COLD weather(off season) investing - Posted by James C

Posted by James C on November 16, 2000 at 09:09:44:

thanks Ron

COLD weather(off season) investing - Posted by James C

Posted by James C on November 15, 2000 at 19:23:10:

I am a newbie to real estate investing and I am wondering,with the cold months coming now. What does everyone do till spring hits. Do you still buy and sell your properties as normal or do you make changes to your plan. I have procrastinated long enough but fearful of getting started now,because it will be colder and people will be trying to stay in their homes till spring time. Any feedback would be appreciated, thank you…

not off season, just different - Posted by Jim IL

Posted by Jim IL on November 15, 2000 at 20:48:12:

I too live in an area where we get COLD in the winter.
Sellers are still out there, and actually, the motivation level seems to be higher at this time of year.
The problem that I have is that there are fewer buyers.
Many people are less likely to move for a couple of rather common reasons.
Such as cold weather, and the fact that school is in session.
They do not want to move there kids from one school to another, or lug furniture out into the cold and possible snow. (Not to mention the fast approaching holiday season.)
But, also remember, if you negotiate a good deal, and market a good deal, there are still buyers out there, it may just take a little longer to get them to sign.
So, when you buy in the winter months, you need to factor in a longer holding time and cost.

In the winter months I try to buy as many homes as I can, while negotiating terms that will allow me to hold the homes until spring hits and/or the market picks up.
I just signed up a L/O deal today, and when the seller asked when I would start to make payments, I said, "As soon as I find a suitable tenant/buyer."
I even had something like that in the agreement.
I explained to the seller that the market for buyers was slower at this time of year, and they understood because they too had been having difficulty selling the home.
But, I further pointed out that I also had experience in selling homes, and therefore could probably handle it better than most, since this is my only occupation.
I also told them that if we needed to set a date for the first payment, then I would not do the deal.
The seller asked me “why?”, and I told them that this would not be fair to them.
I said that if I was pressed to make payments, I could not screen as carefully, and would be rushed to fill the house.
Since both of us wanted the home sold, we need to get a good quality T/B’er in the home who has a good chance at financing in the not too distant future, and this no time frame for payments would allow me to do just that.
Also, I told the seller that since I do not make my profit until I have a buyer, I would still AGRESSIVELY market the home.

Last year I bought a couple of homes where the sellers themselves were motivated but did not want to move in the winter.
So, I negotiated a deal with the sellers where we would sign now, and I’d take possession and take over payments in the spring.
I just made sure that I had the right to market the homes right away.
This allowed me to effectively hold the homes at no cost to me, and save them for the better market in the warmer season.

When I have the cash on hand, I will also buy homes and hold them through the winter to sell later.
But, the deals must be REALLY good for me to do that.
Again, we have to allow for longer holding time.
Bottom line is, no matter what the weather is like, people STILL have problems that need to be solved, and we as investors and problem solvers just need to be prepared to solve them a little differently depending on market conditions.

I have also found that the end of the year is a great time to buy REO’s, because lenders want there books cleared before they start a new fiscal year.
And January is an excellent time to buy as well, with all the holiday bills coming due, many people will get in over there heads and need to sell there homes.

Jim IL

What I do - Posted by Ron (MD)

Posted by Ron (MD) on November 15, 2000 at 20:43:14:

Many investors do slow down their activities in the winter. It’s very, very cold out and, after all, this is a traditionally slow time for real estate in general. I look at winter differently.

First, I do rehabs so that’s all I can talk about.

This is my favorite time to be buying houses. There are a couple reasons. (I’m not certain if they are real or imagined, but I think they’re real.) There is less competition from others (investors and owner/occupants). After all, it is really, really cold out. Second, I buy most of my homes from banks and they like to have them off their books at year end. I think they are a bit more motivated right now if I can settle by year-end. Also, if my contract is accepted in November, I will be settling in December and completing the repairs in January and February – all set to sell in the spring. Finally, contractors have less work available in the winter, so they are happier to get work from me. (This year-round source of work also makes them appreciate me during the other times of year, as well.)

As for selling homes, I do know that this is a slow season for buyers to be out. All I can say is last December I wrote three contracts for purchase on my houses, that closed in January (and the lenders weren’t too busy and my loans were processed pretty quickly). Also, even though it is mid-November, my phone keeps ringing every day from prospects interested in buying a home.

Ron Guy

Banks clearing REO’s off books - Posted by rrSmith

Posted by rrSmith on November 16, 2000 at 16:53:44:

The end of the year is a great time to buy REO’s, because lenders want their books cleared before they start a new fiscal year.

Yes, almost forgot about this end year bonus!
good post jim IL

Re: not off season, just different - Posted by James C

Posted by James C on November 16, 2000 at 09:08:12:

thanks Jim I appreciate the feedback

Excellent Post Jim nt. - Posted by phil fernandez

Posted by phil fernandez on November 15, 2000 at 21:25:33: