I got to thinking yesterday while I was on the local golf course here in Lake Oswego (I volunteer at the course on Sundays… so free golf for me for the summer!!) about the real estate market and all of the idiots spouting off doom and gloom.

Okay, yes…

• The RESIDENTIAL market as a WHOLE has been hit pretty hard (notice… as a WHOLE)
• It’s tougher to get financing (for people who don’t know what they’re doing)
• There’s more competition for the same properties (but, 80% of that competition doesn’t have a clue what they’re doing)

Yes, I agree with that.

But, when people say how crappy the real estate market is… I just have to sit back and say… HUH?

Then, I quickly remember who these people are and see that they aren’t savvy investors and aren’t entrepreneurial in nature. A crappy market to one… is a once in a life-time market for another.

The Real Estate Market Is NOT Hurting

I know, that statement is a 180 from what other people are saying out there. Everyday the news says how bad foreclosures are getting, housing prices are dropping, people can’t sell their homes, and on and on. Yes, all of that is happening.

But, these words are coming from a person who is looking it at from an owner occupied seller standpoint. Ya, if I had to sell my single family middle of the road home right now I would be hating life. Unless the price is way low… or the property is unique in some way… odds are that the house will sit on the market for a long time.

However, when you look at it from a real estate entrepreneur perspective… this market is still rocking. In particular, commercial income properties are still hitting it out of the park for both the buyers and the sellers.

Properties like:

• 4+ unit apartment buildings
• Mini-storages
• Retail multi-unit shopping centers ( in good areas of course)

Any property that is an income producing property is still doing pretty darn good.

Case In Point

Last week a business partner of mine called me into his office and told me that he is ready to sell his 200+ unit mini-storage in a small town here in Oregon. He bought it for $325k 4 years ago and is ready to sell so he can move his gains elsewhere.

Anyhow, at the meeting he told me that he had already had an offer on the property at $675k and was thinking about closing. But, the offer paperwork had some contingencies that looked like the guy was trying to flip it. My partner had no problem with the guy making some extra money… he just didn’t want to be drug along for 60 days while this guy tried to find another buyer.

So…

Long story short… I created a kick-ass property package, marketed the property using ONLY online strategies… received multiple strong offers… and 4 days later we had it under contract for $780k ($30k over the asking price I set of $750k) with a local buyer who can close in 3 weeks all cash.

Even more, we negotiated for the buyer to pay 100% of the closing costs AND 100% of the buyers realtor commissions. The best part is that this transaction is a real win-win for everyone involved. The buyers couldn’t be more excited.

Bidding Wars and Higher Than Asking Price Offers Are Not Gone

Remember a few years back when you could list a single family home and get 20% over your asking price? That was crazy. Now, most people are lucky to get 5% below their asking price for middle of the road single family homes (with the average marketer that is).

But, there are markets (like commercial income properties ) that are still rockin’ and are getting above asking price offers and bidding wars are ensuing. Crazy stuff. I know because I was a part of one (the case above) last week… and we only marketed the property for 3-4 days.

The reason this phenomenon is happening is because income properties will always be at a premium. If the property produces good numbers, there WILL ALWAYS be buyers no matter how "crappy" the market is to some people.

I have a 4 unit that I’m getting ready to sell and am confident that I’ll be able to get a premium for the property. I bought it for about $160k 4 years ago… and am looking to get between $275k and $300k out of it.

It’s All In The Way You Present and Market The Property

Yes, this mini-storage property would have eventually sold if I didn’t market it for those 3-4 days. For $780k… probably not.

But, it was the marketing and the way I presented the property in this instance that got the ball rolling and set the hook on these buyers. I’d rather sell (or buy) and income producing property any day of the week. It’s way the heck easier to sell them… and pretty black and white to figure the max price you can buy at to have it make sense. Either the property meets the predefined income criteria you set… or it doesn’t. It’s that easy.

But, the reason I wrote this article is to dispel the myth that the real estate market is in the tank. It’s not. Some parts of the market are pretty sucky… but those aren’t the ones that you should be focusing on.

If You Were A Car Salesman…

Let’s pretend for a sec that you are a car salesman. Let’s say that the economy is really doing well and the new BMW’s are flying off the lot like no other. What are you going to focus on selling? Who are you going to market to?

Pretty self-explanatory to me.

Now, what if the overall economy takes a dive and people stop buying BMW’s. Do you keep on selling BMW’s or do you find another vehicle that people are more apt to be buying? Well… for me… I’d go out and see what people ARE buying and sell the heck out of that.

The same translates into ANY market… especially real estate.

Yes, the overall real estate market (residential) isn’t doing too hot. But, do you stick with what is doing terrible for you or find the market that is still hot?

Two options:

1. Go after the markets that are still hot (commercial income properties, high and low income properties)
2. Change your strategy in the "bad" market to cater to those who are still looking to buy properties (i.e. – who wants to buy single family homes right now? Who has the money to do it? I’ll tell you. Investors are buying up SFH’s like nothing right now… and people at the upper income levels are buying the heck out of luxury homes right now.)

Anyhow, I didn’t write this article to get you to go into commercial income properties (but it’s a damn good market). I wrote it to get your mind thinking a bit differently about things.

Don’t get that doom and gloom attitude as a real estate investor . There are ALWAYS markets out there that are doing awesome… and ones that are sucking it up.

Go where the gettin’ is good.

—-

*** Okay, just a reminder and quick plug for the awesome FREE webinar we’ve got going tomorrow (Tuesday 5/6) with real estate investor Brad Wozny. This will be a 70 minute webinar where Brad will share his insights about creating a solid real estate investing business using the Fortune 500 business building principles he learned while an executive at a huge corporation.

Anyhow, this webinar will be awesome… and will help you pinpoint specific things that you need to do in your REI business to turn it into a recession-proof BUSINESS… rather than a hobby like 95% of the failing and struggling investors out there.

Once again it’s free… sign up at the link below. We only have about 100 slots on the webinar and we’re already pretty darn close to filling them:

>> Sign Up For The Free Webinar <<

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Categories: daily musings
Tags: commercial real estate, mini-storage, real estate investing, real estate market