How Can Investors adapt to todays Market? The days of record high appreciation of properties have come to a halt in most markets. Fear is influencing many investors in the current market and many outside factors have made their presence know in the area of real estate. Covid has come back with large outbreaks in China, The war in Ukraine is raging on, and there is a dark cloud hanging Thailand (China). The competition in the real estate market is fiece right now. This is because that despite the high price of homes, there is limited supply for potential buyers. The interest rates have grow significantly and along with these exterior factors the housing market has shifted.
Real estate investors have slowed down their purchasing due to the uncertainty and question of profit. Is flipping still at viable option? Is buy and hold riskier than normal? Should short term rentals be liquidated? These are just some of the questions investors are asking. There will be more as time progresses.
Firstly, how are investors supposed to navigate the new reality and seller expecations? It is common knowledge to the savy investor that sellers expectations of pricing lags behind what the current market calls for. Current sellers are still holding on to pricing expectations from last year. Unfortunately, the only way for them to come to terms with this is for the market to show them. The sellers who are not negotiable and unwilling to see the truth of the market will have their properties sit for months. It is very unlikely that they will get anywhere near their asking price. Investors must take an educational approach when dealing with stubborn sellers.
Secondly, the underwriting process has changed drastically in the last 6 months. Money is harder to come by and it has also become significantly more expensive. Shoping around for new lenders and even the use of creative financing can keep the deals coming in. Investors needs to use leverage as we all progress into this uncertain market.
Lastly, investors play a game of margins. If the sale prices are going down, investors have to adjust their own buy prices. It is simply a slide on the scale. Invesors must also make purchases with longer hold costs. Cutting corners on renovations will also result in lower sales prices. You make all of your money on the purchase. Lower prices result in safer investments and more profit.
In conclusion, investments always include risk. It is important to run numbers and adjust estimates to the market. Do your due diligence before making any major decisions. If you have any questions about your property, contact the licensed professionals at Homeinc. We are here to help you with all your real estate needs. Call or text the team today 1-888-850-2636.