Is the competition pushing you out of your space? Is it tough to find the deals you used to find? What’s an investor to do? These are common questions for any type of investor, in any type of asset class, in any place in time. It’s bound to happen sooner or later, whether you’re investing in stocks, precious metals, real state, notes, or any other type of business. They’re all a function of a marketplace that’s constantly changing and typically based on supply and demand.
Several years ago, at the height of the real estate boom right before the crash, I remember riding in a cab, and the cab driver was telling me that he and his brother were going to be real estate investors and they were going to strike it rich. Nothing against cab drivers, but my point is that everyone was getting into real state at the time, whether they knew what they were doing or not. It was the herd effect.
All the anxious money leaving the stock market heading into real estate was driving the prices of everything up. Even properties I owned in tough neighborhoods were selling for unheard of prices. It was 2005 and 2006, and to be quite honest, I sold 10 properties and took some of my risk off the table. My only regret was that I didn’t sell more — because it was going to be over 10 years before I’d see equity like that come back into my market.
Supply and Demand
For the most part, every market is based on supply and demand.
Recently, I heard a real estate investor say that the hedge funds are buying up all the real estate deals in their area. Also, I’ve heard a Florida REO agent say supply is drying up, and they’re thinking of going into notes. There’s an abundance of note buyers everywhere who are scrambling for note deals to invest in.
So, what’s an investor to do?
Hopefully all of your eggs are not in just one basket, as you never know what might happen. That being said, when your market starts to change, there are a few options that can help you survive.
4 Tips to Help Investors Survive in a Changing & Competitive Marketplace
1. Differentiate Yourself
Try working in a specialized niche where not too many folks are operating.
I remember when I was a realtor, I specialized in finding properties for investors. When the market tanked, many of my peers shifted into assisting first-time homebuyers. Personally, I went into delinquent notes. But you get the idea; it’s change or die sometimes.
2. Create a Unique Experience
Go above and beyond for your customer.
Even in a saturated field, it’s common for a small percentage of the companies to command a large percentage of the marketplace (Instagram vs. Kodak, for example).
3. Focus on What You Do Best
Why bother trying to do something that you’re not good at?
It’s much easier to work off of your strengths and become the best you can at that area. So, maybe it’s time to assess your Strengths, Weaknesses, Opportunities, and Threats (SWOT).
4. Change Markets or Products
Sometimes it’s just time to make a move.
It wasn’t too long ago that my firm shifted from purchasing only second lien mortgages (our specialty) into also purchasing first liens. Sometimes you just need to develop another vertical or revenue stream. The worst thing you can do is pretend nothing is happening.
But as my project management team is always telling me, “The biggest marketplace is in your customer’s head.”
So, let me ask you, what are you doing to stay at the forefront of your top customers’ mind?
Be sure to leave a comment, and let’s discuss!