Editor’s Note: Hal Cranmer has had a wild past. Born in India, he’s lived all over the world and started his working life as an Air Force Special Operations and Commercial airline pilot. After 9/11 brought him down from the clouds, he entered the corporate world and rose to the level of running a $36M machining plant. Yet from 2006 on, he caught the passion for real estate investing. He flipped a bunch of houses in Minneapolis and still owns several multifamily rentals there. Lately, he is into assisted living, and owns 5 assisted living homes in the Phoenix area. He loves to follow real estate trends, both locally and nationally.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Cranmer provides us with his own unique, lively and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out our other super-helpful Market News Updates. For now, enjoy...
From Hal Cranmer...
We’re just over halfway into 2018 but it’s never too late to snag your best sale yet!
If you’re thinking about buying or selling a property at this time of the year, knowing the latest real estate trends would definitely up your chances of sealing that deal.
We rounded up the top 2 current trends that will help both buyers and sellers (aka investors) and how these trends would affect them.
#1: Property prices are higher in 2018 than last year
This isn’t actually new news since real estate prices have gradually increased about 3%–4% annually over the course of 30 years. The real news is that this year, the prices jumped a whopping 10% increase in 2018.
Obviously markets vary a lot. Some places are up even higher and some are lower. But the bottom line is that for most markets, we are WAAAYYYY up!
Let’s convert that to dollars, shall we?
If you bought a house in 2017 for $200,000, you are up $20,000, on average, if you still own it. Not a bad return – especially if you were able to buy it for no money down.
Half of the home buyers are looking for properties that cost below $200,000. But the problem is, only 1 in 3 homes is priced below that range! That means homes that are in that price range are going to go fast – and for top dollar.
Seller’s Point of View
Higher prices mean that sellers will most likely make a good amount of profit selling properties at this time. If you’re thinking about selling – think about it HARD!
Buyer’s Point of View
Buying a property in the current market may not be a good idea for real estate investors.
But if you’re really keen on buying properties any time soon, here are a couple helpful tips:
1. Don’t go beyond your budget. Don’t buy a property that doesn’t make sense financially. Remember, the goal is to resell the property and maximize profit. There are good deals in every market. Performing the analysis and walking away from bad deals are keys to becoming successful.
2. Research, research, research. Location is one of the factors when it comes to a property’s price. If you’re scouting for properties in a location you’re not familiar with, it’s best to connect with someone who knows the area well, like a local real estate agent.
#2: Homes are hot on the market and they’re selling FAST.
Despite the price increase of homes in the past year, many are still selling like pancakes.
Realtor.com showed that in February 2018, properties were selling 8% faster than the previous year. The following month, they found out that homes were selling at least one week quicker in the biggest housing markets in the U.S. than last year.
Is it too soon to use the ‘bubble’ term yet?
Seller’s Point of View
Good news for sellers!
Your property gets sold at a higher price and the pressure of selling the property ASAP flies out the window.
With the number of buyers lining up, you’ll have the power to negotiate with people and sell the property according to your terms. You may not have to do any ‘creative funding’ deals.
Buyer’s Point of View
If you’re buying properties, you’ll definitely have to deal with the competition. The good deals are going to go quickly – and maybe at a price that isn’t a good deal.
According to Realtor.com, the 2018 market is the first market where a lot of buyers are choosing so few properties.
But of course, great real estate investors don’t go down without a fight. Here are my 2 cents so you can snatch the property you want:
1. Have all your financing lined up. Set aside money ahead of time just in case you find a property worth buying.
You can also get pre-approved for a mortgage. This gives an impression that you’re a serious buyer. Many buyers start the mortgage process after they find a home they want.
2. Determine the type of property you want. With the number of competitors vying for properties, you’ll be able to beat them by knowing exactly what you want and making an offer ASAP.
Do you want single-family homes? Co-ops? Commercial real estate? Apartment buildings? Or duplexes? The more specific you are, the better. And the more knowledgeable you are about your niche, the quicker you can do your due diligence and make the offer.
3. Write a personal letter to sellers. Do you want to stand out among a sea of competitors? Then sending a letter containing your personal story might be the key.
You might want to list the things you love about the house. Again, the more specific, the better. Whether they have a walk-in closet or a huge backyard, tell them how you want to use the space. How you envision it to be.
Make sure you tell them how easy you will make the selling process. The sellers want to know ‘What’s in it for me?’
4. Get an agent to scout for you. If you’re a busy real estate investor and/or if you don’t know the area well, it might help to hire a Realtor to walk you through the complexities of buying a property.
Make sure that the real estate agent you’re working with is experienced in the field and has a great reputation. Make sure they work with investors, not just homeowners.
You’d know if an agent is good at their job if they’re an expert at negotiating and if they can manage detailed paperwork up until closing.
Your Thoughts?
Got any new trends you might want to add to the list? Don’t hesitate to share by commenting below.
Hal Cranmer
Hal Cranmer has had a wild past. Born in India, he’s lived all over the world and started his working life as an Air Force Special Operations and Commercial airline pilot. After 9/11 brought him down from the clouds, he entered the corporate world and rose to the level of running a $36M machining plant. Yet from 2006 on, he caught the passion for real estate investing. He flipped a bunch of houses in Minneapolis and still owns several multifamily rentals there. Lately, he is into assisted living, and owns 5 assisted living homes in the Phoenix area. He loves to follow real estate trends, both locally and nationally.