How are you responding to price cuts?

[Zachary Inman]

Hey BP!

My home market is Indianapolis, Indiana, and I'm seeing many price reductions following the continued increase of rates — which comes as a surprise to no one. I'm prowling the market for good opportunities, as always, but can't help but think that it might be best to hold off for a bit to see some more normalization. True, the cost of money will rise, but I can't help but think it'd be a less turbulent acquisition environment in a few months or so.

Two questions for you all: 

1. How significantly are rate hikes affecting your market?

2. What is your short-medium term strategy in the current environment?

[Joseph Cacciapaglia]

Market inefficiency is where profits come from. Right now many sellers are panicking. I've already seen several sellers take deals well below what I thought possible, because they're staring into the unknown right now. The savvy investors I know are starting to make a lot of low offers, because some sellers are actually taking them. I believe some of these will end up being below the actual market bottom. Some of the best deals I saw during the GFC happened in 2008, long before the bottom, but right when the panic was highest.

Im in San Antonio, which is performing relatively well compared to several other markets I follow. Despite that, we still have plenty of nervous sellers, and not many buyers out there trying to capitalize on it.