Finding Deals: Home Builders Stuck With Oversupply
While some real estate commentators have continued to take to the media to proclaim the housing market will stay strong due to underbuilding and a need for more inventory, a new report from Bloomberg argues that builders are already suffering from oversupply.
Why is there a disparity in these claims, what do the numbers show, and how can struggling home builders become a great source of deal flow for real estate wholesalers?
Too Many New Homes
A new report from Bloomberg states that US home builders are already being lumbered with too many unsold homes.
Inflation in living costs and rapidly rising interest rates have been pricing many buyers out of the market. According to data from the National Association of Home Builders (NAHB), this June saw the most new homes delivered to market in 12 years. The same month, buyer activity dropped to its lowest level in 10 years.
Figures from the US Census Bureau show new home inventory has rocketed to almost 10 months of supply. Compared to the competitive market in which homes were recently selling in a day with multiple offers or waiting lists.
Some builders fear that they are going to be stuck with more unsold new homes than in the last crisis.
Why Are Builders Getting Stuck?
Common reasons that builders are finding themselves in this situation, even when the existing home sales market may be stronger include:
-
Pricing new homes at the peak or above market value
-
Lack of affordable housing
-
Building the wrong type of inventory for consumers
-
Overbuilding in the wrong areas
It is worth noting that the most recent data from BankProspector also shows a dramatic spike in construction loan defaults. Lenders may be slowing down draws, and are fearful of extending more time to builders who are hitting maturity dates.
Turning Builder Surplus Into Deal Flow
This surplus of inventory can be great deal flow for investors.
You can help builders close out communities by acquiring their last remaining units so they can get cashed out and onto the next project.
Many builders may be stuck with furnished model homes that they would like to liquidate.
In other cases, those at the front end of new projects need to pre-sell a percentage of units to obtain financing. You can step in and grab multiple units as sizable discounts.
Or perhaps you can acquire and wholesale stalled construction projects and unfinished homes for flippers and other builders who will finish them.
Top Funding News
|
|
|
|
|
| Linked In | You Tube | Google+ |
"I want thank you for the excellent service I received from Best Transaction Funding.The quick response I received from your company from the beginning of the transaction and to the end was unbelievable. I also want to give a special compliment to you as well. You went to great lengths to keep me informed and gave my title company all the information they needed to complete a successful closing. I cannot express how thankful I am. Such service builds great working relationships. I will definitely recommend Best Transaction Funding to all my fellow investors. Thank You."
- Frank Olaitan, Real Estate Investor, MD
"I can't thank you and your company enough for providing funding for our latest project, and right at the last minute. You came through with funding in less than 24 hours and coordinated with the closing agent and attorneys like you had been involved with our project the entire way. I'll know exactly where to call for the funding we'll need for our next project."
- Dave Pricken, Real Estate Investor, NJ
"Thank you so much! I just had a talk with our Realtor on both properties and told him amazing things about your company!... Normally I rehab the houses and re resells them. I just don't have the patience for that work anymore. This [transactional funding] is such a better way for me and less stress."
- Steven Kupecz, Real Estate Investor, TN
"We want to thank you for the exceptional customer service you provided. No one comes close. We had contacted a competitor the same time we contacted your company. Your company responded with in a few minutes while the competitor has yet to respond weeks later even after multiple phone calls and emails. Thanks again for the unmatched customer service."
"We had looked into several transaction lenders for a couple properties we were trying to flip. Your company was the most responsive and had the best pricing. Even though we had logistics issues with the B/C lender, your company acted very professionally and handled our requests beyond our expectations."
"Thank you for your commitment to an excellent customer experience."
- Phoenix Properties, LLC, Ronald Destefani, Investor, PA
"I was studying on how transactional funding works and you guys had the best and most thorough explanations posted so I could fully understand the details in back to back closing. I'd already started setting everything up but your video confirmed that I'm on the right track."
- La'Donna Turnipseed-Scott, Investor, LA
"....a few months back, I happened upon a video, on your site, regarding the use of transactional funding with Hud properties; and I found myself replaying the video over and over because of the value that I saw in the message...it actually explained the process, step-by-step on how to submit a Hud deal by using transactional funding. Once I completed the video, my initial response was to take immediate action by duplicating what I had learned from the video into real time. So I did some research on properties in a market where I knew I had buyers; and put together a hud deal. I then located a realtor able and willing to submit my bid online and within a couple of days, to my surprise, received a call telling me that I had won – my very 1st Hud bid."
"To you I say, ”KUDOS to Best Transactional Funding and Thank you for providing the education and services to Real Estate Entrepreneurs like me. Please keep up the good work!'"
- T. A. Davis, Investor, NJ
"You each deserve high marks for your wonderfully quick response time to each of our questions and requests! You hit home runs with us! Your application system was easy to use. Our deal met your qualifications and every time Rob Kozak or any member of Mystic Properties, LLC phoned, we received a "real" person dialing back to speak with us.
Your patience and persistence were exceptional in dealing with our business interests. Thank you for such great customer service! We look forward to working with your staff, again, in the future. We like referring people to you, as us, our team would have missed-out on an excellent earning opportunity.
Your help negotiating with our title company made our back-to-back deal, finally happen. People noticed on settlement day how effectively and efficiently your part of the transaction was organized and executed. Again, thank you for truthfully being the "BEST" at what you do!"
- Diane McAdams, Mystic Properties, LLC, Real Estate Investor, Pennsylvania
"Boy, you guys are impressive! I can’t thank you enough for scrambling and getting my deal done at the last minute like that. You and your team were awesome!"
- Donna Bauer, The NoteBuyer Inc., Real Estate Investor, OH
"Thank you so much for working so diligently with me. Your services really are the "BEST". I look forward to working with you in the near future!"
- Ericka B., Real Estate Investor, CA
