Are Investors Backing Off, or Just Getting Pickier?

Question

Locally in Utah, I’ve noticed fewer investors competing on every deal — but the ones who are still active seem much more selective, targeting homes that sit and negotiating hard.

If you’re investing right now, are you pulling back and waiting for the market to shift more, or just being more picky about the deals you chase?

V.G Jason · Answer

It was a free for all for the seller's for about 2 years. Real estate agents kept the frenzy for another 1-2 years.

Now reality hits. At some point the fundamentals matter...and you're seeing that now.

Caleb Brown · Answer

It's a mix. Investors are waiting since they are uneasy with the economy, less money floating around, deals are harder to make work with rates, people are being conservative on adding debt/doors, etc. There's a variety of reasons but the market is not the same as a few years ago.

Russell Brazil · Answer

We are at an inflection point in the market. Things might get better, or they might get worse. So with that, astute investors are just being a little more cautious.

Zachary Clevenger · Answer

As the others have mentioned so far...I am both being cautious and picky. They both placate to each other.Most deals suck. I analyze 100 properties and maybe one moves to the next level. Even then the numbers typically won't meet my criteria due to many factors.1) Everything is over priced.

2) Everything costs more now; HVAC, utilities, water, sewer, taxes, insurance, hell even lawncare.

It is more critical now to be extremely picky.

Mohammed Rahman · Answer

Feels like it’s more about being pickier than pulling back completely. Money’s more expensive and holding costs add up, so people don’t want to gamble on thin margins anymore.

The buyers who are still active are running the numbers harder, focusing on properties where they can negotiate or add real value.

A lot of investors are sitting on the sidelines waiting for more price drops, but the ones staying in the game are just laser-focused on deals that make sense today, not hoping the market bails them out later.

Doug Smith · Answer

I think people are starting to get concerned about aggressively leveraging (borrowing at high LTVs) when many markets are declining a bit. We're also seeing an imbalance between sales prices and rents which makes investors put more down on property to get property to cash flow at or above a 1.0X DSCR. I was also just talking with one of our people this morning about the fact that there is a big spread right now in what sellers think their properties are worth vs what buyers/investors are willing to pay. I think all of those factors are causing a slow down in activity in a lot of markets, but I enjoy seeing what other posters are seeing.

Kyle Vogeler · Answer

I would say it's probably a little of both.

Some investors fear what may happen in the economy and are therefore backing off, while others are still active but are "pickier" because interest rates have gone up from the 2020 lows so not every deal makes as much sense now.

Are Investors Backing Off, or Just Getting Pickier?

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