Florida which has notoriously been home to a quarter of the nation's foreclosures saw a 62% decline in foreclosures during 2011. Add to this a new report by the Commerce Department showing housing inventory levels are at a better than healthy 5.6 month supply and it is obvious that real estate investors need to begin brushing up their marketing plans, negotiation skills and tweaking their investment strategies in order to continue finding houses to flip.
The threats of masses amounts of looming 'shadow inventory' seems to have dissipated, with lenders taking a proactive approach to finding other ways to pass off REOs in bulk and preserve home values. A few months ago the biggest problem for real estate investors was weeding through the flood of short sales, foreclosures and REOs on the market. Now the issue is fighting the competition for a crack at the best deals and hoping that bidding wars don't drive prices too high.
So what can real estate investors do to get ahead of the competition and find deals that still make sense to flip?
Getting on the bulk REO train is one way but it also means having huge amounts of cash and being stuck with properties the banks have already been unsuccessful in selling.
At a minimum investors need to be looking into ways to automate their sourcing and bidding processes in order to keep deals flowing. This will also make it easier to cover larger areas. Some parts of the country are simply getting very difficult to find wholesale priced deals like Miami and San Jose. Looking to those regions which haven't felt the rebound yet and which aren't so hot with foreign investors like the Midwest could hold easier deals.
While Realtors and banks may have been easy sources of discounted properties to pick from for the last two years, those investors who start getting better and testing direct marketing to individual home sellers could put themselves ahead of the wave of new investors jumping into the market. Test copy, test packaging, test phone numbers and timing in order to obtain the maximum ROI and make budgets go further.
Finally, put together a pack of 'bird-dogs'. Enroll everyone you can in finding you great homes with equity and profits to be made. If you pay them based on you flipping the deal successful using flash funding it doesn't matter how much you offer. It could be $5 to someone overseas scraping property records all day or $500 to $1,000 to some local partners.
Investors just must realize they can't wait. Everyday more people are jumping back into real estate invest.
Where are the best areas to invest in real estate today? There are certainly still discounted properties to be had in most neighborhoods across the U.S. though some clearly have more than others. Miami, San Jose and San Diego may be quickly becoming over heated and mean much tougher competition. While cities like Atlanta, Phoenix, Chicago and Las Vegas are still awash with foreclosure bargains.
Duane Ortega has been enabling real estate investors to increase their volume and make real profits from real estate in both good times and bad over the last 10 years with no hassle transactional funding.
