By Trent Modglin
Q: Are you seeing increased interest in people looking to get involved in investment property?
A: We’re seeing a lot of interest from buyers in a few different ways. 
We’re seeing some owner-occupant buyers who desire a fixer-upper for the purpose or rehabbing it for themselves to live in. There are many options out there for financing these purchases with as little as a three-percent down payment plus funding for the construction costs, which makes it an affordable way to build equity.
Another large segment are buy-and-hold rental investors. We are seeing a lot of individual and institutional buyers come into our market and buy condos, single-family homes and multi-unit buildings for the purpose of long-term rental. Stable and/or increasing rental prices and low interest rates have sweetened the pot for these types of investments and have, in some cases, raised the prices and competition in that area.
Finally, you have the rehabbers or new construction builders. Many buyers either can’t afford to or don’t have the patience or time to rehab a home, which creates an opportunity for an investor to purchase a distressed property and re-sell it as a finished product.
In addition, the market’s low inventory environment has driven prices up, making the builders wake up and start new construction to satisfy the demand that is out there.
Q: Do buyers typically need an all-cash offer to be able to get in and buy these properties?
A: Many people do think the only way to get involved in investment property is by having liquid cash. Although for most people, a direct cash offer is the best offer, there are many ways to still get involved without it.
First off, I see a lot of investors who partner up. They have the skill and the knowledge and crew to complete the work. Then they partner up with an investor who has the money but maybe not the time or patience to do it.
Another option is to find a private “hard-money” lender. Investors can borrow a percentage of the purchase price as well as some of the extra money to rehab the property.
Even though the interest percentage typically is much higher than the traditional mortgage, it ends up being a lot more affordable than using an equity partner because you don’t have to share as much of the profit.
There are still loan products out there for investment buyers. Due in part to the previous mortgage crisis, the credit, capital and other requirements that are now necessary make it more difficult to qualify for these mortgages. This option is the best option for investors with excellent credit and good capital reserves because it represents the best deal for them.
Q: What kind of advice would you give newcomers to the game of investment property?
A: One cautionary tale would be not to get emotionally caught up in the purchase of an investment property.
People see a lot of these home-flipping shows on TV and fall in love the idea of finding a diamond in the rough and taking a distressed building and making it something special. But you have to remember the first word in “investment property” is “investment.” It’s easy to get caught up in fancy chandeliers and imported Italian marble, but each decision you make will ultimately impact the 
return you see. You need to be strategic about those choices and make sure that the focus is on the return and knowing the customer instead of overdoing it with high-end finishes.
Q: It’s a very competitive market right now. How does that affect one’s ability to still get a deal on an investment?
A: Despite the highly competitive market, there are still great deals out there. You just have to be careful not to overpay because in many transactions, the potential profit is actually made when you buy. For example, there are so many investors in the space for long-term rental or flips, some of them are from other states or even other countries. The increase in investor activity and the decrease in inventory have created a situation where there can be bidding wars on properties. The only thing worse than missing a good deal is overpaying for a property and losing money.
My recommendation would be to put a lot of thought into what it is you’re trying to accomplish, and come up with a model or formula for what it is you want to achieve. And then stick to it. Don’t get caught up in a bidding war. Don’t get caught up in emotion. If it works, it works. The numbers should make the decision. Not you.
Adam can be reached at Sales@DomainRealtyOnline.com or 773-770-8001.