Are There Still Deals in Hot Markets?

Headlines create small talk; they get people talking. It's their business model. The problem is when it affects one's decision making ability. One narrative that has been fanned for the last eighteen months is that we are in an overheated market. Some interpret this as now is not the time to buy real estate. Wait on the sidelines for the next recession. This is a broad stroke across hundreds of markets. Fortunately, deals do still exist, even in hot markets. 

Real estate, especially residential and certain segments of commercial, is a fragmented industry meaning there are hundreds if not thousands of players. On the flip side, think of e-commerce sales. According to Business Insider, 43% of all online sales in 2016 went through Amazon. Residential and commercial real estate don't have an equivalent. It is a more local business. Real estate is in the micro, not the macro. Buying a single family home or mobile home park in Orlando, FL based off a headline that the Fed will move interest rates 25 basis points will likely be a losing proposition. Neighborhood amenities, rent growth, job centers, etc. will play more into the valuation than any national headlines.

With fractured ownership comes opportunities, people get sick, change jobs, file for divorce, lose a loved one, and a whole list of other life stresses. These events happen in good and bad times. Finding good deals usually means alleviating some stress from a person or organization's life. I'd argue in today's world people have less financial control of their life, so the opportunities might be greater. 

However, let's say you believe your market is different. It is truly too hot. You will wait. Say in one year from today, the market experiences a downturn. Are you ready? Most people know they should "buy low and sell high" but few actually do. Especially if this is your first time. Those headlines that you were reading about overheating are going to be selling the fear. Markets in Disarray as Lending Locks Up. If you believe that you will act, what stopped you from doing it in 2009-2012? Analyze your reason for hesitation. Maybe you have a valid reason. Otherwise, you are watching the opportunities float on by.

This is not a call to mindless investing. Be smart. You might have to look at 5x more deals to find the right opportunities, but they exist. Don't let the headlines be an excuse to avoid doing the work. Keep searching and don't sit on the sidelines. There has never been a better time to be alive.