Updated over 7 years ago on . Most recent reply
"St. Louis region falls out of the Top 20 metros in the U.S."
In case my fellow St. Louis investors haven't already seen this...
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I think the influx of out of state buyers is because of where we are in the market cycle not necessarily because people are being misled. The coastal markets are played out and if the best an investor there can do is a 3 or 4 cap, then a property in St. Louis at a 5 or 6 cap looks amazing on paper. I think most local investors would shake our head at the "on paper" numbers knowing the nuances of this market, but for an out of state investor struggling to find yield, it's a sensible play. Plus, from a capital preservation standpoint, if you think the market in say LA or NY is topping out, then cashing out near the highs and parking money in St. Louis for a 5% return makes sense if you think the property values at home might take a 50% haircut. That level of volatility is less likely here in St. Louis where it's kind of steady as she goes, even during downturns.
I share your frustration @Megan Greathouse! We've been eager to get into a 2nd property, but have either been outpriced on most and then outbid when one is in the ballpark. The most recent one we looked at was in a great area and the units were very nice, but the building had easily $30-50k in capex coming due within 3-5 years. Going by our numbers, we thought they were overpriced by at least 20%, but it still got multiple offers over ask within a day.
Looking to buy and hold long term, I'm comfortable sticking to my numbers and waiting it out. In the meantime I'll just keep stacking investment capital and hopefully if/when these folks don't end up making any money on their overpriced buys, I'll be there to scoop them at a discount!