Learning how to find real estate deals in a low-inventory housing market can be quite the ordeal. This is especially true if you are an inexperienced real estate investor. You must be ready to put in a lot of time and effort to find the right investment property for yourself when the market is in this state.
Thankfully, Mashvisor has 6 great tips to help you with finding real estate investment properties in the low-inventory real estate market in your area.
2 Reasons for a Low-Inventory Real Estate Market
The Winter
There are a couple of reasons that cause a low-inventory real estate market. The first reason for this shift in the market is the weather! That is right, during the winter and fall, it is very normal to run into the low-inventory real estate issue when searching for property. After kids are getting settled into their school routines, people are a lot less likely to put their single-family properties up for sale. This creates a lack of inventory within the housing market.
However, the low-inventory housing market of the winter is actually viewed as rather positive in some ways as prices will be drastically lower than any other time of the year. This is a great time to buy income properties especially if you are a good negotiator.
A Seller’s Market
The second reason that could bring about a low-inventory real estate market is the seller’s market. A seller’s market refers to a time where there is a high demand to buy property and that demand is met with property owners not wanting to sell. Of course, this issue can happen during the winter, but it is usually not the case as owners who advertise during the winter are usually rather eager to make any deal.
Low-inventory real estate during a seller’s market means very high competition between investors. It also means overpriced real estate because sellers know there aren’t enough properties to go around. This creates a whole new set of issues for real estate investors searching for income property.
Related: Is It a Buyer’s Market or Seller’s Market?
Now that you know the possible causes of a low-inventory housing market, here are 6 tips to help your investment property search during this time.
Tip #1: Use a Real Estate Agent
A low-inventory housing market is an issue for real estate investors and real estate agents alike. At this time, real estate agents are also desperate to make a deal and keep their clients happy! This is great news for you as a real estate investor because it means your real estate agent will be working twice as hard to find an investment property that will actually make you money.
The best thing you can do when conducting an investment property search in a low-inventory housing market is to find a real estate agent who is hardworking and has a good reputation. To find a good real estate agent, ask for referrals from friends and fellow investors and even check online reviews for their services. You can also find a top-performing real estate agent using Mashvisor’s Directory.
Tip #2: Surf the Web for Investment Property
To find the most profitable investments in a low-inventory real estate market, you must be constantly on the lookout. The best way to be on the lookout for new investment property is to check online using heatmaps.
Learn More: Finding Income Properties Using a Heatmap
However, to be realistic, there is no way you can always be online to check for new properties. This is where you can use a few simple tactics to get the best out of technology. Log on to a real estate website you use to search for property, such as Mashvisor, and subscribe to get an email notification whenever a new investment property matching your description is put on the market. This way, you will be the first to have a look at the investment property that interests you. This can help you stay ahead of the competition in a low-inventory housing market!
Tip #3: Be Flexible in a Low-Inventory Real Estate Market
Be open to putting in work when learning how to find real estate deals in a low-inventory housing market. For you as a real estate investor and buyer, this means being constantly ready to take time off to view a property, as well as accepting some possible compromises with your requirements. Often times the real estate investor who ends up nabbing the rental property is the first one to see it. So, make sure more often than not, you’re the first on the scene.
Tip #4: Sharpen Your Negotiation Skills
As a property buyer in a low-inventory housing market, you must be incredibly good at negotiating without going too far. This is especially true when it is a seller’s market. Don’t go overboard with lowballing your offers as this might cost you the income property entirely. Instead, do enough research on the market and each property using an investment property calculator to get the margins that allow you to make the right offer for you and for the seller.
Related: 8 Negotiation Tips for Buying an Investment Property
Tip #5: Consider Investing in Other Markets
While we often talk about the US real estate market as one entity, this is not always the case. A lot of times one state can have the hottest, low-inventory real estate markets in the country, while another state could have emerging markets with high inventory and profitable properties. If you are very firm about the requirements during your search in a low-inventory housing market, try looking into new markets. You might find exactly what you are looking for.
Tip #6: Rethink the Type of Property You Want to Buy
Many times, a low-inventory housing market only applies to one type of rental property like single-family income properties rather than multi-family units or even condos. In this instance, if you are thinking of buying a single-family investment property, try taking a look at condos instead. Condos are cheaper and you may find more variety during these low-inventory real estate periods.
While you’re in the mix of finding property in a low-inventory housing market, don’t forget one of the best tips for real estate investors: Take your time. Just because inventory is currently low, does not mean you have to buy whatever investment property you can get your hands on. Remember, at the end of the day this is an investment and must be profitable to buy. The best real estate investments are made after the time is taken to research and inspect the property of interest thoroughly using the best real estate analysis tools such as the ones offered by Mashvisor.
To learn more about how Mashvisor will help you make faster and smarter real estate investment decisions, click here.