S. Clay Sparkman
A recent article (“Supply of homes for sale hits record low, and prices suddenly jump,” penned by Diane Olick at the CNBC site, posted 1/22/20) discusses the current numbers and issues related to home supply, demand, and pricing.
It seems that in general, high demand for housing coupled with a precariously low supply, has lead to even higher prices for homes. It seems that investors are jumping into the fixer market (both fix/sell and fix/flip) at high rates competing with consumers for the existing supply of homes, driving prices even higher.
It is not entirely clear but I get the feeling that Ms. Olick views investors as gumming up the works, but I am inclined to think that they add critical value, as they often buy homes which need a significant amount of work–homes which most consumer buyers would be hard pressed to tackle on their own (with issues like financing, the problems inherent in renovating a home which you wish to live in, and of course the problems of how to get that work done and done at a quality level and according to specs).
At any rate, this is both good and bad for the investors, as they face a more competitive buyer’s market (and this is where there profit is really made), but also face a high demand sellers market (allowing them to move the property quickly or rent it, and maximizing the value).
I always tell buyers that the buying is the hardest part. Many don’t have an operation setup for buying, and they should. I would argue that even small operations should devote one third of their resources and time to the buying process, and that process should be continuously ongoing so that the investor always has the next home lined up in time to move the construction team to the new property immediately upon completion of the prior home.
Consider sharing this with your appropriate clients and let us know if they need funding for a project. After 55 years in the business, we can give a few pointers and some guidance, and would be happy to provide funding when projects make sense and fit our parameters.
— Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964. Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX. To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php
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