Real Estate is weird and complicated if you follow it everyday but the basic theory of buying, fixing, holding and selling is still all that matters. But what happens when the market changes or your target buyer as a listing agent moves? Well you do what I seem to do every few years or even months, we re focus our efforts and chase the new target. If I kept saying I wanted to sell to the same people that were buying 5 years ago, I would already be out of business. Money has changed with the rising interest rates and pricing. Development has changed as costs and local requirements increase and over all end user demand has weekend as rates hit a peak and ease of entry lessons and lessons. So what would the Real Estate opportunities be in your market? I am going to tell you a few I see happening in mine, Westfield Indiana and hopefully it gives some guidance on your next move.
Become a great buyer – Becoming a great buyer is more then having the cash to close. Being a great buyer entails being able to be patient and hold a property for the right user. In todays market, especially Westfield the buildings take a little longer to lease since our rates are higher and landlords coming into the market will need patience. Having the ability to buy something and comfortably maintain the property and not become desperate for the flip or the next tenant is key. Of course buying it low and having a user Tee’d up would help but the first part is rare it seems and the end user many times is unwilling to commit in advance, so the trick is to control the property first, sit tight and chase the perfect tenant or buyer over time while making a profit long term.
Seller Financing – This was the solution in a transaction that would have never happened had the seller not been wiling to create reasonable terms for a buyer. As the loan rates increased the pro forma changed so my buyer was reaching a point that they could not cash flow the property based on current and potential rents, so we approached the seller for financing. The seller was no longer interested in maintaining the property but enjoyed the regular rental income so giving the buyer a few years to stabilize the building for higher rents at a discounted interest rate was a perfect win for everyone. The seller is still receiving “rent payment” for a couple of years but has passed on the owners expenses like insurance and a new roof. The buyer can now clean up the property, increase tenants credit and rents and then go to the bank with better cash flow to satisfy an appraisal and payment rates. I think we will see more and more of this as our system works its way out.
Improving properties – A space that I think is underserved is the commercial rehab space in Westfield. We have many older properties that would be great for a tenant or buyer but they come with so much work or are in unattractive conditions. This is a great time to negotiate a sale on a property to rehab for a commercial user. 115 N Union is a great example of cool space that was renovated and now leased as a modern and cool business. When you take a user through a space like that they get much more excited than a rehab project when they just want to go to work and do their job. Buy a building or house, have it zoned accordingly, update the fixtures and style so that it has a wow appeal to end users and market the property at that point. The days are gone and the rents are too high to expect someone to see all the possibilities so making it visually easy to see can create a better demand and support our awesome rental rates.
Buy – If you are waiting on a crash and fire sales you are in the wrong market. Start that negotiation now with stagnate properties and less than good condition buildings. Owners are many times priced high hoping for anything but still have the mindset of “you can always drop the price”. If you see a property you like you should make an offer you like. I always tell people that they have nothing to lose since they already don’t own the property and if the seller is offended they can go onto the next offer. Make offers with a reasonable explanation and you might be surprised at what you can get done. Call the listing broker and ask them what the seller is looking for and you might learn a little bit about the deal. I always tell buyers if a quick close or no financing is more attractive to a seller or if they are stuck on their price but willing to be a part of a loan term.
The moral to the story is that even thought the world changed or Westfield development is on pause, there are still ways to be involved in real estate. There are still ways to make money and created value but the days of easy are over. Engage and commit to a good local broker, have a relationship with a good local bank and most importantly dig in and study your area. There are properties worth buying you just have to work hard on it and find them in a noisy crowded space. Good luck!
Curt has been in the Indianapolis Real Estate business for over 15 years and spent his first years learning all aspects of commercial management and brokerage. He has had great success in managing existing commercial projects and new retail and office developments. Curt specializes in building owner representation and purchases in the Westfield Indiana market as well throughout the Indianapolis Metro area. Curt is passionate about growing the local Westfield community and in his free time volunteers with Student Impact and raising 2 children with his wife Jennifer.