With the real estate market changing as quickly as it is right now, it’s important that investors not forget to adapt to these changes. Here in Atlanta, our market is being dramatically affected by the tremendous amount of institutional investment money competing for single family properties. Add to this the quickly diminishing supply of inventory and you can imagine what’s happening to the average investor in this market. While it’s amazing to watch the kind of upward pressure we are seeing on prices, it’s forced investors to adapt quickly.
Just in the last few months, I’ve been reminded how important it is to have an arsenal of strategies to employ for many different properties and situations. With fewer houses available, the need for creativity becomes even greater.
For example, most of the homes that I purchase are fully renovated, then rented and sold turn-key. That’s my primary business model. However, there are occasionally properties where the numbers don’t quite justify my traditional model. At the same time, the property still might make sense to wholesale to another local investor, owner occupant or even hedge fund at a slight mark-up. Rather than walking away from the deal altogether because it doesn’t fit my “typical” investment, I’m able to turn a quick profit and move on to the next deal.
The Importance of Education and Networking
A big part of learning to adapt strategies midstream is education and networking. It’s taken some time to network and build a decent buyers list, but once you’ve put some time and effort into getting to know other investors and buyers, it makes it much easier to tailor certain opportunities to specific buyers. Not only this, you get to know which attorneys specialize in these areas and can help you work through any challenges or road blocks that may arise from a particular transaction.
Over time, you’ll be able to do more deals because your buying criteria becomes less stringent as you become more familiar with additional exit strategies and buyers. I believe the need to continually learn and network is one of the most important principles in real estate investing. Not only does it allow you to grow your investing business, it allows you to adapt in an ever changing real estate environment.
I would love to hear how other investors have learned to broaden their investing strategy to capitalize on new and different real estate opportunities. Let me know in the comments.