This is how crazy the market is right now....

This is how crazy the market is right now....

Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes

I've been making offers on a lot of properties lately, and it seems like there's just so much competition out there. Seems like more and more people are becoming buyers everyday. Understandable, since prices and rates are so low. Though, in my opinion, I don't think interest rates are the primary reason there's so much interest in the houses I'm looking at because you don't stand a chance of even getting your offer looked at if you're using financing.

Anyway, everything I'm bidding on is getting 10-20+ offers within a couple days of it being listed. Doesn't seem to matter what the listed price is...it's going to sell for over.

Well, the other day, a buddy of mine bid on a house that got 35 offers in just a few days, and today I attempted to make an offer on a house listed for $110k in a C class neighborhood. However, my realtor told me that there are already over 50 offers on this house, with the highest so far being $170k cash. Trust me, there is nothing special or unique about this house, other than it is for sale. And it's only been on the market for 2 days.

Needless to say, I didn't make an offer on this one because it was above my max number I set for this particular property. I found that if you don't set a number and stick to it, it's too easy to get carried away in the bidding frenzy.

Anyway, I don't really have a question. Just sharing my experience in this crazy market we're in.

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Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
13y
Originally posted by Will Barnard:
In the most competitive of environments, 2013 should be yet again a banner year for me and for anyone else who takes action.

I agree with Will. 2012 was in a great year for me and I have big plans for 2013. People who work it are still getting inventory, but it definitely is a tough market for a newbie.

I don't know how I'd feel if I was the highest of 50+ bidders on a house. So it might be time to look for other sources of deal flow.

See this reply in the discussion

27 Replies

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  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Where, Kyle?

  • Property Manager · Chicago, IL · Member since 2012 · 5 posts · 0 votes
    13y

    I do not have a direct answer for you,but have you noticed that there are a lot
    corporate buyers out there.Also they are buying everything that is available and hiring people to attend the auctions (that,s they,re only job )and taking any profit out of the deal.I think the small investor days are over.The corporate
    giants want to own where you live too......................

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    Kyle J. This seems to be happening everywhere. Usually, December is an excellent time to pick up some deals.

    I think what's happening is that prices were going down for so long that people were afraid to buy. Now that prices are going up, everyone is jumping on the bandwagon.

    It might be time to hoard cash and wait for the market to soften a little. I would hate to pay top dollar for a house, fix it up, and then have it be worth less than I paid three months from now. I can sit at home and do better than that.

    You're not alone. Many markets are like yours.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y
    Originally posted by Jon Klaus:
    Where, Kyle?

    The two that had 35 offers and 50+ offers were in Sacramento. But I'm seeing the same thing in every city around me where I'm putting in offers. Though it seems like Sacramento is a little hotter than the others.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y
    Originally posted by Rob K:

    It might be time to hoard cash and wait for the market to soften a little.

    I was actually thinking the same thing recently.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y

    Coincidentally, I just saw this news story:

    http://www.centralvalleybusinesstimes.com/stories/001/?ID=22368

    According to the article, two of the three cities I buy in just made the nation's top ten list for housing price increases. Interesting.

  • Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
    13y

    Hey Kyle,

    The REO game is truly a game. What your experiencing in California, we are experiencing down in Florida as well. There is a lack of inventory which is causing an increase in price because of high demand. REO game is not my style simple because investors drives the prices of homes up because the deal is in a multiple bid situation. I center my business around helping people. I target private sellers who may be in a distressed situation and I would educate them on all of the available options they have when looking to sell their home depending on what type of situation they may be in. In my niche I see less and less competition. To your success from "Mrflippahouse"

  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    13y

    Blackstone is buying everything below $300K in Sacramento, which doesn't leave much left over for individual home buyers and small investors, so there is a high concentration of offers for what little product there is. They will slow down soon, but it wouldn't be surprising if another group comes in when Blackstone starts to back off.

    There are still deals to be had in Sacramento, you just have to out-maneuver the big guys. It's not as easy as it was last year, buy I'm getting some deal flow there despite the competition. If you are flipping, you'll have to increase your price bracket above the low end where the buy & hold guys play.

  • Involved In Real Estate · Fort Worth, TX · Member since 2012 · 158 posts · 11 votes
    13y

    How fast can the market change? Can a property depreciate largely in a couple of months? The only way I see this happening is if a big employer closes nearby?

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y
    Originally posted by Rob K:

    It might be time to hoard cash and wait for the market to soften a little.
    if you were in my area, I would lie to you and say the same thing just to keep one more out of my market! However, I disagree with your statement. Sitting on cash takes you out of the current opportunity to take advantage of the opportunities that are currently present. While competition is fierce, more so than I have ever seen, I am loaded right now with deals, you just have to work hard and have a way to get them. I created a niche for myself in my market place and it is paying off well. In the most competitive of environments, 2013 should be yet again a banner year for me and for anyone else who takes action.
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    13y

    @David A., look back to August 2005, yes the market can lose a lot of value very quickly, but you are right that it takes some catalyst to initiate the drop.

    @Will Barnard, I agree with you. 2012 will be my best year in over 20, and I enthusiastically look forward to 2013. There is as much deal flow out there as I can handle, despite the competition.

  • Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    13y

    Are all Realtors allowed to tell you the current bid? Cause mine doesn't... It'd be helpful to know so I can just ask him what the current bid is then not have to sign papers to put in a offer that has no chance of being accepted. I feel that's all I do, every time, so far...

    Will Barnard - And I'm ready to go out and take it!!!

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y
    Originally posted by Brian Burke:
    Blackstone is buying everything below $300K in Sacramento, which doesn't leave much left over for individual home buyers and small investors, so there is a high concentration of offers for what little product there is. They will slow down soon, but it wouldn't be surprising if another group comes in when Blackstone starts to back off.

    There are still deals to be had in Sacramento, you just have to out-maneuver the big guys. It's not as easy as it was last year, buy I'm getting some deal flow there despite the competition. If you are flipping, you'll have to increase your price bracket above the low end where the buy & hold guys play.

    I was at a REI club meeting in Sacramento last night and numerous people said the same thing....Blackstone and THR are both buying up lots of property right now in this market.

    In fact, here's a recent story on them: http://sacramentoappraisalblog.com/tag/thr-california-llc/

    I don't flip. I just buy and hold, so I feel like I can go a little above what the flippers pay. Although no one (myself included) wants to overpay, I can pay a little more because my business model is built around the monthly cashflow and not the home's ARV. Even with that, it's still been tough acquiring more properties (at least off MLS). I think I might try some new strategies though.

  • Investor · Atlanta, GA · Member since 2012 · 408 posts · 37 votes
    13y

    Don't give up. Not every property is getting bid on the way you mentioned. I have seen the same here in Atlanta with 20+ bids on a property. If that stopped me that would mean I wouldn't have made offers on other properties that were making 20+ gross returns. Just keep inquiring, and write offers. Be quick on the draw and it wouldn't hurt to offer cash.
    That being said:
    Consider changing your target properties temporarily. Look at new areas, price ranges, fix-up requirements, etc.
    Most importantly, don't pay more than you are willing to pay. So far you are doing fine. The supply of housing is still in the favor of buyers, for now.

  • Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    13y

    I put in a bid on an REO in november. There were 3 (including me) investors. I got a good deal.

    The hedge funds are coming out here too in droves, however, they're hitting certain cities - ones close to highways & blue collar & near manufacturers. They do buy & hold.

    I don't see these fund companies making it with the prices they're paying (sight unseen) & using PM's. There was an article in my local newspaper about these guys. They're shooting for 8% returns.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y
    Originally posted by Ben Bakhshi:
    Don't give up. Not every property is getting bid on the way you mentioned. I have seen the same here in Atlanta with 20+ bids on a property. If that stopped me that would mean I wouldn't have made offers on other properties that were making 20+ gross returns. Just keep inquiring, and write offers. Be quick on the draw and it wouldn't hurt to offer cash.
    That being said:
    Consider changing your target properties temporarily. Look at new areas, price ranges, fix-up requirements, etc.
    Most importantly, don't pay more than you are willing to pay. So far you are doing fine. The supply of housing is still in the favor of buyers, for now.

    Thanks Ben Bakhshi. I'm going to keep putting offers in, and all my offers are cash now. Financed offers just aren't being looked at.

    I thought 50+ offers was a lot, but coincidentally there was a guy at the REI investors meeting I went to last night who said the last house he just bid on got 82 offers!

  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    13y
    Originally posted by Kyle J.:

    I was at a REI club meeting in Sacramento last night and numerous people said the same thing....Blackstone and THR are both buying up lots of property right now in this market.

    THR is Blackstone. They'll be backing off soon, they have to digest all of this inventory they have been buying. They haven't even touched a lot of it.

  • Durham, NC · Member since 2012 · 498 posts · 48 votes
    13y

    The following quotation is from one of my early posts elsewhere:

    "When US policy makers decided to further deleverage the housing market, they understood well how venture capital in general makes investment decisions based on Return/Risk (Sharpe Ratio). The investment in real estate must also be compared against investment with risk of similar scale, such as investment in stock market. They might have felt that Return/Risk ratio is higher for short term stock investment because of high liquidity of such market and therefore
    investment banks are banned to trade stocks by Volcker's Rule, so that their money can be forced into real estate. This is exactly what has happened. Goldman Sachs started to buy real estate aggressively from the last fall in anticipation of full implementation of Volcker's Rule this summer. Then big investors such as Warren Buffett, John Paulson, and even some of the foreign sovereignty funds all
    started to rush more dollars into US real estate market. QE3 is just another more direct push. "

  • Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    13y

    I actually think that owner occupants are getting in on the action too. I'm seeing way more houses going to owner occupants on HUD"s site than I have at any time in the last 5 years (thats how long I've been doing this).

    Looking at bid results, there are some counties down by me where owner occupants are literally the only successful bidders for the period. Thats just crazy.

    It used to be about 50-50. At its peak, I'd say it was 70-30 owner occupants. But 90-10? Or even 100-0? The time periods are smaller sample sizes at any given time but still. Not a single one making it out to investor.....

  • Commercial Real Estate Broker · San Diego, CA · Member since 2012 · 37 posts · 1 vote
    13y

    Hi everyone, I am new to this forum and so far it has provided me with a ton of great info. I wanted to touch on this post and also had a question:

    I am thinking about "slowly" getting into real estate for investment purposes by starting small. My family has done very well with RE of the last decades, but we have never focused on what the current market (last few years) seems to be - i.e. trying to buy/flip/hold lower-end housing at fire-sale prices. We prefer to increase real value in properties and not to simply throw in the "granite slab" counters from HD to scalp a few grand from a flip.

    Given the other articles posted here and the fact that so many of the properties these days are receiving tens of offers, would you all say that this is geared toward this particular market segment in general? In other words, if I chose to stay away from the lion-pit of <$200k properties and wanted to look more at 3/4 plexes in Northern Calif (Sacramento), do you think that the market may be a little less "crowded" and perhaps financing deals might be more accepted?

    ~Thanks

  • Antelope, CA · Member since 2012 · 23 posts · 1 vote
    13y
    Originally posted by Brian Burke:
    Blackstone is buying everything below $300K in Sacramento, which doesn't leave much left over for individual home buyers and small investors, so there is a high concentration of offers for what little product there is. They will slow down soon, but it wouldn't be surprising if another group comes in when Blackstone starts to back off.

    There are still deals to be had in Sacramento, you just have to out-maneuver the big guys. It's not as easy as it was last year, buy I'm getting some deal flow there despite the competition. If you are flipping, you'll have to increase your price bracket above the low end where the buy & hold guys play.

    I'm in Sacramento too. Seeing this now makes me want to list my house at a ridiculously high price just to see if they touch it.

  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    13y

    They very well might...you never know! They are buying about a third of my flips for higher prices than end-user buyers.

  • Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    13y
    Originally posted by Will Barnard:
    In the most competitive of environments, 2013 should be yet again a banner year for me and for anyone else who takes action.

    I agree with Will. 2012 was in a great year for me and I have big plans for 2013. People who work it are still getting inventory, but it definitely is a tough market for a newbie.

    I don't know how I'd feel if I was the highest of 50+ bidders on a house. So it might be time to look for other sources of deal flow.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y
    Originally posted by Steve L.:

    I don't know how I'd feel if I was the highest of 50+ bidders on a house. So it might be time to look for other sources of deal flow.
    Great point Steve. You either have to work harder to get deals, find a new niche, or a new source.
  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    13y

    I also agree with the above two posts. In fact, for 2013 I'm going to do exactly that and change up/diversify my investing strategies a little bit.

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