How We Buy Property
Falling In Love With The Numbers
Our property offers and quick closings are not for everyone. For your typical home buyer, it is a matter of emotion. Are they falling in love with the property and will it meet their needs? For us, it is “falling in love with the numbers.” As the seller of the property, how you make your decision should be based in part on your financial goals and deadlines, and to take under consideration the market conditions. In our B.E.L.L. program, we are often the bridge to a solution.
Our goal is to purchase your property if the numbers work.
What Makes The Numbers Work?
First of all, it has to work for you. While we almost always look to purchase a property with no contingencies, we are often flexible on the close date you need. And we often purchase a property that is in excellent condition, or one that had a major fire or flood.
We have 4 pathways for property we discover. 1) We first consider the property for an AIRBNB, 2) or a 1-3 year long term rental ideally for an individual that may have been relocated for job purposes, 3) or we may refurbish a property and bring it back to the market. 4) Fourthly, if the property is not a match for Fox Financial, we have two types of buyers who could be a better fit for your property. We have long standing relationships with relocation companies moving employees (see www.foxfinancialrelocation.com) and also a national pool of investors obtaining rental property. (In some markets 20-30% of properties are acquired by investment firms)
10% Rule
Our benchmark for buying and holding property for 5 years, is in part based on the annual appreciation rate of property in your area. We hold property as a business, to cash flow, and also to hold property that will appreciate 8-10% per year.
Velocity Rule
Present day “Market Velocity” in your market, is a measuring stick that helps us forecast a property’s value over the next 24 months. It is a simple economic premise of supply and demand. Ideally, near your property, there is “pent up demand” of buyers and not an oversupply of sellers. Buyer demand is a factor that drives appreciation of an asset up in value, or when there is low buyer demand, in some cases causing minor depreciation, pushing property down in value.
Fox Rule
It is called a Cap Rate or Capitalization Rate. Ideally your property Cap Rate is 8.0% or higher. This will depend in part on what the property could rent for over a 24 month period. When the Cape Rate achieves our estimate, along with the Velocity results, and the 10% rule, we are often in a position to make an offer on your property.