The cap rates for income properties are at all-time lows, creating extremely high valuations. The sale price per square foot for residential properties is at all-time highs.
It is difficult for investors to profit from short-term real estate investments in what seems to be an overvalued market.
Through my experience arranging financing on all types of real estate transactions, I have learned the kind of short-term investors who are capitalizing on the inefficiencies in the market and making a profit.
Here are three types of real estate investors I see profit in today’s market:
- Investors with development/construction expertise who can add value to properties, e.g., assembling parcels, creating higher density, transitioning property to its highest and best use.
- Investors with the financial wherewithal to perform fast in purchasing a property, a property purchased in a matter of days with little to no contingencies often will come at a discount.
- Investors with the right relationship connections to acquire properties that are discounted, e.g., properties that never hit the open market, firsthand knowledge of distressed sales, etc.
The long-term real estate investor has inflation on their side to help offset this current high-valued market. But the short-term investor needs specific expertise, the financial means, and the relationship connections to profit into today’s market.
Are you a short-term real estate investor? How are you navigating this high-priced market?