Last week, in my first post on the BiggerPockets Blog, I wrote about how I became the investors’ Realtor by being an investor myself, thinking like an investor, having marketing materials designed for investors, and being in the hottest spots for investor real estate purchases. This week I would like to expand on the idea of traveling to the investment hot spots. Being in the places where people actually want to buy, and are buying, will enhance your chances of becoming a leader in your field. Specializing in a niche within a niche will also help establish your reputation as a leader in your area of expertise.
As you recall from our last article, I was heavily involved in several real estate markets over the 2003 to 2006 period. Where ever the hottest market… I was there. I was in Las Vegas, Phoenix, Albuquerque, and North Carolina just to name a few. I stayed tuned-in to where investors were heading, as I was one of them, and invested in all of these markets myself. Since the summer of 2008 I have specialized once again in the Las Vegas valley, but this time it has been foreclosures and REO properties… not new construction homes. I knew it was time to gear myself back up for sales in the Las Vegas area as I watched the prices of single family homes and condos drop rapidly due to the glut of foreclosures flooding the market. These lower prices created homes that could be purchased and rented for very good cash flow… better than Vegas has seen in decades. I took the opportunity to begin educating myself about this niche in this market, develop my marketing materials, and get ready to welcome the investors that I knew would soon come running into the Las Vegas housing market once again.
Becoming An Expert
I cannot stress enough how important it is to identify a niche and establish yourself as an expert in that particular area. Clients genuinely appreciate and flock to agents who really know what they are talking about. Do your research. Using Google Alerts enables anyone to stay on top of any area, subject, or interest simply by signing on to their alert system and receiving the best articles and blogs to follow on a daily basis. When I identify a hot spot for investors, it is because I have done extensive research on that topic. I am able to combine the knowledge I derive from that research with the gut feelings that I have been able to develop over the years. I do travel extensively and am always personally checking out areas that are on my radar.
Also, in my research, there are some experts in their respective fields that I follow closely and whose opinions I respect. These individuals and groups include: Bruce Norris and the Norris Group, John Burns Real Estate Consulting, Robert Shiller and the Case Shiller Index, and local Las Vegas economist Keith Schwer. These men and their support staffs do an amazing amount of research and by reading up on their newsletters and reports it is easy to stay on top of and spot trends in the marketplace.
Creating a Niche
To expound briefly on another niche I have been following: Since moving back to Las Vegas in 2004, one area that I have been watching very closely is the high rise condo market in Las Vegas. After five years of watching the high rise condo market up close and personal, and reading everything I can about it, I believe that the timing is just about right for investors to begin taking a serious look at this micro-market. The reason is simple. Builders constructed these properties and sold them for huge retail prices two to five years ago. It seems to have taken a little bit longer for investors in these luxury properties to feel the sting of the economic downturn, but it appears that they finally have as a large amount of foreclosures are now hitting the market at very low wholesale prices. As this happens, a second wave of investors are jumping back in to scoop up the spoils of the original purchasers at prices approaching.20 on the dollar! The biggest obstacle for potential high rise investors at this time is that the inventory is still fairly small as we are waiting for more foreclosures to hit the market.
Of the 75 high rise property developments announced in Las Vegas just a few years back, only about 20 % were actually built. Because of the current national economic downturn Las Vegas is very fortunate that of the 47,500 proposed luxury condo units, only about 9,300 rooms have come online or will come online once the current units are finished. If all of the condos that were proposed had actually been built, it could have been disastrous for the Las Vegas economy because of the over supply of rooms it would have created.
The opportunity in all of this comes in two areas: The first is buying units from investors who bought them new and are now losing them. A second tier of savvy bottom-feeder investors are picking up some units at 20 cents on the dollar from highs of a couple of years ago. I recently sold a unit at the MGM Signature Towers condominiums for $99,000. This luxury condo hotel in Las Vegas was built just a few years ago. The same unit sold new for $469,000 in 2006. The new sale price represents a drop of 78% (or a purchase price of 22 cents on the dollar). By keeping my antenna up and identifying this trend of pricing in this particular project I was able to quickly educate myself on the project, develop some marketing materials that I circulated to my investor database, and sell two units in just the last couple of weeks. The second area of opportunity will be buying units at auction or directly from developers who are unable to move their current high priced inventory. I have already attended several auctions where high rise condo units were for sale. This is helping to bring down the prices of these previously overpriced properties. The auction route could be an especially great opportunity for the bigger investors that play in the $1- $5 million range.
As a proactive investors’ Realtor I am beginning the process of educating myself on this specific segment of the foreclosure market so that I will be at the forefront of the luxury condo opportunity here in Las Vegas. In whatever market you are in I encourage you to find your specific niche, educate yourself on it, and become the best, most highly respected representative in that area that you can be. Be the “go-to guy” in your field and clients will find you and look to you for answers. Once they make contact, the rest is up to you.
Till next time
My name is Glenn Plantone