging market, no doubt! However, savvy real estate investors can create wealth in any market. So how do you navigate this market? What approach do you take?
1. Don’t get in the weeds with all the nay-sayers.
Find the “good buys.” Find the positive cash flowing properties. You might need to look deeper as inventory is down. But good to great properties are still out there! If you are an investor looking for your next great investment, you will want properties that are not performing well where you can understand why. The sellers will have pressure to sell and your ability to negotiate will be enhanced. A property can simply be with the wrong rental company. Maybe that rental company has too much of a certain inventory. It is always a kiss of death when a rental company takes on too many that are same floor plan in the same development with the same bedspreads. A simple move to another rental company can be a game changer.
2. Other easy fixes include improving the amenities.
If it doesn’t have a hot tub, an entertainment center, or a variety of electronic games, these can and should be added. If the TV’s are outdated or the décor is “old school,” then refreshing the look with modern, larger TV’s (as big as will fit in each room) and a fresh coat of stain or paint can quickly add rental income value to your investment.
3. Look for properties that have not kept up with the times!
A fairly small budget of $5,000- $10,000 will refresh a cabin that has tired bedspreads, wall art from a secondhand store, worn out rugs, or is just plain dirty due to heavy use over the years. Give that investment a deep cleaning! Dust off the cobwebs and pressure wash and stain the decks. It is amazing how this straightforward face lift can change the rental revenue and the value.
4. It is time to get creative on financing!
Ask the seller to buy your points down to get your loan where you desire. Ask your lender about their creative programs, particularly credit unions as they have the ability to offer interesting options. It doesn’t hurt to ask about seller financing while you are at it. This next season of real estate we are going to see more and more creativity and participation of sellers aiding buyers with financing. You might even be able to pick up the loan the seller currently has! There are hoops to jump through, but you just might find the win you are looking for with one or more of these options.
5. Be patient.
Since inventory is down you might have to “wait” for the right property to come along. Patience is golden! With interest rates higher you are not going to have compete with as many buyers for an investment cabin property but be ready to jump on a good property when it comes online. And if is really good be ready to pay the asking price. It is better to secure a property that is an excellent property than to negotiate off a few thousand dollars. It is better to obtain it!
6. Finish unfinished spaces.
Look for unfinished space that you can add instant value to by finishing, basements, attics, crawlspaces that are huge, garages or offices that could be game rooms, bedrooms, or open lofts that can house bunkbeds. When you are searching, say, for a four bedroom, go down to 2 and 3 bedrooms with larger square footage and see if there is a hidden opportunity in those properties.
In conclusion, there are over 11 million visitors to the Great Smoky National Park every year. When times are tough, visitors flock to our area to refresh their energy and loving on their families. Cabins well taken care of with the amenities that renters love enjoy the highest overnight revenues across the nation. There is no better place to invest! Enjoy the hunt!
