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Missed Out On Deals To iBuyers? You May Get A Second Chance

Institutional investors made up about 17% of all home sales in the North Texas area in 2021. That massive number, while indicating the desirability of DFW as an investable area, also shows that many individual investors simply couldn’t compete for deals against corporate-backed buyers operating on higher volume and lower margins. As the market shifts, these assets may come back into play and create a ripe opportunity for the every day investor.

The basic premise is simple, the iBuyer strategy involves purchasing homes in a forward moving market, charging a set of convenience fees to the seller, doing basic cosmetic repairs, and putting the home on the market at a higher price. The strategy works well so long as prices continue to increase with solid momentum and the investment firm is able to turn properties quickly. Where it stops working is in times of market shift, when inventory that may have been bought at too high a price begins to sit. This is what we’re currently seeing in the North Texas market. Homes listed by companies affiliated with iBuyer programs are sitting longer than traditional resales and closing at lower prices. It appears a liquidation is taking place and it could present the perfect opportunity for individual investors.

Institutional buyers with imperfect underwriting systems are finding they may have overpaid for a substantial number of assets early on in 2022 and are now attempting to get those homes off their balance sheets and deploy capital elsewhere. If missed out on deals earlier in the year, it may be time to circle back and make an offer to the company directly. You’re likely to have a much stronger negotiating position now than when you tried to purchase from the previous owner.

Take a close look at the homes listed by iBuyer backed companies and you may find your next smoking deal. And when you’re ready to have that property managed by the best team in town, give us a call at 469-649-7666!

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Make Your Rental Stand Out Over The Competition

As inventory levels rise and the economy teeters on the brink of recession, many real estate investors are pondering their next moves. While opportunities are likely to become available in the next phase of the cycle, one of the most important things investors can do right now is ensure that their occupancy is as high as possible. With potential layoffs ahead, it’s important to attract quality tenants and serve them well to maximize your investment potential in a changing environment.

There are several factors that affect occupancy: rent rate, condition, marketing, responsiveness, and they all have an effect on the other factors. Perhaps the most important is condition, as it affects how much rent you can charge, how quickly the unit will turn over, and your long-term prospects for rental income. If you’re looking to increase occupancy at your rental property, here are some tips to make your rental stand out over the competition.

Invest in quality finishes: One way to make sure your rental stands out is to upgrade the finishes. This includes things like countertops, appliances, and fixtures. Not only will this make your rental more attractive to potential tenants, but it will also increase the rental rate you can charge.

Make sure the property is well-maintained: Another important factor in making your rental stand out is to ensure that it is well-maintained. This includes regular cleaning, landscaping, and repairs. Tenants are looking for a rental that is in move-in condition and will be easy to take care of.

Marketing is another component that dramatically affects occupancy. If you’re not marketing your rental property effectively, you’re likely missing out on potential tenants. Make sure you’re using all the channels available to reach potential renters, including online listings, social media, and word-of-mouth.

Finally, responsiveness is key to keeping occupancy high. If a tenant has a maintenance request, make sure it’s addressed in a timely manner. If there’s an issue with the rental, be proactive in communicating with the tenant and resolving the issue. Tenants want to know that their concerns will be addressed quickly and efficiently.

By following these tips, you can make your rental stand out in a competitive market and keep occupancy high. By attracting quality tenants and serving them well, you can maximize your investment potential in a changing rental market.

Of course, you can always hire an amazing property management company, like the one that wrote this blog, and they’ll ensure your investment reaches it maximum potential while allowing you to stay hands off. If you’re interested in learning more about our services give us a call at 469-649-7666 today!

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The BRRR Strategy Explained

One of the biggest obstacles to building a real estate portfolio is how to finance properties without injecting a massive amount of cash, which can be infeasible and dilute returns. Enter the BRRRR strategy, one of the oldest and most dependable and predictable strategies to employ when looking to expand you single-family rental portfolio. Today we’re breaking this strategy down to show you can you can scale without the unrealistic capital injection.

The BRRRR strategy is an acronym for “buy, rehab, rent, refinance, repeat.” The strategy starts with finding a property that is undervalued and has the potential to be renovated into a higher-quality rental unit. Once you’ve determined that the numbers make sense and you’re able to buy the property cash or through creative financing methods like seller financing or hard money loans, it’s time to start the renovations.

After completing the necessary renovations to bring the property up to code and making it more appealing to renters, you’ll then list the unit on the rental market. At this point, you may be wondering how you’ll finance the entire endeavor without breaking the bank. This is where refinancing comes in.

You’ll be able to refinance the property after completing the renovations and securing a tenant, which, if executed properly, can give you access to all of the cash you initially put into the deal. From there, it’s simply a matter of repeating the process with new properties to continue scaling your real estate portfolio.

While the BRRRR strategy may seem simple on paper, it does require a significant amount of work and knowledge in order to be successful. However, if you’re willing to put in the time and effort, this strategy can be an excellent way to expand your portfolio without breaking the bank.

The most important part of implementing the BRRRR strategy in your investing is finding quality deals. In order to find these deals, you need to be constantly searching for properties that are undervalued and have the potential to be renovated into a higher-quality rental unit. This can be a full-time job in itself, but it’s important to remember that the time you invest now will pay off later down the road. Focus on deals in which your all in investment will be no greater than 75%-80% of the after repaired value (ARV) of the home. This will allow you to recoup as much of your upfront cash investment as possible after refinancing the home, allowing you to repeat the process without the substantial cash outlay.

To learn more about this strategy, or simply to connect with the best property management team in Texas, give us a call today at 469-649-7666!

GET A FREE RENTAL ANALYSIS

Let our experts analyze your rental property and provide a completely free report.

Where To Look For Deals In A Shifting Market

One constant truth is that opportunity never vanishes, it simply manifests itself differently. For the last few years, buyers were willing to pay higher and higher prices, rents followed suit, and investors had a difficult time finding deals. Moving forward, the exact opposite has the potential to be true. So where will the opportunity for investors show itself in a shifting market? There are a few places that we would all be wise to look.

Property Tax Blues

The first place that deal flow is likely to show itself is in properties that were purchased as borderline deals a year or two ago, but that will become unprofitable with the increase in property taxes. Cash flow will be siphoned off as monthly payments increase, causing a headache for investors that no longer view the property as a viable investment and may be willing to sell at a price that make sense.

Capital Gains Trouble

Another good problem to solve will be for investors with long term holds that are looking to cash out, but don’t want to pay the hefty tax bill that comes with the sale. This will take some creative deal structure, though solving problems like this can lead to consistent deal flow in all market environments.

1-2 Door Investors

The simple fact is that it has gotten more difficult to build a portfolio over the last couple of years and many investors haven’t been able to reach a level of stabilization in their portfolios. This is the time when many investors consider liquidation for the simple fact that they aren’t generating the returns they want, and would rather sell and deploy their capital elsewhere. This can be a great opportunity for more experienced investors to provide pick up deals, provide assistance and even network and form partnership with other investors.

Any way you slice it, the market is changing, so strategies must change too. The good news is that, with inventory on the rise, there is likely more opportunity for investment than at any point in the several years.

If your looking for the best property management team in North Texas to look after your portfolio, give Homeward Property Management a call today at 469-649-7666!

GET A FREE RENTAL ANALYSIS

Let our experts analyze your rental property and provide a completely free report.

The Market Is Flattening Out – What Does That Mean For Investors?

The real estate market in North Texas is finally finding some semblance of stability, as prices level out and fierce bidding wars subside. This is obviously good news for buyers, as rates have remained solid and inventory creeps up. Sellers, on the other hand, retain the benefit of a massive equity build-up over the last couple of years, putting those looking to sell in a solid position even without multiple offers. So where do investors fall in this shifting market? There are more opportunities ahead.

In a market where prices are increasing, it’s difficult to find deals because everyone is trying to buy and capitalize on the appreciation. In a flattening market, there are more properties available for purchase as sellers become more realistic about their pricing. This provides opportunities for investors to get into the market at a lower cost basis and still see potential appreciation as the market turns around.

In addition, a flattening market gives investors more time to do due diligence on properties before making an offer. In a hot market, there are often bidding wars and multiple offers, which can lead to hasty decisions and overpaying for a property. When the market is calmer, investors can take their time looking at different properties and make sure they are getting the best deal possible, and finding portfolio fit.

It’s also true that, while distressed property opportunities may not have been as plentiful the last couple of years, they’re still a steady stream for deal flow and institutional investor that operate on very low margins have decreased buying as rates have jumped up, giving individual investors willing to put in the time and energy to find solid deals a massive edge.

Stable markets tend to provide more opportunity across the board, as exuberance subsides and rational thinking takes over. Investors acting out of emotion or not acting at all for the last 24 months will find much more latitude in their ability to find and structure deals.

If you’re looking for expert guidance and professional management of your portfolio, call us today at 469-649-7666.

Recessions & Housing: A Quick Guide

As the major market indexes continue their downward trajectory and inflation creeps up despite swift rate increases by the Federal Reserve, many Americans are left wondering when we will officially enter recession territory and how it will affect their near-term futures. More specifically, many potential home buyers and sellers are wondering how the housing market will be affected by the looming economic contraction. Today we’re exploring the market internals and explaining the connection between recession and housing, and how it could affect your decision-making.

The first, and likely most important, point to make is that home prices rarely decline during recessions. There have been six recession in the last four decades and homes prices dipped during only two of them. The most notable decline in home prices came during the Great Recession of 2007-2009, when home prices dipped 19.7% on average nationwide. The only other occurrence, however, was in 1991, when home prices declined by a mere 1.9%.

In fact, home prices have actually increased during four of the six recessions since 1980. So if you’re considering purchasing a home in the near future, know that there’s a good chance you’ll be doing so during an economic downturn – but that doesn’t mean you should wait. In fact, recessions can actually present a unique opportunity for would-be home buyers. In times of recession, mortgages rates tend to decline, and inventory levels can rise as many people look to downsize or move to a different area as their lives enter a new chapter and bring new opportunities.

The bottom line for home buyers: If the possibility of a recession makes waiting to purchase seem like the prudent strategy, that data shows the opposite to usually be true. And with demand already outweighing supply in the North Texas area, prices could continue to climb at above average rates even during an economic downturn.

Sellers looking to move need not be afraid of selling during a recession either. In fact, if you’re considering a move in the near future, it may behoove you to act sooner rather than later. The data shows that home prices have increased during four out of the last six recessions – meaning there’s a good chance your home will be worth more in a recession than it is right now. And while the fear of fewer buyers and lower offers may spook some would-be home sellers during an economic contraction, it’s important to have some serious perspective around where the market is and where it’s been.

While homeowners looking to sell in 2023 may not be in the same market environment as those in early 2022, with dozens and dozens of offers all well over asking price, they receive the same benefit when it comes to their value and equity position. All of the 2022 sales set the benchmark for home valuations going forward, so while the number of offers may decrease, the market value of the home is still going to be on par with, or even more than, the prices of homes sold in the current, intense environment.

Given the current state of the market, it’s likely that we’re closer to the peak than the trough – so if you have any thoughts of selling in the near future, now may be the time to do so.

Of course, every recession is different, and the effects on the housing market can vary depending on the severity of the economic downturn. But if you’re considering buying or selling a home in the near future, don’t let the possibility of a recession scare you off – the data shows that it could actually be to your benefit. It’s also true that North Texas is a highly localized market that hasn’t traditional mirror broader economic trends. While such a business-friendly environment and strong local economy, North Texas was hit nearly as hard as other areas by previous recessions and may actually attract another large population surge as people escape less affordable areas and relocate. It’s entirely possible that a recession may continue to heat up an already scalding local housing market.

One thing is certain, as North Texas continues to grow, it’s beneficial to own hard assets such as real estate as a wealth building staple, especially in times of economic slowing. If you’re looking for a premier management company that will maximize your returns in all market environments, give Homeward Property Management a call today at (469) 649-7666!

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How To Find Deals In A Tight Market

The thought keeping many real estate investors up and night right now is where they’re going to find their next deal. Scorching hot markets, like the one we’ve been experiencing in North Texas, can be great for building equity and enhancing cash flow. On the other hand, it’s been increasingly hard to find new opportunities as prices continue to rise and inventory remains low. That’s why it’s crucial, in times like these, to have a systematic approach to your lead generation and pipeline building. Here are our best tips for finding deals in tight markets.

Speed Is Everything

First and foremost, you have to be willing to move fast. When a property does become available that meets your investment criteria, you need to be prepared to make an offer immediately. In many cases, there will be multiple offers on the table, so you can’t afford to hesitate. In order be able to move quickly, your investment strategy and underwriting methods have to be on point. It’s good practice to underwrite opportunities even if they don’t match your criteria perfectly as a way to stay sharp and efficient. Oftentimes we get out of practice by not going through the process of underwriting deals on a regular basis that when a good opportunity comes along we’re slow to react. Practice makes perfect so keep sharpening your skills in all market environments.

Your Relationships Are Your Business

Your deal flow will only ever be as good as the network it’s created by. When opportunity is light we tend to become discouraged and get out of our normal routines. Going to meetup groups, staying active on message boards or in wholesale communities, it can all seem frivolous when the market is tight. The truth, however, is that’s exactly what most other investors are thinking and it’s taking them out of the action. Don’t shy away from your networking habits because deal flow is slow, lean into them as hard as you can and you’ll be rewarded.

Consider Expanding

Not all markets are created equal. North Texas happens to be a hotspot for activity right now, making it difficult to compete for a limited number of deals. But not every market is this hectic, and the next up and coming area is out there somewhere. Now may be the perfect time to start thinking about investing in new markets. If you’ve never invested outside of your local area this will require you to expand your comfort zone just a bit. But, hey, it’s better than twiddling your thumbs and waiting for the next deal to show up at your doorstep. Take massive action!

Go Direct

If you’ve taken a more passive approach to your lead generation in the past, buying off the open market or through wholesalers, now may be the perfect time to start going direct to sellers. Whether that’s through direct mail campaigns, phone prospecting, or good old-fashioned door knocking, tight markets reward those who are willing to do wha others aren’t.

While the market may be slim with deals at the moment, it will always reward those that treat their business like a business in all stages of the economic cycle. And part of treating your business like a business is working with the right partners to manage your assets with the utmost professionalism and care.

If you’re looking for a team seasoned professionals to manage your portfolio give us a call at 469-649-7666 today!

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North Texas Homes Nearing Unaffordable Level

As the Fed hiked rates 0.50% on Wednesday, mortgage rates are still struggling to find their groove and react to a multitude of market variables. The hope is that higher rates will stave off price increase nationwide as homes, especially in hot markets like North Texas, approach unaffordable levels based on Fannie Mae lending guidelines. This has investors on edge about the short-term future and the implications of higher rates and prices.

Fannie Mae guidelines stipulate that the loan total be no more than 28% of the borrower’s gross income in most situations. That number goes up to 31% if the borrower has other debts, and can be as high as 45% in certain cases. As home prices continue to rise, the hope is that higher rates will flatten them out, allowing borrowers to remain eligible for conforming loans and not become priced out of the market.

The median income for the Dallas/Fort Worth metroplex currently hovers around $80,000/year. The median home prices is approximately $320,000. This means that, at current interest rate levels, North Texas medians are towing the 28% line into unaffordable territory. If prices keep rising and rates remain the same, most North Texas residents will no longer be able to afford a home.

This is a cause for concern for many, as it could lead to a decrease in demand and, eventually, prices. While this may be good news for first-time home buyers or those looking to trade up, it’s not so great for current homeowners who are trying to sell. Another possible scenario, as investors gobble up more inventory at current rate levels, is that rental demand continues to increase as a reaction to the lack of affordability for would-be homeowners. In this scenario the increase rental demand could push rental rates higher. Investors used to locking in 3% rates on their properties are likely to need to charge more in rent to make deals work in a tight market. If that happens, the push and pull between supply and demand of rental properties will be influenced primarily by inflation and wage levels. If wages stay stagnant, rental rates can only go so high, making North Texas less desirable for investors and bringing home prices back down.

The next 18 months will be an interesting time in both the local and national real estate markets. Investors looking to acquire more properties in this tight inventory market are wise to connect with a reputable management company that will not only look after their portfolios, but help find them new opportunities before they hit the market.

If you’re looking for a premier property management service in North Texas or are interested in investing in real estate locally, give us a call today at 469-649-7666!

GET A FREE RENTAL ANALYSIS

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Worried About Inflation? Buy Real Estate

Personal consumption expenditure prices rose 5.2% in March compared to the same month last year, according to the Federal Reserve. This comes as inflation adjusted wages fell 0.4%. While the Fed has promised more rates hikes throughout 2022, inflation is still rearing its ugly head in the American economy. This leaves most Americans wondering how to protect their wealth as the prices of goods rise and wages may not follow. In times like these, hard assets make the most sense as a wealth preservation vehicle.

Real estate is a perfect example of a hard asset. Not only does real estate usually appreciate over time, it can also provide rental income, helping offset any inflationary pressures on wealth. And, in the event of a recession, real estate is much less likely to lose value than stocks or other paper assets.

Real estate should always be a part of any well-diversified portfolio. More millionaires have been created through real estate investing than any other asset class. Further, according to CNBC, the average net worth of a homeowner in 2019 was $255,000, while renters averaged just $6,300.

If you’re worried about inflation or a potential recession, buying a home may be the best way to protect your wealth. Of course, real estate isn’t the only hard asset that can provide protection from inflation. Gold, for example, is another popular inflation hedge. But real estate has the added benefit of providing a place to live or generate rental income.

The bottom line is that real estate provides a hedge against inflation and can help preserve your wealth during a recession. If you’re worried about either of these things, buying a home is a great way to protect your money.

With mortgage rates still historically low, now is a perfect time to move your money into hard assets like real estate to preserve, and even enhance, your wealth during through the next economic cycle.

If you’re looking to invest in real estate, or for the best property management company in North Texas give us a call at 469-649-7666 today!

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This Is The Most Important Thing To Look For In A Property Manager

As an investor, a property manager is a key component in the daily management of your portfolio. Simply put, you hire a property management company to make your life easier and minimize the amount of time and energy you spend monitoring your investment. It’s also true that, with the many moving pieces involved in managing a real estate portfolio, it can be easy for things to get lost in the fray if not closely monitored. That’s why the number one trait you should be looking for is efficient, meaningful and predictable communication with your manager.

While property managers typically have a wide variety of duties and responsibilities, communication should be at the forefront of everything they do on your behalf. From updating you on the status of maintenance requests to providing performance reports on your rental property, your manager should keep you in the loop every step of the way. Furthermore, they should be proactive in their approach to problem-solving and troubleshooting – meaning that if there’s an issue with one of your properties, you should feel confident that your manager is already working on a solution.

At the end of the day, investing in real estate is a huge commitment – both financially and emotionally. And while it’s important to work with a property management team that you can trust to handle the day-to-day aspects of portfolio maintenance, you never want to be left in the dark. Especially when key decisions need to be made. For that reason, communication should be at the top of your list when evaluating potential property management companies. After all, it’s the key to maintaining a successful partnership – and keeping your investment property portfolio running like a well-oiled machine.

Still not sure if communication is the most important thing to look for in property manager? Here are some other qualities that should also be high on your list.

– A property manager should be knowledgeable about the area in which your property is located.

– They should have a strong understanding of the rental market and be able to provide guidance on pricing strategy.

– They should have a proven track record of successful property management.

– They should be responsive to your questions and concerns in a timely manner.

There are many factors to consider when choosing a property manager. But if you’re looking for a partner who will help you navigate the ups and downs of real estate investing, communication should be at the top of your list. After all, it’s the key to maintaining a successful partnership – and keeping your investment property portfolio running like a well-oiled machine.

If you’re looking fo a property manager that provides efficient communication and expert service give us a call today 469-649-7666!

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