The 1 Problem For Most Real Estate Investors In Todays Economy And How To Solve It

Dated: 08/06/2014

Views: 597

I get to talk with many real estate investors during the week – both beginners as well as seasoned pro’s – operating in various markets throughout the country, and the single biggest problem many of them are currently facing seems to be the same across the board …
So what’s creating this tight supply?  A number of factors, including:
  • Foreclosure activity is way down.  RealtyTrac just reported foreclosure filings being down 20% nationwide from a year ago.  Foreclosure auctions are also down 21% from a year ago and have decreased annually now for 41 consecutive months.
  • Many sellers have been reluctant to put their homes on the market.  One of the main reasons?  Fear they won’t be able to buy a comparable or better replacement home due to rising prices, and … tight inventory.
  • New home construction hasn’t kept pace with demand.  In a normal market we typically see around $1.5M new homes being built, but the current pace is around 800k homes.  Why?  Part of the reason is that many of the smaller home builders (who typically comprise maybe 50% of all builders) got wiped out during ‘The Great Recession’. 
Bottom line?  It’s currently a sellers market in most parts of the country.  A ‘normal’ market is around 6-7 months worth of inventory, meaning it would take that long to sell off the entire housing stock at the current sales pace. 
Most parts of the country are running below that, with an average being around 4-5 months, and even lower in certain pockets.
That, in a nutshell, is the main challenge facing most real estate investors today – finding enough good deals to either wholesale, rehab, or just hang on to for the long term.
So what’s the best strategy or approach in the current economy?
Ahhh … that’s the million dollar question. 
I have a very savvy investor friend who recommends … “Don’t force the issue … be patient … and simply wait for the market to turn in your favor and take what it gives you.
I think he’s right.  And it’s hard to argue with his success.
I also have another equally savvy and equally successful investor friend who says … “Get more creative and innovative … be more aggressive … and just apply the right strategy for the current market.”
I think she’s right also.  And she has the success to prove it as well.
I see wisdom on both sides, and I think it really boils down to your own comfort level and ‘nature’.
Personally, I tend to align more with my “Get more creative and innovative” friend.  It’s just my nature.  Plus, I’m growth-oriented and I like action and problem solving.
So what’s she prescribing specifically?
Basically, learn and apply everything you possibly can about marketing … and the most impactful and effective methods for generating leads.  And don’t just look at what’s being done in the real estate arena.  Also look for innovative approaches in other industries that you can ‘swipe & deploy’!
And the right strategy in today’s market?  She recommends ‘flipping’ strategies like wholesaling, rehabbing, creative/seller financing deals, and lease option plays, which are strategies that don’t require a lot of capital and risk, and you can be in and out of them in just weeks or days. 
Even rehabs can be done with minimal risk by using private or hard money lenders, or by utilizing joint ventures.
I totally agree. 
Rather than sitting on the sidelines, what I’ve done instead is adopt the right strategy for the current market, opened up new markets, and turned on the marketing jets.
My favorite marketing strategies?  Direct Mail, PPC Online Advertising, Geographic Canvassing, Radio & TV Ads, and yes … even the lowly Bandit Sign.
Creating deal flow is the single most important skill a real estate entrepreneur can develop, so I’ll be talking a whole lot more about marketing and lead generation in upcoming issues.
P.S.  If you’re a serious real estate investor and need to solve this tight inventory problem … like YESTERDAY, then stay tuned for an amazing resource I’ll be telling you about next week.
It’s a game-changer!

If you are interested in buying homes to live in or for investment Click Here.

Latest Blog Posts

New Homes In Matthews NC

Looking for new construction in Matthews, NC?  Click here to check out a few great homes!  If you would like more information or would like to tour one of these beautiful homes in person,

Read More

Marching Into Spring

March is the month that Spring Starts, that means flowers, green grass & lots of growth. The Spring real estate market does not wait on the weather. Whether you are thinking of putting your

Read More

Listings In Lake Norman

Would you like to see a list of homes that JUST hit the market in Lake Norman? Click.

Read More

Fun Things To Do In And Around Charlotte NC

So many things to do in and around Charlotte NC. Get out and have some fun! Check out this link for some ideas.;

Read More