Competition for buying investment property is pretty high in the current housing market as inventory is low. As an alternative way of buying investment property in the real estate market, real estate investors are gravitating toward buying off market investment property.
If you’re interested in buying investment property right now, then you too should know all about this real estate investment strategy.
Is selling an off market investment property right for you? Should you consider buying investment property from off market listings? In order to answer these questions, you need to know what an off market investment property exactly is as well as its major advantages and disadvantages for buyers and sellers in the real estate market.
Read to the end of the post for some of the best real estate investing tips on how to find off market investment property and off market listings.
What Is an Off Market Investment Property?
The definition of an off market investment property is simple. It’s an investment property that has not been advertised publicly for sale in the real estate market. It won’t be found on any of the popular MLS sites for investment properties or homes for sale.
Either the seller of an off market real estate investment property wishes for the sale to remain private and has no intention of selling (just yet) or the investment property is in the process of being listed. In the latter case, a real estate agent or seller allows the investment property to be sold before it is officially listed or advertised publicly in the real estate market.
Pros of Selling an Off Market Investment Property
For one reason or another, a real estate investor may appreciate the privacy that comes along with selling a real estate investment as an off market investment property. Whether the reasons are personal or you wish to protect your current tenants, choosing to sell with an off market real estate strategy will keep your investment property away from the open real estate market.
No Fear of “Days on Market”
Any real estate investor who has tried selling or has sold an investment property knows the fear of the term “days on market.” Ideally, in a seller’s market, the days on market are low and investment properties are sold quickly. When investment properties take longer to sell, it can be an indication to a real estate investor looking to buy that this particular investment property has some issues with it, whether it be too high of a price or something with the actual property and its money-making abilities. Longer days on market open the door for low-ball offers.
With an off market investment property, no one is aware of days on market since your investment property isn’t publicly up for sale in the real estate market. In this way, even if it takes some time to sell, you can test it all out: decide on the price privately and make any adjustments without alerting buyers to anything odd.
Cons of Selling an Off Market Investment Property
Less Competition for an Off Market Investment Property
Because there is privacy, this means a real estate investor selling an off market investment property won’t find as many buyers. This means no bidding wars that can possibly lead to the seller making a killing in the return on investment because of competition and demand.
The Possibility of Vacancy Costs
Because there is less competition, it will naturally take more time to sell the investment property. If the rental property is vacant as you’re trying to sell, vacancy costs will pile up. This has to be taken into account as you’ll have a negative cash flow property on your hands that you’ll have to budget for.
Pros of Buying an Off Market Investment Property
Less Competition for an Off Market Investment Property
As less competition is a con for sellers, it’s, of course, a major pro for buyers of an off market investment property. This is what makes an off market investment property so great in a seller’s market. In a seller’s market, you might find dozens of real estate investors going after the same real estate investment property. Any offer you put up might be ignored, or you might end up paying more than you want to get your dream investment property.
With an off market investment property, there is likely to be only one or two other real estate investors putting up offers, if any at all. This means you have the advantage of getting good deals as no one else is making any offers to compete with yours.
More Time for Due Diligence
Sometimes, in a seller’s market, a real estate investor buying investment property has to act fast in order to get a good deal. This doesn’t allow for much time to perform a thorough investment property analysis or do due diligence. Because off market property sales take longer, a buyer gets more time for all of that.
Cons of Buying an Off Market Investment Property
Never Know the True Real Estate Market Value
One of the major issues with buying off market investment property is the real estate market value. While you can perform real estate market analysis on an off market real estate property, it has never officially been in the real estate market. Therefore, you won’t know how much it will truly sell for when in competition with other investment properties. Keep in mind, though, that a proper real estate market analysis should negate this con.
How to Find Off Market Investment Property
While some might consider the difficulty of finding off market listings as a con of buying one, it doesn’t have to be that way with the right real estate investing tips.
Make Sure to Have a Location Pinned Down for Successful Real Estate Investing
To make these real estate investing tips more applicable, it’s a good idea to have a few locations pinned down for where to invest in real estate. The easiest way to do this? Use Mashvisor’s investment property calculator. The investment property calculator will reveal all of the key factors that make a location the best place to invest in real estate: cash on cash return, cap rate, rental income for Airbnb and traditional rentals, etc.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Work with Real Estate Agents
You can hire a real estate agent who specializes in finding off market properties for sale. The more experience they have with off market properties for sale, the better. These real estate agents can be the best source for this type of real estate investment.
Another option is to contact different real estate agents in a location (once you have deemed it a great place to invest in real estate). Ask that you be put on their list for interested buyers of off market properties for sale. Whether these real estate agents specialize in off market properties for sale or not is not an issue as they can contact you when an investment property is in pre-sale and has not been publicly advertised yet, giving you first dibs.
Check Out Websites for Off Market Listings
The second best way for how to find off market properties for sale is by visiting the websites dedicated to these investment properties. Websites like these can be a great resource for off market listings.
Just as you must start with contacting different real estate agents, networking, in general, is a good idea. You may hear of real estate investors looking to sell an investment property before they officially advertise the fact.
Try Direct Marketing
Again, once you find a prime location for real estate investing, you can try direct marketing. Visit the local title company to get a list of names and addresses of property owners in the neighborhood. Send out letters letting them know you are an interested buyer.
Visit Investment Properties
Visiting potential investment properties door to door, while time-consuming and maybe even a little intimidating, is still a good way to find off market investment property. Just be polite and have what you wish to say prepared. Do not take up too much of their time and even consider having some kind of flier or business card on hand so the property owners may contact you if they wish.
There are plenty of advantages to buying and selling off market investment properties. Even learning how to find off market properties for sale isn’t too difficult. As long as a real estate investor keeps the disadvantages in mind, an off market investment property can make for a great real estate investment.