United States - Existing Home Sales: Months Supply
rates on permanent financing unlocks even greater rental yields. In addition to the short-term and long- term financial gain, multifamily investments come with other benefits. The increase in renting by the Millennial and Baby Boomer generations as well as the need for workforce housing amongst middle-incomers has placed an extremely high demand on this property type. This demand increases occupancy rates and allows for greater and more frequent rent increases. It’s not just existing homes where you can get creative with financing either. Given the lack of quality inventory, now may be as good a time as ever to build-to-sell or build-to- rent. Not only are new construction budgets and scopes of work more predictable, but new homes are more desirable for buyers. Also, lots of inventory of infill and shovel-ready lots exist (much of which is left over from the last recession). If new construction interests you, make sure to find a good lender with experience in building and developing. They need to know how to finance heavy value-add and construction projects. That brings us to the next point. BE CREATIVEWITHRENOVATIONS Many investors have begun looking at doing larger renovation projects, such as teardowns and rebuilds, because they can achieve great yields. Additionally, less experienced investors and operators won’t be competing for those deals. That makes it easier to succeed in this area. When engaging in a large construction and renovation endeavor, focus on finding ways to add value. For example, if you buy a multifamily property that needs upgrades, keep in mind what exterior multifamily home improvements drive
• Text and email blasts • Heavy outbound cold calling • Direct mail • Door knocking • Driving-for-dollars • Referral-based marketing plans
These direct-to-seller tactics will help you build awareness, increase engagement, and secure more prospective leads.
BEMORE CREATIVE INYOURSTRATEGIES Since it’s hard to find good deals on fix-and-flip single- family homes, where is the opportunity? Well, consider the current real estate market: we have low inventory, rising values, and low interest rates. Mortgage interest rates for a 15-year fixed loan have dropped to 2.96 percent, according to Bankrate (spring 2020). Given these factors, we’ve seen a lot of investors look beyond single-family homes. Many top operators now seek opportunities in acquiring multifamily properties. Because of economies of scale within multifamily, you can acquire assets that generate more cashflow, add efficiencies to managing your portfolio, take advantage of greater appreciation rates, all while achieving high overall yield. Thanks to low interest rates resulting in potentially more investment capacity, investors can now access higher leverage and larger investments — including multifamily properties. The added value of low interest
68 | think realty magazine :: may 2020
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