There are a couple ways to buy property in a hot market.
The first way, which is how almost everyone else does it, looks something like this. Show up at an open house on the weekend along with about 100 other couples, get all excited about the new paint and flooring in the house, then sit down with your Realtor and come up with a bid number. When Monday rolls around, you submit your bid without conditions at $50k over asking price, then cross your fingers, only to find out that some other idiot outbid you by an additional $50k. Rinse and repeat the following weekend until finally you either outbid someone else, or end up settling for a house that you don’t really even like.
The second way, which is the way that I like to do it, is to look for properties that aren’t quite as pretty. Tenanted properties fit the bill here. They are usually in a bit rougher shape, and likely need some new paint, flooring, and some minor repairs and renovations. They are generally more difficult to show as you need to give 24 hours notice and work around their schedule or the schedule of the realtor and perhaps even the property manager.
This is enough to keep away the masses and eliminate a lot of your competition. The uglier, the better, and generally you can negotiate a better deal here. You can keep the tenant and use the property as an investment property, or give them the boot and move in yourself (depending on the lease agreement of course.
In conclusion, don’t follow the herd! Look for that diamond in the rough by looking at tenanted rental properties and up your chances in a hot market!
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Chris Stepchuk, May 27, 2017