Are Investors Still buying?

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Jossalyn Wallace
Real Estate Agent · Destin, FL · Member since 2019 · 116 posts · 111 votes
3y

Investors are always buying if the deal is good enough! 

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  • Jossalyn Wallace
    Real Estate Agent · Destin, FL · Member since 2019 · 116 posts · 111 votes
    3y

    Investors are always buying if the deal is good enough! 

    8Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    This is the time to buy, when there is fear and the market is down. Not when there are bidding wars. 

    7Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    I can’t buy! Investors are buying everything. I can’t buy! Investors aren’t buying everything. “Everyone” was waiting for the crash. They were going to buy every great deal. Now they’re afraid of a slowdown. 

    As some wise BP member once said. If you lack e courage or the capacity to purchase during a boom market. What makes you think you’ll find them during a crash. 

    8Reply
  • Andy SabischPro Member
    Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
    3y

    If a deal works, the deal works.  As interest rates go up, you need to be sure of the numbers you are running but there are deals out there and savy investors will buy if the deal makes sense.

    I will say that your statement "I plan to wholesale SFRs in all of California" is a pretty ambitious statement and one that reflects a lot of today's wholesalers that are trying to get into the market.  Do you have any experience in this area?  The vast majority of wholesale deals I have seen recently have been from novice wholesalers that do not understand reno costs and ARVs.  They under estimate one and overstate the other to make a deal look like a home run when it is usually a strike.  Since reno costs vary especially statewide, how are you planning to blanket the entire state when you have some very talented wholesalers in specific markets that know their local market better than you can hope to doing it virtually.  Not trying to dissuade you but asking the question you do indicates you do not have a buyers list which would be investors that are buyers as that would have answered your question.  Wholesaling is real but the way many approach it lately as a result of the Internet gurus hawking their courses has resulted in sellers getting burned and actual investors being presented deals that waste everyone's time.

    Best of luck but it sounds like a pretty ambitious plan with limited plans up front.

    2Reply
  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    3y
    Quote from @Joseph Hernandez:

    Hi. Are investors buying in 2023? I want to wholesale SFR's in all of California. I don't want to waste advertising funds if the market is down.

     Yes investors are still buying. Returns have gotten compressed so people are being more picky.

    2Reply
  • Austin Pitts
    Real Estate Agent · Austin, TX · Member since 2016 · 86 posts · 58 votes
    3y

    The serious investors are still buying. Investment real estate never stops, criteria changes and margins flex but real investors keep buying. Like someone mentioned already, our investors see this as an opportunity. 

    2Reply
  • Ronald Ty
    Member since 2020 · 68 posts · 30 votes
    3y

    Been hearing about a correction just about every year since 2012 lol. 

    there is too much inventory at least in my area. Until that changes, I don't see a correction. And I definitely don't see a crash. That was a once in a lifetime situation.

    And people keep talking about the interest rate hike. While it os higher, the reality is 6-7% is still cheap $. In the late 70s, it was in the high teens. Now, they was a problem. 

    BP has too much drama. :)

    2Reply
  • Joseph Hernandez
    OP
    Member since 2023 · 164 posts · 15 votes
    3y

    I'm targeting homeowners in default in a large metro area. I'm a returning wholesaler, I'm trying to get a feel of how much below market value would an investor (buy and hold or flip) would purchase an SFR for? I know it depends on various factors, but let's say the property is a 3 bd/2 bth starter home and a cosmetic fixer with no other negative factors. Can you tell me in a dollar amount, how much a typical investor pay in today's market, such as 50k below FMV? Also, it must be a cash buyer as time is of the essence, since I will be working with homeowners in NOS stage. Thanks in advance!

    0Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 584 posts · 738 votes
    3y

    @Bill Brandt

    That is awesome quote. That's is a wise BP member. Very true.

    0Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 584 posts · 738 votes
    3y

    I'm still buying. However, I am much more picky and I have been making much lower offers than the asking price. As a result, I have lost several deals in the last month based on 50K to 300K difference from the asking.

    A part of me feels like I missed put on opportunities that could have been fruitful with longer hold time. But the other part of me feels that by rearranging the buy box and strategies, it would introduce more uncertainty and speculation. That change can alter my growth strategy and increase the risks substantially.

    Thus, I stick to my buy box, continue to hold steady and keep on throwing fair offers out there. Many sellers are clinging on to the hype and the recent market boom. But all will come down to earth eventually, either through price adjustments or rate adjustments.

    I closed on a deal early April. Final asking dropped to $825K. I held steady to my numbers. I ended up COE on it for $765K.

    Yesterday, I got a call on a property that I initially pursued for $880K. Seller wanted $1.3M and was willing to drop to $1.1M. I moved on and made several other offers to other properties and did not get anything. Well... yesterday, that seller called and asked if I was willing to put $880K in writing. Darn right I was! Scrambled to get updated funding quotes all afternoon. Sent the PSA over last night with proof of funds and we should open escrow.

    On top of that, I got another call for OOS for another building that fit the buy box. Suddenly, my problem has shifted to not enough capital to capture it all.

    Lesson: stick you your guns. Adjust accordingly, but do not put yourself at risk or bank on speculation and time. Although time will always heal a bad purchase, it will rob you of good opportunities and growth.

    That's my 0.02 on buying in this current cycle. It may nor apply to everyone's personal goals or investment locations, but it is what I am experiencing in So Cal. Good deals are harder to create, but they are out there.

    You make it happen and do not expect it to be handed to you on a platter like 2020 or 2021... or 2008 to 2014.😎

    3Reply
  • Ronald Ty
    Member since 2020 · 68 posts · 30 votes
    3y

    People like to say there were a ton of deals in 2008-12 & there were. 

    but they don't talk about there still was a ton of competition. There always will be if it is a good deal. 

    And they also don't mention that the values kept coming down and down. When you buy a home thinking it will be worth 200k arv and then it sinks to 190k, it makes it tough to make $.

    2Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 584 posts · 738 votes
    3y

    @Scott Williamson

    DITTO!

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Sam Yin:

    @Scott Williamson

    DITTO!

    Investor Home Purchases Collapse Most On Record

    https://www.zerohedge.com/mark...

    BY TYLER DURDENTHURSDAY, JUN 01, 2023 - 05:00 PM

    Residential real estate brokerage firm Redfin released new data that revealed a record-breaking drop in homes purchased by investors in the first quarter. This sharp decline is due to a combination of elevated interest rates and sliding home prices, which impacts potential future returns. With investors retreating to the sidelines, buyers in the market have dramatically shrunk, and price wars have eased.

    Redfin data shows investors purchased 48.6% fewer homes in the first quarter compared with the same period last year. This was the most significant plunge on record.

    To illustrate just how the Federal Reserve's 14 months of aggressive interest hikes have chilled a major buyer of the residential real estate market, Redfin shows the record-breaking pullback in the chart below:

    1Reply
  • Ronald Ty
    Member since 2020 · 68 posts · 30 votes
    3y

    I would argue that as long as there is a shortage in inventory, the prices will continue to go up. Historically, it has been 2-3%. 

    1Reply
  • Sam YinPro Member
    Los Angeles, CA · Member since 2021 · 584 posts · 738 votes
    3y
    Quote from @Ronald Ty:

    I would argue that as long as there is a shortage in inventory, the prices will continue to go up. Historically, it has been 2-3%. 

    I am going to argue the same. 


    I'm not taking sides, but I am speaking from a local market perspective.  Nationally,  it may be different.  Locally, it is a buyers market in SoCal. Things still seem to be over priced, over bid, and overly scarce.  Inventory is low. Prices remain high. Buyers/investors are still out there hunting and parking their money. Oftentimes,  I cannot see how people are buying sub 2% caps or ZERO to negative cash flow investments property... but they do and are still doing it today.

    1Reply
  • Chris Merchant
    Member since 2023 · 216 posts · 133 votes
    3y

    I never close myself off or say I am not going to invest, like many have said if the right deal comes along then I jump at it and make an offer, even if a good property gets sent my way, I will run the numbers quickly and make an offer, worst thing that can happen is the seller refuses the offer.  As an investor you can not be afraid to hear the word "no".  There is always a demand for rentals it seems as the investor you just need to be sure to do your due diligence in vetting the deal.

    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    3y

    @Joseph Hernandez Investors are buying in my market even if the deals don't work. They think my area is cheap money compared to other areas and falsely assume they can BRRRR and raise rents unreasonably high and still find tenants. Those of us in the know are still buying all the good deals!

    0Reply
  • Eddy OgbekhiluPro Member
    Investor · Lutz Florida . · Member since 2018 · 103 posts · 34 votes
    3y

    @Sam Yin...Strategy at its finest.

    0Reply
  • Joe R.
    Investor · Cape Coral, FL · Member since 2017 · 39 posts · 35 votes
    3y

    Buying everyday.  The fear is totally irrational  

    3Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Joseph Hernandez:

    I'm targeting homeowners in default in a large metro area. I'm a returning wholesaler, I'm trying to get a feel of how much below market value would an investor (buy and hold or flip) would purchase an SFR for? I know it depends on various factors, but let's say the property is a 3 bd/2 bth starter home and a cosmetic fixer with no other negative factors. Can you tell me in a dollar amount, how much a typical investor pay in today's market, such as 50k below FMV? Also, it must be a cash buyer as time is of the essence, since I will be working with homeowners in NOS stage. Thanks in advance!


    If you think about homeowner default, better get more serious W2 job.  Everything you ask seems so 2009 era LOL
    0Reply
  • Joseph Hernandez
    OP
    Member since 2023 · 164 posts · 15 votes
    3y

    Apparently you can't read. I said I was a returning wholesaler. I've been out of the business since the 08' crash. In addition, I never said I'm afraid. I'm simply doing my due diligence so I don't waste money.  

    0Reply
  • Joseph Hernandez
    OP
    Member since 2023 · 164 posts · 15 votes
    3y

    Thank you for your input Alecia. 

    0Reply
  • Andy SabischPro Member
    Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
    3y
    Quote from @Joseph Hernandez:

    Apparently you can't read. I said I was a returning wholesaler. I've been out of the business since the 08' crash. In addition, I never said I'm afraid. I'm simply doing my due diligence so I don't waste money.  


    Joseph,

    First, I might recommend toning down your responses if you want quality input from BP members.  You may be a returning wholesaler (which you did not state in your initial post) and responding the way you did to posts that are coming from seasoned CURRENT players in the market tends to result in posts being ignored.


    Second, while you may have done wholesaling in 2008 and before, the landscape for wholesalers has changed dramatically thanks to internet gurus hawking get rick courses to the masses with little to no experience and even less understanding of the market.  Wholesalers for the most part tend to under estimate reno costs and over inflate the ARV in the hope of getting a deal and to those that know numbers, we simply write them off as lacking the product a real investor is interested in and we move on.

    The three things you need today to be a successful wholesaler are 1) a solid understanding of estimating reno costs, 2) a solid understanding of pilling comps to get ARVs and 3) a list of cash buyers so you are not looking for one when you get a property under contract.  As I said, 95% of the wholesalers today lack one or all three of these and they fail miserably.

    There is no magic percentage as far as what you need to buy at, what investors want or where to find cash buyers.  If you have a REIG in your area, visit it and see what others are finding in terms of flips and what they are looking for . . . market to them and then expand.  If you think that any area in the country does not have at least a dozen wholesalers working the same lists calling the same owners, you are kidding yourself.  If you can develop a repoire with the seller and can solve a problem for them while finding an investor what they want and making a few dollars for yourself, you can stand out.  I will say that we get called on several of our properties multiple times each week and I talk to the caller . . . all are wholesalers and most brand new that do not know how to take the next step.  In fact we have a property we are going to sell as we have too much on our plate and I called three bandit sign posters . . . not one was able to answer some basic questions and that was with me prompting them and offering to help them find a buyer.

    Good luck in your come back but times have changed and as they say sugar works better than vinegar when it comes to posts . . . .
    1Reply
  • Joseph Hernandez
    OP
    Member since 2023 · 164 posts · 15 votes
    3y

    Thank you Sam for your input.

    0Reply
  • Joseph Hernandez
    OP
    Member since 2023 · 164 posts · 15 votes
    3y

    Thank you all for taking the time to reply to my post. This is my first post in BP ever. I am disappointed from some of the replies. Not one person answered my question: roughly how much under-market will an investor pay for an SFR that's a cosmetic fixer? I know it depends on other factors, but you could have given me a range. What is so difficult about that? Also, some of you are rude. You treat me as though I'm a scared newbie, and mocking me. Stop embarrassing yourselves by acting like children. I'm a seasoned real estate and mortgage broker. I also flipped homes and wholesaled since 1994, but stopped in 2008. i'm fully aware as a broker how to run comps. As a previous flipper, I know how to calculate ARV. I know expenses are almost always higher than my initial estimate. The reason i'm geo targeting all of California is because I want to focus strictly on homeowners in NOS stage, which is a small segment of the population. I have the budget, I have agents under me to JV with me and yes, I am very ambitious. Yes, I know how frustrating it is to work with incompetent "wholesalers." I think the increase is due to the promotion of micro flipping, heavily promoted in sites such as FB, Connected Investors and Property Shark.

    0Reply
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