A Booming Rental Market Makes Condos Highly Valued
I wouldn't say that it's hard to find good investment homes if
you know what makes a good investment property, but for novice
investors I'm beginning to get more of my customers great deals on
condos that feel like a great choice with much smaller risk.
Typically condos can be a tough sell in a down market, but in the
Orlando area - it's becoming a great boom because of such low
prices that are being coupled with a huge demand from the rental
market. The rental market is becoming substantial, to the point
that some days I'm getting more calls to go show rentals than I am
on my bank listings. This is a first in my career.
Why the shift? Many of the traditional home sales don't exist anymore. Because of decreasing home values compared with when many people purchased their homes years ago, they can't get any value out of it, or worse, they are completely upside. So naturally, if the market value has depressed then most home sellers will have a hard time selling for a profit depending on when they purhased - let alone hope to break even. So, what do they do? In that position, most people are faced with two options; walk away or work with the bank on what typically ends up a short sale (though in a rare case I have seen a bank work to keep the homeowner in the house by lowering the interest rate and forgiving fees).
Whatever the scenario, the main two property types that we're seing enter the market as listings are short sales and bank owned homes. Those two happen to be the hardest deals to close. As the number of available bank owned properties in my area has decreased lately, almost offers come back with a "highest and best" sheet to let you know their are multiple offers. So in the end, what am I getting at? Even in a down market, the great home values have many seekers. It's a buyers market, but that doesn't mean it's easy to find a great deal - especially as an investor. Many bank owned properties have provisions that require investment offers wait during a certain holding period while owner occupants get first dibs. There is nothing wrong with that policy, but it's just another hurdle to climb among so many others.
So where do most buyers end up finding good bargains? They want what the renters are looking for. Often times people get so caught up looking at homes as the true flip, that they forget that condos can be so much lower stress. They often have much fewer buyers after them because availability is higher, thus fewer bidding scenarios and more where you can go below asking. They usually are more central in location (if you look well), and the condos that are good for investment will be in good shape, have a good COA to help hold your value, and are built to a better standard than the appartments that the public is after right now while being afraid of the housing market.