where are we in the cycle???
I recently attended and was a participant at a local county a tax action. They had over 140 properties for sale and drew standing room only in the largest court room they had available.
I also attended and bid in two absolute auctions for estate sales as well as placed offers on several HUD and bank foreclosures. I purchased and/or sold 30 properties this year to date.
Why I mention this is that all these experiences are similar. In my market, prices are going up and competition is getting stronger.
I had to re-evaluate strategies as well as re-formulate cost and profit structures. The funny thing is that, although acquit ion costs and as well material costs have increased, retail sales prices just are starting too.
So in the short term, I had to adjust my margins down to compensate for it. I can not control comps. But, over time (6mo.+) comps start to catch up. Rather than pass on a deal, I take it and either make 20-24% rather than my typical 25+ or hit the market a little more than originally planned for a few weeks and see if I get any showings. If not, I adjust down.
So, with that stated, I think we temporarily bottomed and have started the climb back up on the other side of the curve which is a great position to be in if you can buy right. I would like to know what other small to mid markets are experiencing.
Comments (2)
Well "We" probably aren't in the same place. All real estate is local and your market is probably in a little different stage than mine. I am surprised you are not seeing retail prices go up much yet. The fact you are seeing more competition says more investors are coming back into the market. I am seeing more dumb money come into the investor market. Perhaps investors i your area are hearing the national new that the market is heating up. My gut tells me we are on the way back up but it won't be a smooth ride. Many markets still have shadow inventory and hedge fund buying SFH rentals could cause artificial demand which can later backfire. I think a key will be financing. Money is still tight. Despite low rates, many people can't get financing. I suspect we will see rates go up but financing becoming more available. At that point the market will stabilize.
Ned Carey, about 11 years ago
Thanks Ned, your comments regarding a larger market than mine is interesting, Here, we are kinda off the radar (with Alt below and Nashville above) so unless a national just happens to get property here, or locals bring in outside funds, we are locally invested. There are more interest here over the last few years with VW and Amazon locating facilities here. A few of my investors from CA moved here within the last few months! We dont experience the big curve highs and lows as major markets have so maybe this gradual change is an indication of what larger markets are experiencing.
John Santero, about 11 years ago