If you ask a real estate investor about the best opportunities he/she has had in the business, off market properties for sale would be the answer. So, how do you invest in them after all?
What are off market properties for sale?
An off market property is one that is sold privately. In other words, when the seller or real estate agent does not want to take the sale publically, they sell it off the market. For this, they turn to more exclusive real estate marketing strategies. For example, sometimes, the real estate agent is the one who tries to sell the investment property before it hits the sale listings on MLS. So, he/she starts contacting other investors or even ordinary people who might be interested.
Now you are curious as to why a seller would want to sell off the market. Moreover, what would make a real estate buyer take on the burden to find off market property for sale?
Why a seller sells off the market
The first reason for a seller to go with the off market option is related to real estate basics: Costs! By putting up off market properties for sale, a seller could cut off a good chunk of expenses that otherwise would go to marketing the property.
Another reason could be privacy. Life circumstances are unpredictable and are personal. Therefore, when people go through divorce, death or other life challenges, they prefer to keep it on the down low and get things done privately.
Finally, the quick sale is a reason as well. Many real estate investors or even people who have nothing to do with the business are motivated to sell. In some cases, it is a loss, and in others, it is the need for liquidity.
Why would you invest in off market properties for sale?
The first reason that should motivate you to invest in off market properties for sale is the price. Often times, a real estate investor can find off market properties for sale for below market value. This means that it is a cheaper property than the one you would buy on a regular property listing site.
Also, when buying an investment property, you are competing with other investors. And, in the real estate business, we prefer less competition on good deals! Since off market properties for sale are not public, it makes the number of investors competing with you closer to zero.
The best real estate investment strategies come with the lowest costs. Therefore, an off market property could be the one strategy you need. If you manage to find one without the need to hire a real estate agent, you are actually saving a good amount of money right there!
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Now that you know why off market properties for sale are the best choices for both sellers and buyers, let’s get to the main question: How do you invest in off market properties? In other words, how to find off market property for sale?
How to invest in off market properties for sale
The first thing you want to do is to actually find off market properties for sale. One way to do so is to network. When you connect with other investors in the business, it becomes easier to find an off market property to buy. Another way could be by word of mouth. As a real estate investor, you’ll often hear from other people about properties for sale. The same goes for off market properties. However, the best way to find off market properties for sale is through a real estate agent. Since real estate agents constantly work with property transactions, they are usually the first to have access to off market property listings. Therefore, ask your agent if he/she has any properties that are not on the market yet.
The second step to invest in off market properties for sale is to analyze your choices. Here, you want to be very careful as the process consists of two stages: The investment property analysis and the comparative market analysis. As for the first type, you focus on the return on investment as a determinant of profitability. While the latter focuses on location profitability measures. It analyzes the potential rise in property price over time as well as the potential rental income a landlord can expect to generate. One rule for both analyses: the higher, the better.
For example, a rate of 10% is a better rate of return than 5%. Also, a 3% rate of appreciation is more promising than 1.2%, for instance. So, make sure you look for higher figures.
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The mistake of every beginner real estate investor!
You must know that investing in off market properties for sale is the same as buying any other type of investment property. We say that in terms of the process of purchasing the property. The first rule is to always have a few options of properties for sale. Only after you analyze them can you narrow it down to one property. Otherwise, you’ll fall into the trap that every beginner real estate investor falls into which is buying the first property they stumble upon.
**Tip: Try using Mashvisor’s investment property calculator to ease the process of analyzing multiple investment properties.
Besides, remember we told you that, in most cases, the owners of off market properties for sale are mostly motivated? Use that to your advantage IF you have multiple options. However, if this is the only property you are looking at and it does not seem so promising, then don’t buy it just because it is the only option and it’s cheap.
Regardless of the type of property you choose to work with, it is all about the right calculations. Unless you are ready to invest a little effort, you won’t be seeing any results. Same goes for off market properties for sale. Even though the process is not the easiest, the returns might be the best. So, do yourself a favor and join our platform and get access to all the must-have tools for every real estate investment!