Is your real estate market is too hot to handle or is it cold as a cadaver on a marble slab? I reluctantly live in the People’s Republic of Maryland (very liberal) – and thankfully we didn’t get hit too hard by the housing bubble. Unemployment in MD is still a few points below the national average, and our housing prices seem to be stable. In fact, Maryland, DC, and Northern VA are the hottest three markets in the country. I can almost hear the U-Haul’s coming, but before you load up the family, the dog and all your worldly possessions, hold up. It doesn’t matter if your real estate markets hot or cold, there are great deals in every market.
Fact is, good deals do exist in every market, you just have to be selective. Remember we talked about quality over quantity? If you’ve got a hot or cold market, this is a great time to apply that philosophy. Despite the overflowing excess we see everywhere (although some of it’s easy on the eyes if ya know what I’m sayin’), less is more in some cases. Focus on fewer deals and only deals that will absolutely bring home the bacon. This is a finicky market. Buyers want it all and they want it at a low price. That said, you can not wedge yourself into a deal. Every deal should fit like Cinderella’s slipper.
So what deals should you go after to get the sure paydays?
Million Dollar Listing
In those extra smoldering hot-spots (mostly high-end, ultra rich areas) within your hot market, there are people literally waiting for homes to go on the market. We see this in DC all the time…still! A friend of mine just received an offer on his house that included an escalation clause. I haven’t seen that since 2004. Hot houses selling like hot cakes don’t actually have to be million dollar listings – they just have to be in really desirable neighborhoods. Typically, the number of buyers far outweighs the the amount of inventory in these areas. You’d be surprised how many people target neighborhoods they want to live in. They wait until homes in those neighborhoods become available, then they make shockingly high offers just to secure a spot in their favorite hoods. I know you think I’m crazy, but I’m tellin’ ya, its happening in this market. If there’s a super-hot neighborhood or segment in your market (like DC, Northern VA, NYC…etc), you need to know every player in that market; every agent, every lawyer, every title company, every investor, every contractor – and you need to be ready to pounce when you see a deal. Burn a bridge with any of the players above, and you may as well find another sandbox to play in. You’ll be burnt-toast forever amongst the gate-keepers and deal-makers. If however you can get a foot in the door, you’ll find that you can make some CRAZY paydays and margins that exceed your wildest imagination.
This Old House
No not Bob Villa, or that new guy host. Back in the days of greased hair, vinyl records, and of course Elvis, homes were built with one thing in mind; UTILITY. There were no frills. They were built on a much smaller scale with only the necessities in mind. Ranchers were all the rage back in the day. All rooms were on the same floor and one bathroom for the whole family to share (oh, the horror!) But times have changed, and so have the homes. While there are some people out there who still love the rancher style home, most would say ranchers are a dinosaur of past. Your job is to prove them wrong, and fortunately, that shouldn’t be too difficult to do. Ranchers are easy to upgrade to modern standards. Some of the most successful deals I’ve done have been ranchers.
In 2010 I did a rehab called “Gimme Some Moore” A bunch of investors turned the deal down because the bedrooms were small. I took one look and fell in love. Ranchers usually have massive basements – and this one worked particularly well because it had a side entrance that with only three steps down – you were in the basement. We turned the Motha’ out by adding a master suite in the basement. Most would say I was crazy for doing so, but this was no ordinary bedroom. It was massive with a massive walk-in shower for two. Check the pics below.
A favorite among trendy homeowners and those want to own on a smaller scale. Builders love to convert old apartments to luxury condos, but it’s important to know which markets are in high demand for condos. In large Metropolitan areas like New York City, Washington, DC, Atlanta, and Chicago, condos are still in big demand, but many are too outdated to appeal to young, hip buyers. I’m talkin’ natural trim and wallpaper borders, laminate countertops, and even carpeted bathrooms (which, btw, is absolutely disgusting).
If you play your cards right, you can find some smoking hot condo deals right now. Here’s the ONLY caveat. Make damn sure that the condo association is fully-funded before you buy, because if there is a deficiency, your end-buyer will not be able to get a loan. Investors all over the country are stuck with deals right now that can’t be flipped because the condo associations are essentially bankrupt.
So no more worries about hot markets, right? Just keep your eyes and ears open, and invest your time and energy in high profit margin properties. Now lick your thumb, place it oh so confidently on your ass, and say “ssssssssssssssssssssssssssssssss”. Hot markets are where it’s at, baby.