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How to Find Deals When Inventory is so Low

February 26h, 2020



The US housing market has been experiencing an unprecedented shortage of real estate inventory since the COVID-19 pandemic struck.  The housing inventory data is clear – there is a shortage across the nation. But why? Here are some of the reasons why housing inventory has been shrinking over the past few months:

Low-interest rates – The historically low interest rates have made real estate properties more affordable. As a result, the demand for homes has exceeded the housing supply. 72% of the homes sold in October were on the market for less. 


The slow pace of construction – Generally, real estate construction has slowed down due to factors like a moratorium on construction.

Sellers holding back – Due to safety concerns, many people that were planning to sell their homes have withdrawn their listings.


Though the housing inventory is likely to remain low in 2021, it is still possible to find good real estate deals. Here are some of the strategies you could use to find investment properties for sale in a seller’s market:

Work with a professional full-time realtor - Trying to find a good deal by yourself will leave you disadvantaged in a hot seller's market. A licensed real estate agent will help you access thousands of properties listed on the multiple listing service (MLS) They will use their experience to guide you through the negotiation and closing process.


Look for off-market properties - Off-market property is a term used to refer to property that is not listed on the MLS or advertised publicly. Such properties are not in the public domain, there is less competition from other buyers.


Consider other real estate markets - Contrary to popular belief, the US housing market is not one entity. One state or city could be experiencing low housing inventory and high demand, while another area has high housing inventory.Predictions show that the low inventory housing market is likely to persist into 2021. The strategies listed above will come in handy for anyone that wants to know how to find real estate deals in a low inventory housing market.


Investing In Vacant Land 2.0

February 19th, 2020

We've all there at one point or another: for months, maybe even years, passing by a vacant parcel of land. You imagine a home, a multi-family neighborhood, a shopping center, an office space... anything. For the right investor, an empty parcel can be a goldmine, but is that investor you? Let’s find out. 



One of the biggest benefits of buying vacant land is the freedom to create the property you want. Second, Vacant land buyers typically pay with cash, giving them full and direct ownership. Third, Vacant land is much easier to manage remotely than rental properties are. Lastly, vacant land is usually cheaper to own as a long-term investment, especially since property taxes and fees are often lower than for developed land.

However, every great thing has its drawbacks, the first being that it’s more challenging to find traditional financing for purchasing vacant land. Second, is that you don’t have a mortgage, you likely will have other expenses, such as property taxes, improvement costs, and sometimes even association fees. Third, whether the property is zoned for residential, commercial, or another use determines what you can do. The timeline for getting your project approved by the township can also vary. Lastly, sometimes the property itself can have issues. Avoid flat lots, for example, due to water runoff issues. Likewise, with mountain property, steeply graded land is hard to develop. And make sure you’re clear on the situation with septic, sewer, water, and road access.
Land can be a double-edged sword. On one hand, it’s low maintenance and relatively straightforward. However, it can be scary and intimidating because of the unknowns. As they say, land is the one thing they’re not making any more of.
 

Vacation Rental Strategy 101

February 12th, 2020

Investing in a vacation rentals is a great way for investors to expand their businesses and increase their profit opportunities. The most dominate vacation rental marketplace is Airbnb! Renting out an investment property on throughAirbnb isn’t a strategy suited for everyone; however, those who choose to pursue the option often reap the rewards. Read on to uncover the benefits of vacation rentals through Airbnb, as well as learn which steps will lead you to your success.


Airbnb investing is a strategy where real estate investors purchase rental properties and list the entire property or individual rooms on Airbnb. It is uncommon for investors to live on the properties themselves. This strategy is an excellent way for investors to gain income from multiple properties they own. Airbnb, VRBO, and other platforms have gained massive popularity in the last decade for their ease of use for both tenants and renters.

One of the biggest benefits of adding Airbnb to your investment property strategy is cash flow. A well-furnished property that is photographed professionally in a desirable location and comes with a grade-A host has the ability to generate significant profits. In fact, when managed properly, an Airbnb rental can pull in two to three times the revenue of an unfurnished, long-term rental. All you have to do is research the costs of hotels in the area to see how much you can actually charge guests.

If you're an investor who is looking for a more passive investment, an Airbnb rental strategy may not be for you. One of the "drawbacks" (if you can even call it a drawback) of owning an Airbnb rental is the constant communication that must go on to achieve success. If you're willing to put in the work, however, there's no reason to avoid Airbnb. There's always some risk involved with any real estate deal, and there's no exception when it comes to renting on Airbnb. New guests are entering and exiting your property weekly and there's always a chance that that could lead to problems.

Owning an Airbnb rental can be a great way to earn additional cash flow, but before diving into the strategy, be sure to review the pros and cons, identify your goals, and play up your strengths.


The 3 Partners Every Investor Needs

February 5th, 2020


Small real estate investors don’t have big resources from which to draw support. However, that doesn’t mean they have to go it alone. 



#1. Real Estate Attorney/Tax Professional: One of the first suggestions I always make when speaking to small investors interested in real estate investing is to set up a limited liability company (LLC). An LLC is a way to organize your business legally and help to separate the holdings from your personal wealth and personal taxes. It’s not expensive to start an LLC. In fact, it can be a money-saver in the long run.

#2. Realtor: A local agent who knows the backstreets, as well as the main streets, can be a big asset as you sort through your options.

#3. Handyman/Contractor: Among my most valuable partners are my handyman and contractor. Sometimes this is one person, other times it is two or more or a company with a team. It depends on the circumstances. I don’t look for the lowest price for the work I do. Sure, I want to pay a fair price, but I also value workman’s compensation insurance.


Networking is critical for small rental property investors. Lean on your own network when you need help. Always chat up the folks who you work with. You may be very surprised to learn that the folks who serve your needs have learned many small investor lessons and are willing to share.


A New Wave of Construction Homes Could Be The Cure For The Housing Shortage. 

January 29th, 2020

The housing market has been struggling to keep up with demand since the 2010s, when the number of new homes built was slashed in half compared with the previous decade. As the demand for residential real estate has increased, the scarcity of homes for sale has created a logjam on the supply side. Here’s a look at what experts think will happen in 2021, and how you can put yourself in the best position to make a good deal. (Hint: it’s not the best news if you’re looking to buy a house, especially if you’re a first-time homebuyer.)

If you’re a homebuyer in a seller’s market, your options are limited. When there is less construction, you have fewer new homes to choose from. Another factor of the limited housing options is that older homeowners may be choosing to age in place, keeping many homes off the market. However, you can make the best of a not-entirely-ideal situation.



1.Expand Your Search to the Exurbs.Some motivated buyers are choosing to move farther away from expensive urban cores. This strategy might be helpful for buyers on a budget who have the flexibility of working from home.

2. Prepare Your Financing Before You Start Looking. 
Another hurdle buyers are facing is competition. It’s not unusual to get into bidding wars as more people compete for fewer homes, especially on the entry-level side of things. It is important to get your financing in order before you start house hunting.

3.Take Your Time. 
Don’t rush into buying something that you might regret buying later. The cost of buying a home can take years to recoup, as closing costs can run between 2% to 5% of the loan amount. That means if your home loan is $400,000, closing costs can end up being anywhere from $8,000 to $20,000 depending on your loan, whether you buy points and how much your lender charges in fees.

“Home construction finished the year with the biggest bang since 2006 with 1.669 million units started for construction in December. That means the worst of the housing shortage could soon come to an end." For the 13 straight years prior, home builders have been underproducing below historic norms. Therefore, it will take robust home construction this year and next, at a minimum, to fully supply the market to meet the demand. More construction also means more local job creation. The housing sector looks to lead the economy in recovery in 2021.




College Town Rental Properties in Yamhill County 

January 22nd, 2020


Student housing is a bonafide area of real estate. In fact, with college enrollment increasing 25% since the year 2000, that also means housing demand has increased. Here a some of the benefits of student housing and how some of the returns you can get are even better compared to other areas in residential and commercial real estate.



Higher Rents
As a result of the high demand, college rental properties can generate higher cash flow than traditional investment properties. It is not uncommon to see student housing generating more income than similar houses in a nearby market. According to a study from Home.com, investors with student housing properties may achieve a return on investment upwards of ten percent!

Guaranteed Rents
While students may not seem like reliable tenants, their parents’ financial backing makes them just as reliable as any other tenant, especially because you will require the parents to co-sign for the students. Additionally, when investors buy a house to rent out to students, multiple students likely live in the same property.

Annual Turnover
Although some speculate that student rentals tend to have quick turnover rate year after year, other landlords would state otherwise! Students who belong to a traditional four year University, often come back year after years to finish up their bachelors, return for graduate school or begin work in the same area. In addition, landlord can provide incentives to students who sign a 2-year lease such as lower rent, or a that guarantee of no rent increase.

More damage to Units
Property damage is every investor’s worst nightmare. However, all hope should not be lost. Investors can prepare for these risks in several ways: saving an emergency fund, screening tenants, requiring parental contact, and more.

In Yamhill County, we are fortunate enough to have two private 4 year universities: George Fox University and Linfield University. With the high demand for housing and a forecast of new construction homes in sight makes Yamhill country area an ideal spot to invest in student rentals!

Wrapping Up 2020 

January 15th, 2020

As we leave 2020 behind us and we press forward into a new year, the housing market news has flooded the media with overly optimistic predictions from some intermixed with an opposing view of doom and gloom expressed by others. While we cannot fully predict what the year 2021 will bring, we do know the trends of the 2020 markets that will help prepare us for the coming months. 



As our nation is in the midst of Presidential transfer, the investor market does not seem to be overreacting to the changing of powers from the Trump administration to the Biden administration and many theorize that the economy will follow a similar pattern to the Obama administration of 2009-2017. 

The health crisis brought significant challenges that affected the housing market and caused consumers to reevaluate their current living space. Schools are online, kids and parents are at home, and everyone is desperate for more space! One major problem, inventory levels remain at rock bottom with less than 1 month of inventory in the Portland metro market. Some suspect that due to the increase in mortgage forbearance to 6%, many homeowners will not be able to sustain their mortgage payment, and will be forced to sell. This will stimulate an increase in inventory levels but in the same token decrease overall home values as more inventory floods the market. With historically low interest rates, extremely low inventory levels, and inflated growth in appreciation seen in 2020, many believe that 2021 will remain a seller’s market. 

What about new construction? Well, new construction has been down in the Portland metro area since 2017 and due to the inflated prices of labor, materials, permits, deconstruction and rates, it’s likely that new construction will continue to decline throughout 2021. 

While there is no all-seeing eye that forecasts an accurate depiction of what 2021 will bring, there is no doubt that buyers and sellers will be active this year. Some spots of the Portland Real Estate market remain red hot while others are at a standstill due to the low inventory. 


If you are ready to make a move, let’s connect to layout your goals and financial picture. Based on your financial position, it might be the perfect time to find your dream home or next investment property.