How to Invest Smart Through Extreme Levels of Competition

Mar 4, 2021

The US real estate market is enjoying an incredible sprint – that is only attracting even more investors and capital. How do you maintain your income, deal flow and plans to invest through intensely competitive periods like this?

The White Hot Housing Market

The housing market isn’t just hot, is it in a state of frenzy, with insatiable demand. 

In some markets there is now less than 2 weeks of inventory for sale. Right priced properties are selling in just 10 days or less. It’s not surprising to see bidding wars and buyers ultimately paying double digit percentages above asking prices. 

Depending on where you are home sales volume surged between 18% and 38% last year. Prices are up by double digits in most markets and even more in some hotter areas. 

Forecasts are for more of the same double digit activity through November 2021. 

This surge is only going to attract more investors of all sizes who want a piece of these gains. That will multiply these trends further, unless there are other big changes. 

Investing & Operating Through the Competition

Extreme competition can be frustrating for some investors. Especially those who had bigger goals for deal volume this year, and who had hoped for a correction and return to reasonable and common sense asset values. 

Whether you are investing personally, as a fund, an investment business or family office, do enjoy the gold rush and windfall of gains. Just don’t get caught overpaying. Be the one of few who made it through whatever the next dips and turns are going to bring. 

Don’t See Them as Competitors

Instead of fearing and working against others in the market, choose not to see them as competitors, but as potential business partners. Can you buy from them or sell to them instead of bidding against them?

Find the Overlooked Channels

The retail housing market may seem extremely speculative at the moment. If you don’t want to pay retail prices and bid against novices or those who are happy to take almost negative yields, then look for the acquisition channels they aren’t using. What connections can you find and tap into for better value deals with less competition?

Find your Niches

Focus on honing in on and being the best at a smaller segment of the market. One that isn’t so crowded. Maybe that is the top end of the market for house flips, or non-performing second mortgages for note investors. 

Maintain a Balanced Portfolio

Take the hybrid approach and secure consistent returns with a multi-strategy portfolio that will perform well no matter what happens in the market over the next year. 

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund