Month: April 2023

Categories
Wholesale Wholesaling

Which Comes First in Wholesaling: Cash Buyer or Property?

Source: Scott Graham from Unsplash.

Wholesaling can be challenging, but you’ll close deal after deal if you have the right approach.

You might be wondering, though, should I prioritize getting cash buyers or finding a property first?

On the one hand, if you have cash buyers first, then you already have potential clients lined up to buy your property.

On the other hand, if you have a property to sell, then you’re left with just finding the right buyer to close the deal.

Is one better than the other? Let’s consider both sides.

What Happens When You Get a Cash Buyer First?

Believe it or not, finding cash buyers in your area is easier than you think, because there are a lot of sources that teach you how to do it.

The plus side of focusing on building your buyer list first is that, when you have a cash buyer first, you now have a guide on what kind of property you are looking for. Ask what your buyer is looking for, their purpose, price range, etc.

After interviewing your client, this will help narrow your search criteria. You know where to look and if you should scout for a commercial space or a residential unit. When you get back to your client to pitch a potential property, you have more chances of closing a deal, since you already know what they want.

Having a buyer first is also an advantage because you can ideally close quickly once you find the right deal. And the quicker you can close deals, the more deals you can do (read: the more money you can earn) each year.

What Happens When You Get Property First?

It’s easy to find buyers if you’ve found a great deal. Nobody declines an excellent real estate investment opportunity, after all. You only have to get the property under contract and you’re free to market or sell it to any of the potential buyers in your list.

That being said, here are few marketplaces and strategies you can pursue to find great properties:

  • Attend REIA Meetings: REIA stands for Real Estate Investors Association, where investors support and help each other via group and individual meetings. These meetings offer information, ideas, and networking within the industry. For example, this blog you’re reading is from REIA of Oakland, where we help anybody who’s interested in investing in Oakland County.
  • Online Paid Ads: There are 5.16 billion and 4.76 billion internet and social media users worldwide, respectively, which means using digital ads opens the door to better reach. Connect with your target audience through paid ads. You can set up ads through social media or Google.
  • Online Marketplaces: Facebook marketplace and eBay are great examples where you can list your property online. Although, you have to make sure that you do your research to ensure that you don’t violate any real estate policies on the platform.

Some people say print ads are still relevant. But we beg to differ. It’s a complete waste of time if you ask us, even if 82% of consumers trust print ads when making purchase decisions—in reality, nobody pays any attention to them, especially for major purchase decisions like real estate.

Newsflash: It Doesn’t Matter Which Comes First

I hate to break it to you, but ultimately, it doesn’t matter which you start with. Because finding good deals and serious buyers are the two biggest challenges of wholesaling real estate in general. Neither one is easy, and both are essential.

It takes time and experience to find good deals on the market. So what you really have to do is build your property portfolio and cash buyer list at the same time. Once you’ve mastered the art of finding good deals and have a broad network of cash-in-hand buyers, the rest will be relatively smooth sailing.

Do you agree that finding a good deal is the real challenge? Or do you think building a buyer list is tougher? Let us know in the comments below. And don’t forget to sign up as a member, so you can attend our upcoming meetings for more tips on real estate investing.

Categories
Short Term Rentals

What Are Airbnb Guests Dreaming of in 2023 & How can You Benefit?

Checking out Airbnbs for an upcoming trip.
Source: Pexels (cottonbro)

In recent years, short-term rentals (STR) like Airbnb have become a popular choice for travelers. What began as a small start-up has turned into a global phenomenon, with millions of people booking rooms on the platform—especially after the COVID-19 pandemic, where everybody avoided hotels.

But what exactly are people looking for when it comes to their Airbnb accommodations? Just because travelers are back doesn’t mean it’s the same as pre-pandemic times. You need to know what’s trending and if people are after something luxurious or more relaxed and homey experiences.

Knowing that is crucial because it will help you create an Airbnb that guests will want to revisit repeatedly, decreasing your vacancy rate and ensuring that profits keep coming in. So let’s take a look!

6 Trends That’ll Make You the Ultimate Airbnb Host in 2023

Here are six trends to boost your bottom-line profits and increase your occupancy rate. If you’re an Airbnb host or an STR owner, make sure your rental has all the amenities guests are looking for to stand out.

1. Business Travelers Are Back: Make the Space Work-Friendly

Given the COVID-19 pandemic, the business travel industry took a big hit and left it uncertain. Luckily, things are opening up, and business travels are expected to increase this 2023. There’s also anticipation for an increase in business travel spending. This increase means you could receive an influx of professional guests hoping to find comfortable workspaces.

So consider offering amenities that business travelers appreciate, such as multiple plugs and ports for easy charging, fast Wi-Fi, and a spacious desk. You might also want to include a safe where they can store their valuables—anything to make the space feel like a work-home hybrid spot.

2. Travel Is 24/7: Don’t Force Guests to Stick to a Strict Schedule 

People travel around the clock and frequently encounter unexpected situations along the way, so make your check-in time flexible. They can’t control what life may throw at them, so they’ll surely appreciate it if their accommodations can flex along with them.

For instance, suppose a guest’s flight was due to arrive at 9 p.m., but because of aircraft maintenance, they were delayed by two hours. If you listed your Airbnb check-in time as until 10 p.m. with no exceptions, then you’re making everyone’s lives difficult—especially given that 20% of US flights at airports saw delays last year.

So put up a lockbox so that guests can self-check in. Offering options make your listing more appealing to those trying to limit contact with others and increases convenience and safety for all parties.

3. First Impressions Matter: What Will Guests Think?

What will your guests think when they walk through your short-term rental door? Will they notice the badly-lit hallway with peeling paint and crooked frames or the cozy space that feels like a home away from home?

Guests likely won’t spend much time in the entrance area, but this serves as their first impression of your property—don’t miss the chance to wow them right from the start.

Some Airbnb hosts repaint their front door every season, while others opt for more sophisticated features, such as outdoor lights with motion detectors. The goal is to ensure that the “wow factor” is there when the guests arrive, and that the feeling will stay with them throughout their stay.

4. Hotels Aren’t Cool: Turn Your Airbnb Into a Home

People book an Airbnb because they want to feel right at home, as some studies have found. Even when exploring places they’ve never been to before, guests wish for a quiet space to relax. So, to make their stay homey and enjoyable, consider providing these amenities:

  • Toiletries (e.g., shampoo and conditioner)
  • Bath towels and fresh linens
  • Local snacks and drinks (including drinking water)
  • Simple office supplies
  • Don’t forget coffee & tea!

Additionally, you can invest in a Smart TV so they can stream their favorite films and shows, similar to how they probably spend their extra time at home. Moreover, you can go the extra mile and provide a local guidebook to help them explore the area, especially if you get many out-of-town travelers.

5. Minibars Are Useless: Stock the Kitchen with Essentials 

Like most travelers, Airbnb guests will most likely order delivery or grab some take-out for their meals. But one advantage that most short-term rental properties have over hotels is a fully working kitchen, where guests can opt to cook as they do at home.

Of course, they won’t expect your property to have cupboards filled with fresh groceries and a refrigerator stocked with milk and cheese. But there are certain things they hope they won’t have to buy, such as cooking utensils (e.g., pots and pans) and pantry basics (e.g., salt, pepper, sugar, and cooking oil).

Providing a kitchen with all the essentials ensures that your guests have a positive experience in your Airbnb, where they get the comforts of a home beyond that of a hotel room.

6. More Than a Place to Stay: Offer an Experience

You can offer more than a place to stay by offering an experience, too. Add value to your listing and leave your guests with a special memory by sharing a talent or passion of your own. You might decorate with a collection you’ve built over the years or paint the home like your bright, Latin American childhood house.

Integrate activities into your rental house by focusing on one of the 3 categories of Airbnb Experience: culture & history, food, or nature & outdoor. For example, you might focus the vibe of your rental on how to cook like a local, guided hike, or yoga. Whatever activity you choose to focus your style on, ensure its hands-on. Airbnb also has rules for these experiences to be approved, so don’t forget to check them out.

Leaving your guests with a lasting memory (not just that they booked a place to sleep) makes them more likely to recommend and return, which means a chance to earn more cash.

Give Guests Their Dream Airbnb Stay

Airbnb isn’t going anywhere. And with the travel industry starting to return to its pre-pandemic levels, you’ll likely see more and more guests booking your property. Ensure it has everything they’re dreaming of—whether that’s a homey space or world-class amenities—so your rental property investment is always booked. The more you offer, the more they’ll return!

Looking for someone to handle your Airbnb property? Our team of expert property managers are here to help you out. With more than two decades of experience, they’ll take your listing to the next level.

Get in touch with us today to find your perfect partner.

Categories
Landlords

What’s Happening with Rental Amounts in the City of Detroit?

Source: Photo by Andre Taissin on Unsplash

We’ve all seen the headlines—average rent prices are falling for the first time since the latter part of 2020 when COVID was the culprit. For those invested in Detroit rental properties though, the news isn’t as bad as in other parts of the country.

Let’s look at what happened in the Detroit market, for you to stay updated and vigilant in protecting your investments. (TL;DR? Don’t panic! It’s real estate market dynamics.)

Nationwide Rents Decline in Major US Cities

As the graph below shows, the August national average rent price, according to Redfin, was up 11% year-over-year from 2021. If you compare it to past trends, this figure is the smallest recent annual increase we’ve seen—down from a 19% gain in March 2022.

Even if we were to look at the month-on-month growth, the median rent only moved slightly by 0.4%, which is the slowest growth since late 2021 and a drop from the 1.6% increase last year.

Source: Redfin

“Rent growth will likely slow further as the Federal Reserve continues to raise interest rates. Higher interest rates impact the rental market because they put a damper on spending power in the economy as a whole, including renters’ budgets,” Taylor Marr, Redfin’s Deputy Chief Economist, said.

Rent Trends in the Detroit Housing Market

We can’t confirm if the data below only covers the City of Detroit or the entire Metro Detroit area, but we see that the market is included in the top rent price drops nationwide in August 2022:

Source: Apartments.com

Moreover, executive director of Detroit Future City, Anika Goss, shared, “During the pandemic… people living in the bottom quadrant of the income scale were not being supported. If rent softens and people are back to work in 2022, we might see an evening out… in a year or two years.”

Should Detroit investors lower their rent to attract and retain tenants? Fewer people are purchasing homes but they still need a roof over their heads, so they rent. But it seems like Detroiters in the lower demographics are struggling to pay rent, even with the supposed decline in rent average.

Then again, the data above might only reflect rent decline in the City of Detroit—excluding the rest of Metro Detroit which includes far more affluent areas like Oakland County. As we know, these areas aren’t as affected by economic downturns compared to lower income zones.

In fact, based on our observations as a property management company in Metro Detroit, rent averages have flatlined (not declined). The reason why reports show dropping rent averages in the City of Detroit is likely due to an increase in vacant properties instead.

Looking at recent statistics and trends, the city is actually doing pretty well:

  • The city still has exceptionally low home prices with a median sales price of $100,000—a growth of 38% from late 2021 to 2022. In terms of rent, it’s also the fastest-growing city in the metropolitan area, where rent averages are said to have increased by 32% from 2021 to 2022.
  • The average rent for a one-bedroom apartment in the city is $1,000, which is a 4% decrease compared to a year before (February 2022). For a three-bedroom though—which is more popular in the housing market—the median rent is $1,200, which is a positive 9% year-over-year change.
  • Plus, looking at Zillow data, the City of Detroit saw an  increase in average rent, where investors are charging $20 higher rent than last year:
Source: Zillow

The data above is good news for Metro Detroit investors. And if you do have tenants struggling to keep up with rent payments, we suggest that you reevaluate by asking the following questions:

  • Are you charging above neighborhood rent averages?
  • Are your tenants struggling with rent payments?
  • Are they paying on time and in full?

If you screened your tenants well, they might not have financial problems. But if the economy’s downturn caused them to lose their jobs that affected their income, you might need to help them out.

“Gas prices are coming back down, but rents are going up 10, 12, 15%. And rent can end up taking 40% of these households’ income,” Bank of America CEO Brian Moynihan said.

Ultimately, your cash flow depends largely on your tenant’s ability to pay rent. As much as you want to generate top dollar from your rental properties, you won’t get any returns if the renters themselves can’t afford your home in the first place.

Finding the Sweet Spot for Rent Prices in the City of Detroit

The City of Detroit (and certain areas of Metro Detroit) remains to be a landlord’s market, with rent prices increasing despite the economic downturn. It presents an opportunity for investors willing to lower their rents to attract more tenants than ever before, although doing so requires careful financial evaluation.

Screen your tenants carefully and keep an eye on the economy, and your rental properties will remain profitable even with all the market shifts happening. Your goal is to secure capable tenants while generating a healthy return on investment—find that sweet spot for a win-win solution.

Do you want more tips and guidance on navigating the Detroit market?

Sign up as a member, subscribe to our newsletter, and join us in our upcoming meetings. Let’s share information and expert tips to ensure that our investments adjust and adapt to the market.

Categories
Flipping

the Flipping Forecast for Detroit in 2023 and Beyond

A kitchen after a flipper renovation.
Photo by Aaron Huber

During the height of the pandemic, the real estate market took a big hit. Large markets like New York felt a significant decline in pending house sales, with a hefty 58% decrease. And in our case, the City of Detroit took an even more severe hit, losing 74% of pending sales.

However, when stimulus packages started rolling in during the latter half of 2020, housing sales came back with a caveat. For example, list prices spiked 27% due to the revived increase in demand. This is bad news for house flippers, as finding good deals is significantly more challenging.

Still, with the pandemic in the rearview mirror, it’s time to look at how the real estate market is shaping up in 2023. And more importantly, is it a good time to build your home-flipping portfolio this year?

Real Estate Trends for the City of Detroit, MI

To try and curb inflation, the federal reserve is looking to increase interest rates across the board.

Just this February, interest rates are up and are expected to keep rising in 2023. That being said, inflation is still going strong. We’re looking at incremental interest rate increases throughout the year.

This results in a more challenging time for house flippers to get financing for their flipping project. To give you an idea of how the real estate market looks in the city, here are some trends we’ve observed:

  • Days on the Market: On average, properties stayed on the market for 36 days as of November 2022. It’s an improvement from the earlier half of last year’s average of 44 days on the market. Flippers might have an easier time selling their flips because buyers are more willing to buy.
  • Average Home Price: Compared to June 2021, home prices increased by 38.3%, from $72,500 to $100,205. The increase means house flippers like you might see lower returns on investment because buying a house requires more capital.
  • Average Sale Price: The average sale price of a Detroit property is identical to its average home price and set a new record by surpassing the $100,000 at $100,250—an increase of 38.3%. This isn’t necessarily bad news, as you might earn a bigger profit when you sell your flip.
  • Number of Listings: The number of listings increased from 2021 to 2022 by 38.9%, going from $1,983 to $1,428. This figure means that you’re off to a good start, as there are more houses on the market that you can list as options.
  • Total Sales (Unit): The total sales took a hit in 2022, by -10.1%, from $424 to $383. Your flipping projects might fall through because fewer people are buying, so you need to prepare a good exit strategy , just in case.
  • List Price: In January of this year, the year-over-year home prices were at an increase of 6.7%, and the average listing home price was $80,000.

Despite the climbing interest rates, the Detroit real estate market continues to climb in price, and the economic outlook in the City of Detroit is shaping up to be moderately positive this 2023.

Of course, we’ll have to wait and see if the interest rate hike will affect the situation, but it seems like 2023 is still a great year for you to potentially expand and earn from your flipping projects—as long as they make sense for your budget and risk appetite.

Flippers should Approach the City of Detroit Market with Cautious Optimism in 2023

Despite society moving on from the issues we faced during the pandemic, real estate prices continue to skyrocket. Sure, there’s pressure for the federal reserve to implement schemes to ease inflation, but various other factors also affect the housing market.

Regardless of what happens, the City of Detroit is still one of the most affordable areas, with its median sale price of $100,205, which is around 4x lower than the US median sale price of $405,900.

You’ll continue to find hidden gems in the famed Detroit real estate market to continue building your portfolio. Just be careful and get into projects that are guaranteed success, which you can do by joining as a REIA member, signing up for our newsletter, and meeting other investors in our upcoming meeting.

Leave a comment below if you have any other thoughts about the forecast for 2023!

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