As the real estate market continues to grow, so does the competition for investment properties. A low inventory of homes and high demand for buyers and investors makes the competition fierce. A hidden gem in the real estate world that can often help investors avoid some of the competitors is the world of off-market property listings. However, like anything else, off-market property listings can come with their risks. If you’re a real estate investor looking into what your options are, here are some pros and cons to considering off-market property investments.
A significant benefit of working with off-market property listings is less competition for investors. When you’re looking into properties that are listed on the MLS, you’re essentially competing with both residential buyers looking for a home and investors with similar goals to your own. With off-market property listings, you’re decreasing your competition to a much smaller number. According to Mashvisor contributor, Sylvia Shalhout, “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.”
Off-market property sales tend to take longer, which essentially gives the investor more time to do their diligent research. Whenever you’re investing in real estate market analysis is essential, even when working with off-market properties. Since the sale is longer and finding the right information for your analysis may take more time, take advantage of the longer sales cycle.
Inaccurate Market Values
When properties are listed on the market, it helps determine their market value. One of the most significant issues with buying an off-market property is the inability to determine accurate market value. While it’s still beneficial to perform a market analysis for an estimate, without the property being officially listed on the market, the accurate selling value will be unknown.