3 Ideas for Real Estate in an expensive market

It might be hard to find affordable real estate to purchase in todays market. With prices running just about straight up for the past two years, and with multiple buyers bidding up each property beyond it’s asking price, there are very little options for the small investor to get their hands on a good property.  

1. ADU 


This can be a very lucrative idea when facing high real estate prices. An accessory dwelling unit(ADU) are allowed in most states, but have different rules depending on where you are investing. For example, the state of Oregon passed a law requiring every city with a population of over 2,500 to allow at least one ADU on any property within the urban growth boundary, that is zoned for a single family dwelling.

What you can do is look for properties that are on a corner lot, or maybe have a floor plan that is not desirable, but is something that can be converted into two units. You can keep costs down if you are able to convert within the existing floor plan. It does get a little pricey if you build a new structure, however if rent in your area is high enough it can be a good idea as well.

2. Seller Financing


Seller Financing is a creative way to get deals done. This can be a difficult method, as some negotiation with the owner is necessary. However this can be beneficial for both parties.

While the buyer can negotiate terms and get a deal done outside of a financial institution, so that debt-to-income does not cause as much of a problem. The buyer can sometimes negotiate to a zero down or low interest depending on market conditions and how motivated the seller is.

The seller on the other hand will get a good deal as well. Making more over the life of the agreement, as well as less fees like commissions. This is not always something a seller is comfortable doing but can be negotiated to work out great for both parties.

3. Lease Option


A lease-option is when you and the current owner of the property agree that you will lease the property for a given period of time paying above market rent that goes toward a future down payment.

This can be a way for someone with little money can purchase a property. With that being said, this usually comes with some sort of option fee. 

When the agreed upon lease is up you have the right to purchase but you can refuse to purchase. So if after the lease you were not able to get approved for a loan, you are not contractually obligated to buy the property. 

Hopefully with the payments being paid towards the down payment and real estate market most likely increasing, you should be in the property at a good price and will be well below market value.

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