Surviving As Investor In A Sellers Market

Investor · New York City, NY · Member since 2018 · 81 posts · 19 votes

Hi there and HAPPY NEW YEAR!!! I'm an investor in Virginia (Hampton Roads area), inventory is plentiful BUT the prices are a whopping 15-40K over actual worth due to what we call a sellers market. Any others in my market, or other markets dealing w/the same issues? What are you doing to overcome this obstacle? Also, if you're in the VA market I'd love to hear from you. Be well investor family.Website

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Simcha Davidman

Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes

Hi again :)

Who's to say what they're worth? Things are worth what someone is willing to pay for the income, or in the case of residential properties, what someone is willing to pay to live there. You might only be willing to pay $160k for something, but for a variety of reasons, other people are willing to pay $180k.

It could be that prices are being bid up irrationally. One way to check that is to look at replacement cost. What would it cost to build the house you're looking to buy?

But it also could be that our dollars are worth less and it will take (a lot) more of them to buy the same stuff it did 2 years ago.

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Simcha Davidman
Rental Property Investor · Baltimore, MD · Member since 2014 · 408 posts · 209 votes
4y
Hi again :)
Who's to say what they're worth? Things are worth what someone is willing to pay for the income, or in the case of residential properties, what someone is willing to pay to live there. You might only be willing to pay $160k for something, but for a variety of reasons, other people are willing to pay $180k.
It could be that prices are being bid up irrationally. One way to check that is to look at replacement cost. What would it cost to build the house you're looking to buy?
But it also could be that our dollars are worth less and it will take (a lot) more of them to buy the same stuff it did 2 years ago.
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Carter Fleck
Real Estate Consultant · Virginia Beach, VA · Member since 2022 · 26 posts · 22 votes
4y
@Heyward Lovett -- Simcha has a great point! I am just getting started in this world and am learning a ton everyday. What our firm is doing is we are looking at a couple things: 1) Market future appreciation (who can really predict this?) 2) Revenue stream. It has been pretty balking dealing with real estate in general, but the more I sit with it, the more investments make sense if the rental income or potential revenue upside makes sense. We have had to be extremely creative in our last couple of deals. But as I am learning, "You make money by solving problems". We are involved in a project now that has potential for huge upside, but we were told that we would be "chasing our tail" in pursuing it. So far, it has turned out better than we expected. We shall see how that plays out in the long run, though lol. So that is a long winded way of answering your question... how are we overcoming this obstacle? Reframing how we look at investments and GETTING CREATIVE!
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y
If inventory is plentiful, you are in the minority. If things are selling at those prices then that's what they are worth. If they are sitting there, it's just what they are priced at. Surviving isn't a thing in real estate investing because there are always more areas, more deals, better metrics, and different investment types to investigate. When a market is hot, I still stay on top of all deals and watch what they sell for. You are likely misreading your market if inventory remains high on the market. That means there are deals, they just aren't ready to be deals yet because they are trying to get the pandemic prices after the cliff is already here.
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Joaquin Camarasa
Real Estate Agent · Springfield VA · Member since 2018 · 480 posts · 400 votes
4y
If you come to northern Virginia, we do not have the same luck with inventory, at least that is good. In regards of what you can do it depends if you have cash or not. If you are buying cash reach out to local wholesealers. If you are planning to buy with a conventional loan the only thing you can do is too act fast and try to know what exactly could make for the seller to accept the offer within a few hours.
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Chase Taylor
Rental Property Investor · Virginia Beach, VA · Member since 2014 · 32 posts · 22 votes
4y
Agree with everyone above. How are you determining that prices are 15k-40k above what properties are worth? Is that based on your personal thresholds you need to hit to meet your target returns? Also, when you say inventory is plentiful are you referencing a specific type of property? You will be hard pressed to find an investor in today's market that isn't facing these challenges. In today's world deals aren't found but made. An obvious callout if you aren't already is pursuing off market properties. If you are exclusively looking at properties on the mls you are massively limiting yourself. Another point, creativity, which has already been mentioned above. I just closed on a quad in Norfolk that I converted a unit to 30 day plus Airbnb and am generating an additional $500/mo on this door vs. my long term tenants in the building. I have also done Sub2, owner financing, house-hacking - there are countless strategies you can employ that make a deal. Ultimately, I would challenge you to reframe your mindset and think about how can you can create a deal rather than expecting one to appear. I'm in HR and would be glad to connect!
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