Some of the more recent entries I’ve posted have been about real estate investing. More specifically, I’ve been sharing updates on my search to locate a rental property. In my last post, I mentioned that there was one additional open-house I would be attending. I took a look Sunday morning, and as it turns out, this property ended up being the most attractive (in terms of: price, appearance, quality, utility, etc.) out of all the units I’ve seen to date. The listing for this particular condo was again, well below current market listings for similar properties. I was informed in advance to expect to compete in a bidding war if I wanted to win.
Although I really wanted to emerge victorious, I stuck to my strategy and gameplan - I was determined to win on my own terms and not overbid! I did my best, made a reasonable offer, and still lost by a huge margin. This condo was listed at $250,000 and ended up selling $75,000 above the listing price. It sold for $325,000! Can you say, insanity? Even my agent was floored when he found out, as he was pretty certain we would be in the running to win. I guess I am not too surprised anymore (knowing how hot the housing market is at the moment), but these bidding wars are starting to get a little outrageous. Having already invested about two months into trying to find the right place, and not having much luck, I’m very close to deciding to postpone the search until further notice. The market simply needs to cool off a bit in order for the investment to be attractive.
The following is a link and infographic (Zillow) that puts into perspective just how in-demand the real estate market is right now, especially in Silicon Valley:
That’s too bad FIFighter. I’d keep at it however. The more you do the more you will learn. And you can be outbid 1000 times, but you only have to win once.
Thanks Keichi! I will keep trying, and have definitely learned a lot throughout this process. I’ll probably document this in a blog entry in the future. It’s sort of funny, but I actually feel very bad for my agent. He has put in so much time and effort into all this and has nothing to show for it. In some instances, he was drafting up offer letters at 3 AM. Early bird gets the worm… Usually. At least I gained something… Experience 🙂
Wow, that’s pretty crazy. The same thing is happening to my sister and her husband on the east coast. This is why she wants to start a partnership with me here in Indiana. Prices are still very very reasonable and rents more than cover the costs. I just don’t know if I really want to try to maintain a family relationship AND a business relationship. I feel like that may be a recipe for trouble.
Brian,
Yeah, with the way prices are rising, I pondered the same thought of venturing into rental property with assistance from a sibling. Like you, I also thought it might not be for the best and decided against it in fears of straining a personal relationship by mixing in business.
I can’t tell you how many times this has happened to us. We’ve been outbid almost over 10 times, on properties that you wouldn’t think would sell for above list price. Almost all of the time, you are competing with cash offers that offer way more than list. Why would anyone select our offer with a conventional loan and 20% down? It’s just a bad time to be a regular person wanting to buy real estate.
The real estate market in San Diego is really hot…lots of developing areas, and many of these condos’ mortgages come out higher than monthly rent. Not fair!
Definitely understand how you feel about losing to the all cash offers. I’m currently working on ways to make my non all cash offer more attractive. That is, reduce the number of days needed for inspection/closing, remove appraisal contingencies, put more than 20% down, etc… But it’s still very difficult to compete with those who don’t need any financing.
Good luck on your search! Hopefully we both get lucky, and something worthwhile turns up. I’m trying to remain patient and optimistic… Easier said than done 🙂
I had a few similar experiences in my past year looking at places, I made few bid that were $100k over asking and still was outbid to all cash investors crazy. But I ended up getting a place I’m happy with, what is your housing situation? Do u live in one of the rental properties or rent another place or own a primary residence in addition to these?
[…] Open house after open house… Offer after offer… I kept on losing. Facebook had just IPO’d and Bay Area real estate was on fire! […]