Are You Looking to be an Out of State Investor?
As an out of state investor looking to enter the St. Louis rental market, there are a lot of extra variables to consider. While our market offers some great price points compared to many others across the country, we also have a lot of unique neighborhoods and municipalities each with their own gifts and challenges. It’s best to work with, not only an experienced St. Louis agent, but also one who specializes in the size (and type) of rental properties you’re most interested in. For four plus decades, Realty Exchange has led the commercial and investment real estate industry in St. Louis, closing more than two billion dollars in transactions for our clients. We have achieved those high marks by arming our clients with new tools to stay ahead of market conditions, analyzing the impact of economic trends, and evaluating legal issues that affect our industry and therefore our clients’ bottom line. We put custom financial and marketing solutions in place to improve our clients’ portfolios by fine-tuning existing product performance and holistically managing real estate investment strategies.
Realty Exchange consists of two main entities: the Multifamily Investment Group and the Commercial Group. Our Multifamily Investment Group is one of the most active and largest in the state. Recently, the St. Louis Business Journal rated Realty Exchange as the number one investment company in Missouri.* Our Commercial Group continues to grow by consistently providing exceptional service with an aggressive attitude towards seeking out opportunities for buyer, seller, tenant, and landlord clients. This group has earned the reputation of not sitting behind a desk,but hitting the streets to provide numerous options for our clients. This has brought a high volume of referral business.
Although St. Louis area prices are very attractive compared to many other large cities, they are constantly on the rise! Multi-family prices are substantially higher now than they were even 6 months ago and properties are still selling in record time. Many well qualified out of state buyers are already here and helping to drive the strong demand. While we do have new listings on the MLS virtually every day, many are under contract before the ink is even dry on the listing agreement. So if you want to be successful in your quest for great earning properties you’ll need to move quickly and be able to analyze not just the “now” but also the “achievable” cash flows of the near future.
Realistic expectations and patience are a must! If your return requirements are too rigid and idealistic you may end up with nothing. To be very honest finding an “existing” 10 Cap in a great neighborhood is not achievable at this time. Sellers know how strong the market is and they want the best price regardless of what the cash flows suggest the list price should be. There’s so much demand for so few properties that to be successful many investors are buying based on the potential cash flow they can achieve in the near future, not the actual cash flow at the time of purchase. By looking at properties with MTM leases, also those with long term tenants and “under market” rents in areas with stable tenant base and strong demand we can uncover some great opportunities! It may require some turnover and possibly some updates in order to achieve the higher market rates but that is something that you and your agent would be able to evaluate prior to purchase.
Once you’ve successfully landed your first rental – now it’s time to partner with a skilled property manager. Make sure they understand your long-term strategy and what’s most important to you. They are your ambassador, your “eyes and ears” and the front-line gatekeeper for cash-flow. Understand their fee structure and be sure to walk through specific scenarios related to maintenance, filling vacancies and what happens if there’s a non-paying tenant!
*St. Louis Business Journal. May 30, 2020