The Triggers Forcing Landlords To Become Distressed Sellers
More and more landlords are becoming distressed sellers. What’s driving this trend? How can real estate wholesalers find the deals, and who should they be selling to now?
Rental property owners are being hit with a variety of converging factors which are causing many to give up, and become more motivated to sell their properties.
Rental properties will always be a thing. As will the desire to invest in them. However, real estate wholesalers may now be marketing to a tighter pool of end buyers. Including larger institutional buyers, and wealthier individuals looking to move more of their portfolios to physical real estate.
Here are some of the factors driving distress among landlords, or at least depleting the appeal of holding onto rentals.
Inflation In Holding Costs
Property taxes, association dues, and homeowners insurance premiums are just some of the holding costs that have been going up fast with inflation over the past couple years.
If rents moderate, and holding costs are up 30%, that can cause big problems for owners that financed their rentals. Or at least dampen the cash flow and returns on free and clear properties.
High Construction Costs
Both labor and material costs are way up too. Even in the past few months. Whether it is for routine maintenance, renovating new acquisitions, or remodeling between tenants, increased costs can mean eating up years worth of returns.
Increased Legal Liability
Expanding rules and regulations, and higher local building code standards are all adding to the legal burden of being a landlord.
Failing inspections is expensive. In some cases, it seems some jurisdictions either want to bleed landlords dry, or force them to fold, so that they can flip those properties to big institutions in sweetheart deals, or make a profit on foreclosing on them.
Squatters
Squatting incidents appear to be on the rise. This can prove incredibly expensive for landlords. In many cases they simply must sell to rid themselves of the problem.
Hits To Their Other Finances
Whether it is taking hits to retirement investments in other sectors, or struggling to keep up with inflation in general living costs, weaker overall finances can force landlords to sell and cash out.
As a real estate wholesaler, there are many ways to identify and target these properties. You can look for occupied properties, with out of state owners, mechanics liens, past due property taxes, areas being hit with multiple insurance rate hikes, and those with eviction notices.
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