If you're thinking of investing in real estate (or looking to expand your existing property portfolio), it's important to understand the market conditions. We've talked about a seller's market and how that can impact buying and selling properties, but about a buyer's market?
Since the real estate landscape changes over time, property investors must understand the difference between a seller's vs. a buyer's market and how to maximize returns in either climate. Keep reading to learn more about what to do during a buyer's market!
What Is a Buyer's Market?
A buyer's market is one in which there are more homes for sale than buyers looking to purchase them. This means that buyers have more power and can negotiate better terms with sellers for a real estate investment.
Because there are more homes on the market, buyers can be choosier about which properties they're interested in and have more time to comparison shop. This market also gives real estate investors more inventory, making it easier to find the ideal investment property, often at a better price than inventory available during a seller's market.
How Does This Impact Price?
In a buyer's market, prices are typically lower than in a seller's market because there is more competition among sellers. This is because there are more houses on the market competing for buyers' attention. Because of this, sellers may need to offer discounts or other incentives to attract buyers.
What Does This Mean for Investors?
For real estate investors, a buyer's market can be an excellent opportunity to buy property at a discount. With prices lower than usual, it's easier to find deals and make a profit when selling later down the road. It's also an excellent opportunity to add more rental properties to your portfolio if your real estate investing strategies include rental units.
In a buyer's market, a real estate investor also has more power to negotiate. With a resource like Privy, you get properties and investor insights delivered directly to your inbox. With that information, you can make excellent offers and negotiate with sellers to capitalize on a buyer's market and boost your income and portfolio!
Be Sure To Do Your Research
While a buyer's real estate market can be a good time to invest in properties, it's important to do your research before making any decisions. You'll want to consider things like the type of property you're interested in and the location. It's also a good idea to consult with a real estate professional to get their advice on the best strategy for investing in a buyer's market.
Even at lower prices with plenty of availability, it's still critical to be selective about the investment properties you choose. Just because a residential property is priced low doesn't make it the right fit for your strategies, portfolio, or long-term success.
Whether you prefer fix-and-flip properties or buy-and-hold investments, review market research and run the numbers to make sure you can generate the revenue you need.
If you're a house flipper, a buyer's market can be an ideal time to buy more project homes. You'll likely spend less money on the initial investment, which can add to your profits later when you sell the renovated house to new buyers.
However, a buyer's market can make it challenging to resell the home when you're ready. Keeping a fix-and-flip property too long because it doesn't sell quickly can eat into your profits--even if you purchased the property for a low price.
Beware of your timing and make sure you budget properly to offset any additional costs that can occur if the finished home sits on the market longer than usual.
Grow Your Rental Property Portfolio
For real estate investors that operate rental properties, a buyer's market provides plenty of opportunities to add more rental units (and income) to their portfolios. Lower housing prices make it more budget-friendly to get into your next investment property. However, a buyer's market can also mean lower rent prices (which can impact your income).
As with any property investment in any type of market, run the numbers to make sure a new rental property meets your ROI goals and future income plans. If the numbers add up, take advantage of a buyer's market to build your portfolio!
Capitalize on Real Estate Investments During a Buyer's Market
When experiencing a buyer's market, it can be important to move quickly to buy properties at low prices before they go up again. However, it's also critical to do plenty of research, use reliable sources, and get market insights when considering long-distance real estate investing.
Privy helps real estate investors do those things and more! With the investor insights and properties we send your way, you're able to learn more about specific markets, current housing prices, and recent investor deals to help you make excellent offers and smart decisions. If you're ready to learn more about the Privy Advantage, reach out to our team!
Get one of the best resources for real estate investing when downloading our free ebook, "How to Invest In Real Estate: A Guide!"