STRATEGY
CREATIVE INVESTING
Talking Loudly: CreativeWays to Cashflow HOW CREATIVITY IN INVESTING CAN MAXIMIZE YIELDS AND UNLEASH YOUR FULL POTENTIAL
by Nathan Trunfio
T
hough the housing market remains strong, things have become tricky for investors. In early 2020, the
BEMORE CREATIVE INFINDINGYIELD In today’s market, it takes hard work to source good deals. What you need is a direct-to-seller lead generation engine that balances traditional and digital marketing tactics. It’s the only way to generate a large number of transactions and scale your business. Some methods for direct-to-seller marketing in real estate include: • Pay-per-click advertising and paid search marketing • Paid social media marketing
U.S. inventory of homes plunged to the lowest level since 2012, according to the National Association of Realtors. As the graph below shows, the U.S. only has 3.1 months of supply, meaning it would take only 3.1 months to sell all the homes currently for sale. To put things in perspective, the historical average for house supply is about 6.0 months. This creates challenges for real estate investors. Simply stated, low inventory leads to a low pool of investment opportunities. Even when a good deal arrives on the market, the lack of opportunity means many investors and residents will compete for that deal. With high competition comes higher acquisition costs. Home prices have consistently reached all-time highs since 2012 and increased by 3.7 percent in 2019, according to CoreLogic data. That momentum is expected to continue in the next few years, with prices estimated to rise by 5.3 percent in 2020. Rising construction costs further complicate the landscape. According to the Turner Building Cost Index, building costs increased by 44.7 percent in the 2010s, largely because material and labor shortages have driven up prices. Consequently, real estate investors face more difficulty finding good deals, and that’s led to lower margins. Now, you may be thinking: It is what it is. You can’t change the market. That’s true. But you can make the market work for you. To achieve greater success in this real estate market, get more active and be diligent when buying homes and making deals. With creativity and forward thinking, you can mitigate risks and ensure profitability. The Turner Building Cost Index is determined by the following factors considered on a nationwide basis: labor rates and productivity, material prices and the competitive condition of the marketplace.
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