What happened to all the Cheap Houses?
A lot of people are asking themselves what happened to all the cheap houses. Florida’s real estate market has changed so fast in the past six months, it’s hard to believe. The past few years, properties have been selling for well below value, some houses were even selling for less than half of the cost it took to build them. We knew that it was certainly too good to be true and could not last for long. I had a lunch meeting with an attorney friend of mine and he agreed that this is literally a once-in-a-lifetime buying experience. A lot of smart investors, that have witnessed the changes, are buying as many properties as they can. They bought these properties as long-term holds and are currently renting the houses out. As the market continues to develop, they will start to list these houses and sell them as retail listings.
Hedge funds have also overtaken Florida, buying up literally thousands of houses. When the news broke in the St. Pete Times that Blackstone was buying investment properties, it really got everyone talking. Since then, as many as 10 other hedge funds are currently acquiring houses in Tampa Bay. I’ve spoken with their acquisition teams who say they are under a lot of pressure to acquire as many houses as possible. This has caused a massive increase in demand for investment properties under $120,000. As the supply of houses under $120,000 started to dry up, we saw hedge funds buying houses up to $250,000. The market still has plenty of houses available and because we have 13 year long-standing relationships with banks that have foreclosures for sale, as well as realtors who list a lot of investment type properties, our acquisition team is strong and we are buying upwards of 20 houses every month.
There’s no doubt that in another year a lot of real estate investors, and/or potential real estate investors, will be kicking themselves. They will be saying “I wish I had bought those cheap houses in 2013.” The houses are still selling at a price where they can rent and the owner/investor will receive positive cash flow. I’ve been saying this for years; “People should start buying properties now and let Realnet Property Management handle their investment portfolios. Now, more than ever, is the time to buy!” I would recommend anyone to take their money out of their stocks and mutual funds to convert the retirement accounts into a self-directed IRA. They should be buying as many rental properties as they possibly can. Realnet Property Management, a 10-year-old management company, run by my brother Jon, can handle these properties for our investors and make them truly hands-off investments.
I’ve also heard people say “it’s impossible to buy cheap houses as rental properties now because the hedge funds are buying everything up”. This is not true! We have such long-standing relationships with banks and Realtors that despite hedge funds, that we find wholesale investment properties and we are buying them each and every month. The hedge funds are not able to get better service, properties, or inside information than we are. Right now if I was a real estate investor who has identified that the market is strong and this is a good time to be buy, I would go and talk to one of the Realnet experts and look at some past success stories. There are so many people who bought rental properties from us that are now reaping the benefits. It would be a great idea to look at some of these past investment plans to help you understand how simple it really is to buy investment properties and hold onto them. Real estate is a tangible asset! It’s not like the stock market that can fluctuate so much in just a day’s time. We primarily sell concrete block houses that only need cosmetic rehab, these houses will stand strong for many years to come.