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:
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
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
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’.
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
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
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
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
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
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.