Where are the single and multi-family rental property deals for income seeking investors?
Financing for real estate deals is plentiful, and the market continues to march upwards. Yet, the strengths of the market are also making it appear to be harder to find deal flow and appetizing acquisitions.
So is inventory really as tight as some media outlets make out? How much opportunity is out there? Where are the deals if there are any?
Quarter of a Trillion in Distressed US Real Estate Up for Grabs
Many of the most intense recent bidding wars for income property haven’t even been over distressed deals. The demand for yield is so high, and capital so plentiful that hundreds of qualified bidders have been vying for deals selling for close to $100M.
Some hot markets like Denver, Colorado are reporting inventory levels of less than 2 months’ as of September 2015. However, whether some choose to shrug off the data or not, the fact is that there are billions of dollars in off market deals all over the US.
A September 10th, 2015 newsletter from DistressedPro.com declares that there are still over a quarter million dollars of nonperforming notes and REOs on the books of US banks, credit unions, and asset managers.
As we rolled into the second half of 2015 data compiler RealtyTrac reported 1 in every 74 housing units in FL was still in some phase of the default and foreclosure process. The latest data suggests there are still close to 18M vacant homes in the US, many of which are foreclosures. Regions like SW FL, Detroit, and Las Vegas, are still dealing with entire swathes of ghost town like neighborhoods. As of Sept. 2015 several New York cities and town still reported dealing with 2,000 plus zombie foreclosures (each), which they intend to demolish.
This is all in addition to a surge in new single and multi-family apartment building construction which is slowly trying to build up and catch up with demand.
The Big Question: How to Find and Takedown these Deals
- Automate marketing to direct sellers and homeowners
- Use software like BankProspector to get in the back door and access inventory and decision makers at banks and credit unions
- Leverage other investors for wholesale property deals in your area
- Develop municipal government contacts and provide a solution for dealing with property blight and zombie foreclosures
- Get smaller. Use new blanket mortgage loans and apartment building loans to snipe smaller multifamily deals which aren’t on the radar of big institutional funds