Real Estate Investors: Tune in, Turn on and Cash Out with High-Equity Deals
A lot of real estate investors with short sales and pre-foreclosure backgrounds are used to dealing with incredibly motivated sellers, but today’s best deals are those with equity. Do you have the “right stuff” to angle these deals like a real estate professional?
Five High-Equity Markets Show You the Money
There are five major real estate market segments that offer investors the greatest opportunities to access equity. Homeowners in each of these segments have mindsets that real estate investors must understand in order to successfully negotiate a deal.
Additional information about how to tap these markets is covered in greater detail in my article: “Pounce on High-equity Real Estate Markets for Maximum ROI.” (Follow this link to ArticleBase for instant access to this story.)
- Equity: Bigger is Better: Find homeowners with 40 percent to 100 percent equity. U.S. Census Bureau data reveal that property owners in this arena currently control one-third of all single-family homes. Often, they’re near or at retirement age, are empty nesters and are looking to downsize.
- Adjustable Rate Mortgages with Equity: Homeowners with adjustable rate mortgages (ARMs) and equity usually had an ARM for three years or more before they opt to sell. If they owe less than 70 percent on the loan relative to the house’s value, these homeowners may be looking to execute their own exit strategies while they still have equity - - and before their ARMs re-set.
- Wholesale Real Estate: Properties in this segment are typically old enough to drink legally and tend to have cosmetic and deferred maintenance challenges. In this category, homes with loans at approximately 70 of a property’s value are great targets for real estate investors seeming to max their real estate ROI
- Multiple Family Units with Equity: Here, concentrate on sellers with at least two rental units and a maximum loan-to-value of 70 percent or less to buy, hold or flip income properties. These sellers likely are motivated to sell by ongoing tenant and maintenance hassles. They also may be amenable to financing your purchase if they can defer capital gains taxes and rake in some cash flow through you instead of dealing with rent collection.
- Out-of-Towners: Absentee homeowners are easily identifiable because their mailing address on public record is different from their property address. Property owners in this segment often are disgruntled landlords with single-family homes or multi-unit properties.
Negotiating with High-Equity Sellers
Making deals happen with these property owners often requires more enhanced real estate marketing. Keep in mind that since they have equity, they’re not as likely to have the motivation of a distressed property owner. Though you may have to mail multiple real estate postcards to property owners in this group, you should be aware of local market changes in their areas.
Many of my clients at SalesTeamLive are reporting an across-the-board boost in high-equity homeowner willingness to deal. We can attribute this shift to the ailing economy, stock market and retirement fund losses, and cost-of-living and healthcare price hikes. Many are deciding that downsizing now is the safest way to preserve their standards of living — and their real estate nest eggs.
Someone who says no in June may have a totally different attitude come March, when their homes still haven’t sold and they see comp prices dropping around them. This is especially true in a post-hot market where owners are facing the grim realities the market just won’t support the price they had set in their heads six months ago.
The trick is to be persistent and keep in touch. And however you communicate with high-equity homeowners, be sure to make a good impression. These days more than ever, your real estate investment business depends on it!
One Best Practice Your Mother Probably Told You About
Sending out personalized thank you cards to folks after your presentation isn’t just the polite thing to do. It’s a best practice to reinforce your professionalism, presence and status as a problem solver for your prospects.
Be resilient and implement best practices to be successful in tapping these real estate markets. Suddenly, you may find your focus shifting from what the best color is for a real estate marketing postcard to how to handle the incredibly high volume of calls you’re receiving.
It takes only a few seconds to change the way that you view your real estate business — and the world. For more best practices and strategies that rock your real estate world, sign into GaryBoomershine.com using the yellow fields on the right side of this page or on the GaryBoomershine.com main page.
Tags: absentee owners, ARM with equity, high equity real estate, landlords with equity, preforeclosure, real estate investing, real estate investors, real estate marketing, real estate sales negotiations, short sales, wholesale real estate