It’s no secret- the real estate market around the U.S. is on FIRE right now. Right now is arguably one of the most challenging times for new investors to break into the real estate scene. It might not be easy, but IT CAN BE DONE! Below are some tips and tricks to utilize while investing in a hot market.
Find a Savvy Real Estate Agent
Finding an agent that understands real estate investing can be a crucial tool to your success as an investor. A savvy real estate agent will have connections under challenging markets that can open many different doors for you. Real estate agents can set you up on an automated email list, so you get a notification when a property hits the MLS. These emails can be a significant advantage over anyone that sits around and waits for websites like Zillow or Trulia to post properties, which are frequently slower than the actual posting of the MLS. Getting to property first can pay big dividends in a hot market. A savvy agent can also steer you in the right direction and help you prevent overpaying for a property in a hot market. Too often, you see people buying “investment” properties for prices that don’t make financial sense. These people are no longer buying investments, they’re buying into a big liability, and a good agent can help navigate you away from these situations.
Look for Fix and Flip Properties
Sometimes, the best opportunities come from forcing appreciation into properties in a hot market. Fix and flip properties are not desirable to everyone, limiting the pool of buyers, which can be to your benefit as an investor. If you’re not afraid to purchase a property that needs work, fixer-uppers are the way to go. You can usually pick them up for lower prices, and your savvy agent (that we just talked about), should be working with you to negotiate possible repairs or credits from the sellers to get you the best deal possible.
Pursue Off-Market Opportunities
Off-market deals are the silver tuna of all real estate deals. Big money doesn’t know about them, and bidding wars are not a concern. The problem is FINDING these deals. As an investor, you should have at least one good wholesaler in your back pocket that is bird-dogging these off-market deals for you. You will pay for their efforts, but having a stream of off-market deals coming your way can be worth gold. Off-market deals often open up the door for negotiations between you and the seller. Off-market deals help a lot when you know that the seller has your attention and is not distracted with other potentially better offers.
Explore Different Asset Types
Exploring different asset types in a hot market can also help you find some fantastic deals on properties. There are many ways to make money in real estate, so don’t close yourself off to just one option. If you are dead set on buy-and-hold investing, consider doing a flip to open up some cash flow. Better yet, you could use the BRRRR strategy to fix and stabilize a property and keep it as a rental! Maybe you can get your foot in the door by doing an AirBnB. Though AirBnBs are a little less “passive” than traditional long-term rentals, but it can pay big dividends if you are in a desirable location.
A Word of Caution
It can be very tempting to jump right into a real estate deal just because everyone thinks it’s a great asset to invest in. Education is the most crucial part of your journey as an investor, so you need to know that you’re not going to overpay for a property that may end up costing you more money in the long run. Warren Buffet once said, “Be greedy when others are fearful, and be fearful when others are greedy.” That statement couldn’t be more accurate when it comes to real estate. Everyone knows that real estate is a good investment, but not everyone knows HOW to make it a good investment– so tread with caution in a hot market when every DIY person comes out of the woodwork ready to make a million dollars. You can easily find yourself upside-down in a market that doesn’t support you getting out from underneath an asset unscathed. I would rather have no deal than a bad deal when it comes to real estate, so don’t be afraid to hold off if you aren’t ready to commit. Surround yourself with other professionals in the real estate game and consume as many educational materials like books,
podcasts, and other educational mediums as you can.
Do you know of any other tips for investing in a hot market? Leave a comment below! I would love to hear what has been working for other investors!