Silicon Valley Home Prices are on the rise. Inventory is low, and there are plenty of buyers out there making multiple offers the norm, not the exception. Investors have been a big factor in the market since the crash, but now it may be time for a change if you are an investor.
For the last few years investors were gobbling up foreclosed homes, short sales, and other bargain priced properties. These were often rehabbed and resold quickly. While there was often competition from other investors, it was manageable for many investors.
The landscape has changed. The inventory is so low, and the interest rates are not only low, but loans are a little easier to get than right after the crash. This along with a very high employment rate, and skyrocketing rents, has sent first time home buyers flocking back into the market.
As a result, the chance to buy a home for a low enough price to rehab and resell while making a 30% profit is not working in the investor's favor. It may happen occasionally, but not often.
However, there is still plenty of money to be made investing in real estate. Maybe it is time to look into a buy and hold strategy. It will not make you money overnight, but in the long run will bring in more money than being able to snare the occasional flip.
So if you have $500,000 to spend, why not look for 2-3 homes you can purchase, get a positive cash flow, and sell in 5 years for a great profit if the market has appreciated, or keep holding until your profits are at an acceptable level. With a buy and hold strategy the investor should be looking more at appreciation potential than getting the best price or not buying. It is still number crunching, but the set of numbers being crunched is different.
If you have any questions about buyer or selling investment properties in San Mateo or Santa Clara counties please feel free to contact me.