The window of investment opportunity is open

[AJ Wong]

As we welcome 2023 it seems along the Pacific Coast and specifically the Oregon and California Coast's that there is a window of buying opportunity for investors and buyers. 

My recent experience with purchase and sales transactions support that the market is quite strong, desirable investment properties are selling consistently, albeit with much less buyer competition. 

Sellers are generally more reasonable in their sales prices or at least willing to listen or entertain any and all reasonable offers. 

The challenge for many buyers is identifying properties that offer profitable and reliable returns, as due to the increased costs of financing (and just about everything else) it is increasingly challenging to secure CAP rates and net returns of 10%++

There are a few variables specific to this market and economic environment that buyers should also consider when analyzing investment property financials or pro forma's. Perhaps most notably is the inflation rate and diminishing buying power of the almighty American Dollar. 

Inflation is a tax on savings. It harms the most responsible and prudent savers as it silently decreases leverage capacity and reserves. A 7% inflation rate means your $100k savings is $93k in December and $85k by the Thanksgiving after that. This is presuming that the disclosed CPI is accurate, which historically and notably it is NOT. Combine with general macro economic environmental conditions and there are few places other than hard tangible assets such as land, gold, diamonds and commodities that preserve wealth and fewer that can provide income, cash flow and peace of mind during a recession or increasingly uncertain times. 

This post will not explore the greater influences of unprecedented private and public debts, climate change, societal and economic inequalities and waning dollar dominance but none of those contributors are positives for investors outside of the aforementioned assets, with the exception of climate change..Curry county OR and the PNW Coast at large will arguably benefit from migration patters and more temperate climates..more on that in the next episode..

The takeaway is that investors might have fewer tangible metrics to invest in real estate but the intangibles could make a good deal a great deal. 

I personally would be strongly considering converting a portion of my non tangible assets such as stonks or other paper assets to real hard assets such as real estate. It might not be as inexpensive to borrow but it's cheaper and likely safer than the potential losses. (Feel free to share your two cents on that perspective.) This is not financial advice but I'm short stocks and long commodities, income producing real estate, physical commodities and rare natural colored diamonds :) 

On the leverage side rates have mellowed and I have several transactions pending and closed with incredibly reasonable and even favorable mortgages secured. 

- Six plex with a local credit union with with 30% down in the 6%'s fixed. 

- Turnkey triplex with 10% down, 3% financed closing costs and no PMI in the 7%'s

- 9 Plex with 15% down no PMI in the 6%'s on an investor friendly ARM.

Having been a mortgage broker since 2003 my opinion is those are historically advantageous and workable terms. I wouldn't lend you my money at 6-7% and neither would most banks in most nations..certainly not with minimal leverage. Good luck with financing here in Mexico..at a minimum you'll need 50% down and pay 12%+ interest if and when a mortgage is an option.

Certainly US lenders are being more particular and strict with their guidelines but if you're reading this post it's likely that you can qualify for a conventional or non-conventional mortgage. (If you are unsure message me for three of the best brokers I've had the privilege of working with.)

Anyhow investing in American Real Estate is apparently one of the safest and lucrative investments, investors can make.  It certainly is still financially favorable and feasible even or especially in the current rate and market environment. 

Will you or your broker need to play it safer and smarter? Yes. 

Will you or they need to work harder or more creatively? Hopefully. 

Should you play scared? Never.

My best advice is to educate yourself on the current market. Maybe consider something you haven't just to test the strength of what you have? Examples: property type, area, purpose, use, alternative lender program..Then really find out what happening from who is making it happen and where can you gain an additional advantage? Example: More favorable terms, less down, more down, lower price, financed renovations, higher price with less down. I'm somewhat obsessive with turning over every stone to see what reveals itself, so far it's proven a tedious but necessary and effective property evaluation strategy. 

As it stands, many of the players are on their off season and by the time they realize it is game time it could very well be somewhat of a frenzied market. Several of my lender friends have just this week mentioned recent multiple offer scenarios and I've also seen a doubling of investor interest and inquiries since the turn of the year. Many of whom have been on the sidelines for well over 6-12 months..

During which time there has been little to no notable increase in new coastal construction homes, properties eligible for vacation rental usage are harder to secure due to zoning and demand and at any given point in time there are a handful of worthwhile multi unit properties listed on the entire Oregon Coast. Oh and the assets in the bank buy less, and cost more..

If you're considering any property investment scenario, consider a few more, there is a property with both the doors and windows wide open until the sun returns to the coast with Spring. 

By late April, mid May and certainly deep into June and July the coast will be incredibly active with a loose forecast for mortgage rates to decline notably by year's end which could extend market momentum into Fall and Spring.

Let's see how this ages..