If you are an investor, here is some information

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– Investors –

With an influx of buyers who have disposal cash, the housing market has forced investors to alter the way they acquire properties. Investors are no longer the ones with liquid cash. And with the introduction of the appraisal waiver addendum, buyers who are using conventional loans can compete just as equally. With buyers now in a position to essentially pay whatever they feel a home is worth, they are paying more for properties that need cosmetic updates than before.

So how does an investor compete, when the funds they use to acquire properties are typically from hard money lenders who are charging 8%-12% interest and are lending on a draw? Whether on or off market, sellers are no longer blindly accepting offers extremely under list price. As an investor, how do you acquire a property that makes sense for your bottom line? The answer is new construction and home additions. 

Since buyers have been paying above market for homes, this influx has driven the prices up for homes with less square footage. To make deals make sense, investors are adding square footage to homes by either adding a second story, adding on to the back of a home or both. This maximizes their dollar amount.

In my opinion, the difference between new construction and adding square footage to a home, is one home will start with a blank canvas and the other will have a blueprint to build from. Both will require permits from the city, both will require materials to be ordered and both may have unforeseen circumstances arise. So essentially the risk can be viewed the same.

Since homes are selling within days of hitting the market, there are several buyers on standby to jump at the opportunity to purchase a new construction home or a newly renovated home. With builders limiting the number of homes they release monthly to 2 to 3 a month, waitlists are filling up and in most areas are closed. Not to mention, the price of new construction homes increases bi-weekly. What does this mean for you as an investor? This means that there is plenty of opportunity and money to be made. 

Buy and Hold

What if you are an investor who only has an interest in rentals. The same concept of building or adding square footage on to homes can apply. In fact, there are many single-family homes that are zoned multi-family. These homes are sometimes sold at lot value with the assumption that an investor or developer will purchase the home for the sole purpose of tearing the home down and building townhomes, condos or duplexes. This allows investors to build to suit.

Another option when wanting to acquire rental properties is just to simply buy a property that needs work, update the home and put a renter in place or use as a short-term rental.

Build Your Team

Once you have figured out what type of investments you want to have, it is time to build your team. Your team will consist of your realtor, general contractor (who is bonded and insured), inspector, hard money lender or preferred bank, appraiser and property management company, should you choose to buy and hold. If you are thinking about investing in the Dallas-Fort Worth area, surrounding cities and throughout the state of Texas, I am the one to contact. I have a team of individuals already in place who are ready to help you achieve your goals. They are tried and true, meaning they have already worked with other investor clients of mine and have proven themselves to be trusted, reliable and efficient in their work.

If you want to learn more about the current real estate market and how you can get started, complete the contact form below and let’s schedule a 20-minute consultation and discuss your goals.

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