It's a Bloodbath and Time to Swim with Sharks

What is going on in the Columbus Ohio investment market right now is a terrible thing.  Terrible, that is, if you are overextended.  Terrible if you are trying to sell investment property at retail prices.  Terrible if you don't have a source of funds.

What I am trying to say is that now is a great time to buy investment real estate in the 1-4 market.  What is a 1-4??  That means 1 to 4 units.  This can be a single family home, a double, a three unit or a 4 plex.  These types of real estate investments are the ones most usually made by beginning investors and experienced investors alike.  Some investments can be made for as little as $25,000 (some lower) and on up in price.  Some are spending hundreds of thousands on single family homes for use as executive rentals.

I am sure you are asking "why now?"  Answer: Because the market is terrible.  Yes.  Terrible!  In my opinion, it is getting worse and that is a good thing for investors.

Why is it so bad?  The number 1 reason that I see is that money is tight.  If you have bad credit, little cash and need really creative financing to do deals, then you might just be on the sidelines for a while.  60% of the investors that were buying last year are on the sidelines.  Many people can't refinance out of ARM's, others have different financial problems and the market is flooding with more property every day.

This is very simple economics.  60% less qualified investors and significantly more inventory creates a downward cycle in prices.  This cycle is creating opportunity for those interested in getting into the market.

Buyers are driving the bus these days in Columbus. If you can buy and hold for two years, then you should be buying.  For first timers, buy something with a tenant or that is ready to rent.  More experienced investors should be taking the next step into the deeper water.

The great thing about swimming in this pool is that it has both a deep and a shallow end.  Pick an end, put on your trunks and jump in.  The water is just about right.  Don't mind the sharks.  There's enough chum to go around !!!

 
Posted by Rich Kruse on 07/17/2007 10:27 AM   Comments (10)   , , , ,  
This post has been included in Ohio Information Franklin County, OH Information Columbus, OH Information
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10 Comments on It's a Bloodbath and Time to Swim with Sharks

Awesome. Rich, I have been preaching the same thing here, only I have been telling people to be ready in about a year. Get that credit score up, save some money, earn some money, and get ready.

What is the rental market like right now? I am looking for markets where the rents are $100/mo. for every 10k in purchase price. I have found a couple of places where this is possible in the 50k-75k range. Any chance that is happening in your area?

07/17/2007 10:32 AM by John Evarts (Classic Property Management of Santa Clarita)

That is possible on some properties here, yes.  You need to go to the bank owned though.  Many normal sellers can't take the loss.

07/17/2007 10:41 AM by Rich Kruse (Gryphon USA, Ltd.)

Rich, My market just like yours is starting to be a good opportunity for experienced investors with money. Investors are starting to smile and are getting their finances in order to take advantage of the declining vaues, foreclosures, short sales etc..The market is always good for some body. 

07/17/2007 12:05 PM by Tutas Towne Realty, Inc

Thanks, Rich. I may be contacting you. My wife and I are looking to purchase our next one in Sept/Oct

07/17/2007 12:14 PM by John Evarts (Classic Property Management of Santa Clarita)

Rich,

It would seem that this applies to my market as well.  Thanks for working it so eloquently.

Fran

07/17/2007 12:48 PM by Fran Gatti - Crescent City CA Real Estate (RE/MAX Coastal Redwoods)

Our market seems to have leveled off, but it's hard to tell since it's summer. We'll know for sure by September.

Lisa Hill

07/17/2007 11:51 PM by Lisa Hill (Daytona Beach REALTOR®) (Adams Cameron and Company)

wow this is a serious post - and you are right - I just read that MN state is trying to make it so that every loan has to be full docs.. that will kill a lot of loans - they are saying by August 1 of this year.

07/18/2007 12:38 AM by Central Oregon Real Estate | Thesa Chambers, Broker (RE/MAX Sunset Realty La Pine)

Thesa - Yep.  Every once in a while I get serious.  This whole post is based on a conversation I had with a friend who has been talking about buying for a couple of years.  Now he is on the fence because the market is going down.

07/18/2007 06:46 AM by Rich Kruse (Gryphon USA, Ltd.)

The time to invest is when the prices are down, and the inventory is up if you have the money to do it.  When the market corrects itself again and prices go up, then everyone starts to jump on and so the cycle continues.  It takes guts to look for the future and brains to understand history.

Congratulations on placing in the Carnival of Real Estate!

07/23/2007 03:35 PM by Deborah Burns ~ Seattle Real Estate Agent (BRIO Realty)

Is there a way to take a poll of markets where you can get $100/mo. rent per $10,000 in purchase price? In my market (LA/So. OC) there's no way. I'm sure many of us could send referrals if we knew which markets are supporting rents like that.

07/24/2007 10:43 AM by Shari

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Real Estate Agent: Rich Kruse (Gryphon USA, Ltd.)
Rich Kruse
Columbus, OH
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Gryphon USA, Ltd.

Office Phone: (614) 885-0020 Ext.: 17
Cell Phone: (614) 885-0020
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A lighthearted yet informative look at the real estate and asset sale professions. Gryphon services clients sale and management problems with creative and sometimes extremely aggressive solutions. Primarily a servicer for sellers, Gryphon's professional do also assist investor/ developer buyers with acquisition transactions where the company sometiems participates as a principal.

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