you need for renovations and pad the numbers a little so you have enough cash on hand. • Be aware of other common mistakes investors make. These include only getting one bid for renovation projects, mis-analyz - ing as-is and after-repair values, expecting quick dispositions, etc. Additionally, make sure to do your market research. Read reports from firms like ATTOM Data Solu - tions, House Canary, and Collateral Analytics to learn about investment trends, get accurate valuations, and find out what investment strategies will be most successful (new con- struction, fix-and-flip, etc.) Analyze both macro data, which will help with understanding national and regional market trends, as well as micro data,
see deals fail is because of under- capitalization. You must prepare for every phase of the investment. That means you should: • Use conservative numbers when analyzing deals. Don’t assume market values will accelerate, even as the economy reopens. • Have ample cash reserves. This ensures you have enough money to buy, reposition, and exit. Too often, we see inves- tors spend too much on the acquisition, which leaves them undercapitalized for the next phases of the investment. • Focus on value creation. Take control of what you can control — your deals and properties. Accurately calculate the capital
which will help with deal-level deci- sions in local markets.
BE CAUTIOUS, BUT OPPORTUNISTIC
So, we’ve talked about risks and the need to stay conservative, even as the worst of the pandemic is behind us. With that said, there are lots of opportunities out there. As long as you stick to a conservative, research-focused approach, now’s the time to hop on these opportuni- ties. We’ve listed some below. RESIDENTIAL NEW CONSTRUCTION Housing supply remains historical- ly low. As of February 2021, it would only take 4.8 months to sell all exist- ing homes on the market. (Federal Reserve chart below).
MONTHLY SUPPLY OF HOUSES IN THE UNITED STATES
13
12
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10
9
8
7
6
5
4
3
SOURCES: CENSUS; HUD
f red. s t lou i s fed.org
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