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Foreclosures Are Surging Again

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on Sunday, 17 March 2024
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The latest data shows foreclosures are surging again this year. So, where are the deals?


Real estate investors have been waiting for this dip for a long time. After hitting the worst housing affordability since the 1980s, better priced deals now appear to be becoming more plentiful as defaults pick up.


Foreclosure Activity Rises

According to the latest figures from ATTOM Data, foreclosures rose 8% year of year as of February 2024.


Last month over 32,000 housing units received foreclosure filings, auction notices, or were repossessed by banks.


Foreclosure activity rose the most in these states:


SC up 51%

MO up 50%

PA up 46%

TX up 7%

It’s A Trend, Not A Blip

Until the dynamics driving this activity are reversed substantially, it seems likely we’ll continue to see this trend grow.


Consider that the salary needed to afford a home has soared by 61% in just the past four years.


Inflation in food prices has spiked again in 2024. Along with insurance costs, property taxes, and other expenses. That is being fueled by high interest rates. With no expectations of the Fed cutting key rates this year. Mortgage rates recently topped 8%.


While there are still many cash rich home buyers and investors eagerly looking for deals, there are clearly millions of US households on the brink of foreclosure again.


Making Sense Of The Market

It is true that all real estate is local. At least to a certain extent. Some are leaders and others laggards in the overall cycle. Some are more noticeably and dramatically affected than others.


It is also true that many will let their own motivations and interests cause them to mislead consumers about the state of their local markets.


We are by no means in the heart of a new foreclosure crisis yet. Though it makes sense to do your own research. Track local listing and sales activity for yourself. Is there really too little inventory? Or perhaps too much? How many days are properties really on the market? How many listings are cutting prices? What is the difference between distressed sales prices and others?

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Real Estate News: 4 Headlines To Watch Now

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on Friday, 23 February 2024
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Find out what’s happening in real estate and the economy that could impact your investment strategy, plans, and performance this year…


No Fed Interest Rate Cut Till June

Experts are now pushing back their forecast of a Fed rate cut until at least June this year. That’s not welcome news to millions who were hoping for a break from rampant inflation and high borrowing costs.


Though we could get a well timed rate cut or two before the presidential election.


For now investors need to make their plans based on where rates are at, with a cushion for even higher mortgage and loan rates as banks seek to offset risk and defaults.


The $400M Trump Fine, And The End Of NY

Former president Trump has just been hit with an almost $400M fine in NY, for boasting his properties were worth more than what the judge thinks they are worth.


This ruling has faced harsh criticism from the likes of Shark Tank investors and fund managers. This may be the final straw that has the last remaining investors pull out of NY for good.


It’s a reminder that values are always influx, they are just an opinion, and that opinion can be changed at any time.


It’s a fresh warning of what happened to many investors in the last great recession when banks began slashing credit lines and trying to force homeowners to accelerate the pay back of loans due to revised valuations.


Calls For $50 An Hour Minimum Wage

Forget $15 or $35 an hour. New calls are being made for a $50 an hour minimum wage. That’s about $100k a year. Which may really just be getting by for many households with kids these days.


In turn, it would either mean doubling or tripling inflation on goods and services to keep up with the wage increase, or companies having to lay off another 30% to 60% of their staff.


For real estate companies, it likely means consolidating with fewer team members, but of higher quality, and at higher wages.


The AT&T Outage

AT&T’s massive nationwide service outage is a fresh reminder to investors, entrepreneurs, and businesses that they cannot rely on just one connection.


For both phone service and internet, you need at least one additional back up, and remote alternatives on different providers so that you never get disconnected. You can imagine the havoc this can wreak with closings and deal flow.


These occurrences may become even more common has cyber attacks and online crime grow.

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Real Estate Investors Can’t Afford To Have A Scarcity Mindset

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on Thursday, 04 January 2024
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Real estate investors simply cannot afford to allow themselves to fall into a scarcity or fearful mindset.


If you’ve found yourself holding back from doing more deals, or bunkering down instead of pushing to grow your investment business, this is for you…


Self-Fulfilling Mindsets

We almost always get what we think about and focus on. So, when we are focused on growth, positivity, and getting out there to do more deals, it happens.


Similarly, when businesses and investors contract, begin holding back out of fear, and fear they don’t have enough money, guess what happens? Deals don’t get done, and they run out of money.


Remember that there have been other individual investors and CEOs that have made incredible fortunes in real estate in more challenging times than these.


If you want others to keep being active in the market, then you need to lead by example.


If you are not marketing every day, making offers every week, and are not closing on deals every month, then it is only a matter of time before you do run out of money and end up bankrupt.


The only alternative is to get busy making things happen.


The Demand Is Always There

In addition to the fact that real estate wholesalers can do business just as easily in up and down markets, one of the beautiful things about being in real estate is that the demand is always there.


There will always be a need for housing. To the tune of millions of households per year. For one reason or another people will always need to move each year. Investors and companies will need to sell and buy properties each year.


Even in a depression there will be movers, those who need to downsize, divorcees splitting households, those needing to find tax breaks and new income sources.


Connecting the dots between the supply and demand may require some adjustments in your business model, and a little creativity. Yet, there are plenty of deals to do, if you’ll just step up and take advantage of them.


Do Deals Daily

As a real estate wholesaler you really don’t have to worry about what direction the market will be headed in next quarter or next year. It is irrelevant to you making money right now.


Push ahead by making a minimum of five purchase offers each day. Set goals to add at least five new end buyers to your list each day. Based upon your income goals, set figures for how many deals you will close on and exit each month and week. Then just get to it.

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The Challenges And Opportunities Of The 2024 Real Estate Market

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on Wednesday, 27 December 2023
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The 2024 real estate market is shaping up to be an exciting landscape. An environment with its fair share of both challenges and opportunities.


What should investors be watching? How can they ace the market and win this year?


The Challenges

Uncertainty: Investors and real estate professionals should have learned to become quite comfortable with uncertainty by now. There will be plenty of it this year. Forecasts are still split between growing or nose diving property prices. Use this to your advantage instead of being hampered by it.


Buy from the bearish, and sell to the bullish.


Staffing: While AI and recent mass layoffs may be creating more unemployment, high consumer living prices mean that workers need to make more per hour in order to make working make sense for them. Be prepared to work with a leaner remote team, or pay a lot more this year.


Changing Demographics: Mass financial distress and migration are significantly changing the demographics of property buyers and tenants. Real estate businesses need to stay alert to this, and be able to adjust to these shifts in supply and demand. Average credit scores will change, as will who is investing.


The Opportunities

Motivated Sellers: While many seem very optimistic about the economy, the data seems to suggest that millions of households are facing extreme financial distress. Many appear to finally be at the end of their ability to hold on to vehicles, credit cards, and homes.


In turn this will yield many opportunities to pick up properties at deep discounts, and on better terms.


Failing Competitors: For all of the above reasons many of your competitors may fail or quit this year. These are great opportunities for acquiring their business. Either in the form of buying their companies, their real estate, or absorbing their staff and customers.


Interest Rates: The Fed is expected to begin cutting interest rates in 2024. That could translate into lower borrowing costs for businesses and real estate.


Well qualified buyers could find this makes for better financial projections when taking out mortgages. While also providing more working capital to companies, and providing room for house prices to grow. It may also encourage more owners to sell and move, creating more inventory.


Of course, you don’t have to wait on the Fed for attractive real estate financing deals. Best Transaction Funding is still offering low interest rate loan deals for real estate investors right now.

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5 Must-Do Items Before The New Year

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on Wednesday, 06 December 2023
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These are the five most important to-do items that should be on every real estate professional and investor’s list before the new year arrives…


No matter how busy you think you are, or the ‘urgent’ things that try to distract you and steal your time, the below will make or break how you end this year, and how the entire next year will go for you.


Review The Past Year

Take a day to review the past year. What worked well and didn’t? Why?


Evaluate any gap in your goals versus achievements. Did you surpass your goals, or fall short? What caused that?


Ask what has changed in the real estate market and economy, and your business, and life over the past year, as well as your personal development?


Then take the next day to celebrate all the progress. Even if you didn’t hit all your goals.


Set New Goals For The New Year

Make them specific, BIG, and achievable.


Anchor these to your underlying why. Make them visible on a daily basis. Not just for yourself, but for your entire team.


Begin setting up the framework to be able to achieve these goals over the next 12 months. If you don’t have a template for this yet, even just start a spreadsheet with the categories of items that you need to accomplish them. Including the team and roles you need to till, the connections you need to make, the infrastructure that needs to be put in place, and the budget and funds required.


Evaluate The Outlook For The New Year

Consider what is likely to change or stay the same over the next year?


Such as new regulations, demand and supply, the cost of doing business, and more.


Ask what are the unknowns or wild cards that could be played? How can you be prepared to weather it and capitalize on these changes, so that your business is unshakeable when things happen?


Take Time Out To Reset

Recognize that this is some of the most important and profitable time you will invest in yourself and your business all year.


Whether it is a weekend or a week, the ROI on this time outside of your business will return many times that of the hours you are busy in your business the rest of the year. It will boost every other minute you spend doing things over the next 12 months.


Getaway somewhere new. Ideally you can unplug from everything for at least 48 hours.


Decompress, get inspired, gain new insights, recharge, reenergize, and regain your focus, and perspective on the big picture.


This is the most important thing we all MUST do before the new year.


Set The Table

Then take the remainder of the year to have conversations about everything you’ve contemplated, learned, and set to do for the next year.


This season is ideal for sharing many meals with important people in your life, and new people. This sets the table for the entire next year.


Spend quality time with those you love and care about, time bonding with your team, and connecting with new prospects, and potential partners. Eat together, get feedback, solicit ideas to streamline your achievements, and set up plans to take next steps with them in the new year.

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Real Estate Investing: How To Prepare Yourself To Win In The New Economy

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on Saturday, 07 October 2023
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Want to ensure your real estate business takes off and continues to flourish in the next few months and years?


It’s amazing to already see the great disparity dividing investors, entrepreneurs, and businesses. Some are going bigger than ever with ease. They are growing into new niches, with $100M pipelines and plenty of deals and capital lined up. Others are already struggling and the fear and doubt that is creeping in could prove self-fulfilling.


Whether you are just starting out in real estate, have been riding the recent bull run but haven’t experienced adversity before, or have been at it for decades, there are both regular cyclical and major macro economic shifts happening.


In order to get ahead, and keep winning and growing, you’ve got to be intentional about it.


It may take some tweaks to your model, or a whole new approach. This is an important time to refresh your perspective and anchor it in what really matters and will make you successful.


Consider these 10 ways to prepare for success in real estate, and avoid being swept away by external changes.


Take Stock Of What Really Works

What has really been working, and has directly created your success so far. Be sure to differentiate between those fundamentals, and the frills that may have come along with it.


For example; it was probably working the extra hours and going above and beyond to take care of those customers, not the Ferrari that got you there.


Remember the progress you’ve made and what you’ve achieved so far.


Take Time Away To Think

There are so many distractions around us. Which is often what leads to making serious mistakes, and continuing to slide into failure.


Take a long weekend away. Detach from the everyday tunnel vision. Gain time to truly think and focus.


Unplug and evaluate. Then take time to see new things, and what’s really happening outside of your own little bubble. See how so many are actually struggling right now, as well as how others are doing so well that they are oblivious to this. See new ways of doing things.


Relist Your Priorities

What is really most important to you?


Above the work, is it your family, a partner, or your own health?


In real estate, which metrics and KPIs are truly most important? Hint; they are probably customer happiness, NPS score, and net profit. Everything else may be a dangerous distraction.


Learn What The Successful Are Doing

How are those that have been through these changes before handling it? Not just what they are saying or recommending, but what are they doing in their own finances and business? What have they done to survive and thrive through changes and challenges in the past?


Is it shifting investment strategy, increasing marketing efforts, or being more prudent in their offers?


Read books by real human authors, with real experience. Join mastermind groups or start your own. Hire the right team for this phase of your business, and be sure you hold onto them.


Make Sure Your Team Gets It

Most founders should be horrified by the gap between their initial vision and efforts, and how the business ends up getting run on the front lines.


Ensure your team knows the big vision, the why behind changes, their most important metrics, and the values that are there as guide rails to get there.


Discern What Will Stay The Same Vs. What Will Change

You’re probably far too behind the trend to slap the ‘AI’ label on your business and hope it helps. Now we even have AI created Coca-Cola. It’s become a cheesy and cringe worthy meme, more than a signal of value.


It can help to sail with tailwinds, yet it is being strong in the fundamentals that make a good and sustainable business. Then you build the marketing on top of that.


Refresh Your Morning Routine

It may be time to shake up your morning routine. Add new important tasks. Ensure it anchors you in a positive and successful mindset to overcome the day ahead.


Be sure to check out our Fall Funding Deals, with interest rates as low as 1%.

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Fed Pushes Interest Rates To New 22 Year High

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on Thursday, 27 July 2023
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The Fed’s latest hike puts interest rates at their highest level in 22 years. What does it mean for the economy, property market, and investors?

 

Higher Interest Rates, More Economic Turmoil

With the Fed saying they do not expect a recession, the odds of further rate hikes in the near future seem even higher.


The officially published numbers put economic growth well ahead of expectations. Even though many business owners would disagree.


This may well be the result of misleading averages. In which a few that are outperforming at great scale are masking the distress and decline of the majority.


The same also appears true of the housing industry. Where some markets continue to experience 40% plus annual growth. While others are seeing steep declines in how much buyers are willing to pay for properties.


Whatever is happening behind those headline data points, we can expect that current monetary policy is going to make credit harder and more expensive to get than any other time in many people’s and company’s lifetime.


How do you deal with this as a real estate investor?


Use Short Term Real Estate Financing

If you are wholesaling properties in days or hours, then high rates won’t hurt you.


It’s just a problem for those that get stuck in longer than expected renovation and construction projects, and long term hold landlords. Who should not be counting on rents and resale prices going up forever.


Transactional funding is probably the best example of great short term real estate financing.


Find The Distressed Owners And Sellers

There are millions of businesses and homeowners already being hurt by high inflation, high interest rates, and mass layoffs. Find those in distress and help them.


You may focus on the lowest hanging fruit, for example those already in foreclosure. Or get ahead of your competition by looking into the leading indicators of this distress and reaching them earlier in the journey. That may be looking at the amount of debt they have, or their location.


Find The Hungry Buyers

There is still no shortage of hungry and interested buyers. Match them up with your deals.


Again, you can hire a better part time CMO or marketing manager to get your listings to stand out above the rest. Or you can find them early and create waiting lists. Hone in on the triggers that indicate they may need to move or buy something soon. This could be mass layoffs by company, deteriorating metro areas with high crime, or rising taxes, and patterns of actively buying investment properties.

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AI Could Create Double Digit Unemployment By End Of Year

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on Thursday, 13 July 2023
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AI is trending. It could also create a new downward trend in the economy, and double digit unemployment in just a matter of months.


What does this mean for real estate investors, and where the deals are at?


Change Is Coming Faster Than You Think

When the economy fell off a cliff, seemingly overnight in 2008, business owners and investors thought that they still had 6 or 12 months before a crash. Then it was too late.


With lagging economic data, technology speeding up change to its fastest pace ever, and the Fed with its foot to the floor on the gas pedal to try and increase unemployment and cool the economy, many will wake up tomorrow and find their world has already been disrupted.


Double Digit Unemployment

Even the most vocal advocates of AI and automation technology have also voiced their fears that their success will also create massive unemployment around the globe. Which in turn could create immense poverty.


It’s already happening.


Some AI may be helpful. Unfortunately, it lacks a lot of intelligence in favor of a lot more artificial help. Almost every business seems to be trying to implement it. Yet, without understanding how it is already killing their own businesses.


Virtually all stores are now installing self checkouts, and are putting workers out of work. The frustration this is causing for consumers will likely push them to just a few delivery services.


Big companies like Upwork have replaced human customer service with AI chatbots, which are killing their relationships with their biggest revenue producers and most loyal, long time customers.


According to the Bureau of Labor Statistics, there are almost 3M people working in customer service in the US alone. That represents nearly 10% of the population. Close to 20% of the working population.


Then with many companies blindly turning to AI for content creation, without thinking about how counterproductive it is, and how junk and repetitive content is killing their companies, there’s another 18M freelance jobs at risk on Upwork alone.


More unemployment will be created as even jobs not directly replaced by AI will go away as these companies fail, due to implementing it too early.


It’s easy to see how this could potentially snowball to high double digit unemployment in no time at all.


Discounted Real Estate Buying Opportunities

Mass unemployment and business failures would also mean a tremendous amount of financial distress, credit defaults, and discounted property buying opportunities. Both in the residential and commercial space.


Few many want to hold real estate in a declining market. Though there will be plenty of end buyers who do. This makes for the perfect environment for wholesaling real estate as a strategy.


You can flip to luxury buyers needing asset protection, foreign buyer with economies hit harder than the US, and those investors operating and switching to truly affordable rentals, including Section 8 owners.


Win the space with intelligent human service and differentiate your business with it. You can implement AI later, in the next wave when the kinks are worked out, and there is clarity on the consequences, as well as potential benefits.

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The End Of Junk Fees: How This New Trend Impacts Real Estate Investors

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on Thursday, 22 June 2023
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The president has been making a big and very vocal push to end ‘junk fees’, and to pressure companies into providing all in upfront pricing quotes. How is this being applied in the real estate and finance space? What may it mean for investors?


The Push To End Junk Fees

A recent press conference led by the president heralded some of the brands that have reportedly been shifting away from layers of fragmented fees, to single pricing models. Also called ‘all in upfront pricing’.


There are certainly some sneaky fees and charges that should be done away with, and which really seem to be predatory and victimize those that can least afford it.


Of course, the claim that this change will save American consumers $5B in spending, may be a huge stretch. It is more likely that in many cases fees are just lumped together, and prices may even go up.


The Irony

There appears to be one huge hole and ironic exception to this plan. Which is not including taxes in these so called all in upfront price quotes.


This really destroys the whole concept. It’s an American quirk that you don’t have in other countries, and which may well have inspired all of these other junk fees and fragmented pricing, due to top down leadership examples.


Until this is fixed we won’t have real upfront pricing, all in pricing, or a good customer experience.


We’ve already seen some industries being disrupted by innovative companies that did this on their own, and actually provided less expensive options, for superior customer service and deals. Like MetroPCS in the mobile phone service space. It may be this street level peer pressure which is really most effective in bringing change, and reshaping the players in all industries.


How It’s Being Applied

Some examples of how this trend is showing up may include:


Airbnb’s shift to offering all in nightly pricing options

Banks eliminating overdraft and service fees (though not on mortgages yet)

Simplified pricing on event tickets

Elimination of renter security deposits in favor of monthly fees or higher rents


Summary

Simplified pricing is just common sense. It provides a better user experience, and a more efficient experience, with higher lead conversion potential for businesses. It can also be a fantastic way to disrupt your space, and stand out from the competition. It would just be nice if this also applied to taxes.


This is changing the competitive landscape, and you should be considering your pricing strategy and revenue streams to stay ahead of it.

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How AI Is Killing And Boosting Real Estate Businesses

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on Thursday, 15 June 2023
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Everyone is talking about AI. It’s a huge trend. One with many potential benefits, as well as risks, and plenty of controversy.


Let’s take a look at how AI is already helping to boost some real estate investment businesses, while potentially bankrupting others.


The Good

Good AI tools with some intelligence in their application may help create more efficiency for real estate investors and business owners. They might be able to help streamline tasks and your day so you have more time for the most important work, and more free time.


When curated well, AI tools can help feed your high quality, original, human generated content to prospects and potential leads online.


If your business has true, high value AI tools you’ve developed of your own, then you may find that you are able to raise substantial amounts of additional capital for your business right now.


Even if you don’t, then all of the other entrepreneurs and investors in the AI space who are making out like bandits can become great clients with lots of cash to spend with you.


The Bad

Of course, most people have already encountered negative AI experiences. Especially with customer service apps that are worse than having no chat support at all.


Others have run into AI decision engines in lending, credit, and for other approvals. Often ended up confused on why they were denied, and at the lack of actual intelligence in this so-called AI.


The Ugly

Continuing from the above, if you are trying to implement tools like this for your own customers, you may be turning away countless qualified prospects, and be turning them off with horrible customer service experiences.


Be sure to regularly walk through the process as a customer yourself. If they aren’t making things 100x better for your customer, they are likely costing you an enormous amount of business and income.


If you don’t 100% understand the algorithms being applied and can’t convey them clearly and explain how they are applied evenly to all, then you may run into serious legal issues, compliance problems, and investigations by regulators.


Today, one of the biggest dangers of AI is those being lured into using it to create content. Which often ends up being misleading and incorrect junk. This will rob you of your marketing results, ROI, and both new and existing customers. It may work in another 10 years, with a lot more human input, or for creating fun memes. It’s just not ready for business.


Then lastly, the massive shift to AI is also fueling more unemployment. Even AI leaders and CEOs are concerned about how we will need to address poverty in a world where we only need a fraction of the workers we do today. While the population is also increasing.


In the short and medium term this may lead to a lot more financial distress for consumers and homeowners. Which in turn can make for great opportunities to buy deals at discounts. Though may lead to lower renter and borrower performance.

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7 Ways To Kill Your Real Estate Business Fast

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on Saturday, 25 March 2023
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90% of real estate businesses are unlikely to survive this phase of the economic cycle. The world’s biggest banks are falling like dominoes. That will have a big impact on everything else.


A few investors and real estate firms will not only survive this, but find it their defining moment. One which enables them to scale, establish their personal and business brands as those to count on for everything that comes after this, and will grow incredibly wealthy in a short period of time.


So, how do you not sabotage your venture, and stay in the game and grow it instead?


Relying On Others For Liquidity & Access To Funds

Cash flow and liquidity are what will bankrupt most companies and individuals in the months ahead.


Expect banks and mortgage lenders to struggle to have enough funds on hand, or the willingness to provide access in the year ahead.


Transactional lenders are likely the most reliable for real estate wholesalers. Though make sure you have cash on hand, and spread your deposits amongst banks so that you aren’t caught short when they fail.


Allowing Your Reserves To Be Depleted

No matter how much savings and capital reserves you have, it will be blown through quickly if you keep on tapping into it.


When you do face the decision to tap emergency funds, make sure you pause, and explore new strategies, income streams, inventory types, and funding partners so that you stop the bleed as quickly as possible.


Slowing Down Your Marketing

If you stop marketing, you stop making money. Your business will fail. It is just a matter of how soon. Instead, step up, juice up your marketing efforts, and grab more market share.


Robbing Your Most Loyal & Profitable Customers

When things get leaner many companies make the perilous mistake of robbing and squeezing their best customers. This will burn your relationships and wind up killing your brand permanently. Don’t raise your fees just because you can or to extract more from them when they are going through the same thing too. Giant companies like Facebook and Upwork or Wells Fargo have tried this and it has done irreparable damage.


Doubling Down On Bad Decisions

Be willing to acknowledge mistakes and pivot quickly. Don’t do further damage by doubling down in a direction that is failing.


Spam

Yes, scale up your marketing. Do not resort to spamming your hard earned and bought audience with spam. It will have the opposite of the desired effect.


Living It Up, While Hurting Customers

Don’t be like the big banks and gas companies that are taking out big bonuses, lending their friends hundreds of millions of dollars, and posting record profits, while you are complaining about costs or are shorting your customers. You’ll never get their trust back.


Giving Less Instead Of More

During times like these you want to be looking for how to add more value to your customers and partners, not how you can strip away what they already expect to be included.

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World’s Largest Fund Manager Blocks Withdrawals

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on Thursday, 12 January 2023
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The world’s largest asset manager appears to be in financial trouble after blocking client requests to access their funds.


Could this be the beginning of a new liquidity crunch? How fast might it flow over to other institutions? What can you do as an individual investor to protect your finances and grow them in the coming turbulent times?


Is A New Liquidity Crisis Already In The Works?

Blackrock recently announced that it will not be honoring its clients requests to withdraw funds that they’ve made since September last year. At least for one of their $3.5B property funds. This is the world's largest asset manager, which boasts $10 Trillion dollars under management.


That is around 20x bigger than the FTX debacle. Which should be a major red flag for everyone.


Then we also saw Goldman Sachs ring in the new year with the announcement it will be laying off close to 10% of its workforce, across all banking departments.


What Does It Mean For Investors?

Big brand names seem to mean nothing. The bigger they are, the harder they seem to fall. Remember Lehman Brothers. They were far, far smaller than Blackrock.


Invest directly for yourself. Individual investors should be very wary about having too much of their money tied up in any one fund, bank, or entity. Invest in a way that you can control your own assets. Keep your money diversified.


Stay liquid. Having more cash on hand seems essential for making it through what’s next. Executed well, some of this cash can be used to capitalize on discounted deals and investment opportunities. Cash is king in a financial crunch.


One great way to balance continuing to grow and do more deals is to maximize financial leverage. Check out transactional funding for 100% financing for your real estate deals.


Get in, and get out fast. This is certainly shaping up to be a very volatile year. Wholesaling properties, especially when you are pre-selling them seems to be one of the best ways to create more cash fast, and to avoid getting stuck. Or having your money tied up in anything too long.

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The New Fed Rate Hike: What Investors Need To Know

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on Thursday, 15 December 2022
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The Federal Reserve just raised rates again. What does it mean for real estate investors?


The Fed continued their rapid interest rate hike spree in December. Although this smaller half point hike was not as severe as the last one, it continues the trend, without having allowed time for the data to be published on how well previous hikes have achieved their stated objective.


Inflation

According to the Fed, the purpose of these rate hikes is focused on bringing down inflation. While it could tame some spending, higher rates typically also drive up the true cost paid for things. Which may be actually fueling inflation, rather than ending it.


Unemployment

Among the commentary on this latest rate hike is a fear that the Fed is committing to a period of high unemployment as they force employers to cut jobs.


This could be a very bad time for millions to lose their jobs. Especially with record amounts of credit card debt, and other debt which is subject to seeing repayments rise as rates go up.


If we do start seeing unemployment rise, then there will certainly be a rise in distress, and quite likely more mortgage defaults. At a minimum it should mean more motivated sellers eager to unload their homes at any number and terms possible.


Stocks Plummet

In response to the most recent rate hike 96% of the S&P 500 stocks fell immediately after the news.


That suggests investors in public stocks, including fund managers do not believe that the Fed’s monetary policy is sound, or taking the economy in the right direction.


On the bright side, when the stock market fails, many investors shift their capital to real estate. Which supports more competition and higher values. Given this comes in tandem with the crypto crash, we may see even more flight capital headed into real estate this year. Providing great exits to investors who are also capitalizing on distress caused by rate hikes.


The Stimulus Wild Card

If the economy does suffer from these rate hikes as some suspect, then there will certainly be calls for more stimulus money and bailouts to get us out of that hole.


This would in turn fuel even more inflation. Which would also be good for landlords and their rents.


Summary

While we may face an uncertain year ahead, there are plenty of side effects of rate hikes and follow up policy which could help real estate investors.


This is especially true for real estate wholesalers who have limited exposure to interest rate costs, and are not exposed to price volatility.

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24 Percent Of Homes Recently Taken Off Market: How To Buy Them

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on Thursday, 08 December 2022
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According to data from Redfin and the NY Post, 24% of home listings have been taken off the market by owners in just the last 12 weeks. How can you find and buy them?


On reporting these latest real estate stats, Redfin says that homeowners are becoming increasingly frustrated and disappointed at having missed the peak of the market. They either aren’t attracting the high offers they expected, or aren’t getting any buyer activity at all.


Overpriced listings aren’t taken seriously by buyers. Then after the first few days of showing up online get buried in the mix, and become stale listings that don’t get noticed.


Of course, these homes aren’t going to sell themselves if owners just give up and sit on them. A poor move which in this phase of the market means that they’ll get less and less for their properties the longer they wait. A vicious downward spiral. In which eventually they will have to sell for a lot less or will lose those properties in foreclosure.


Why Buy Them

There are no bad properties. It’s all about the price and terms.


There is plenty of money to be made by real estate wholesalers on this slope.


In fact, these can be the ideal types of properties for wholesalers. Owners are more motivated, and ready to deal. Once delisted, there are no real estate commissions, which can help net the seller more, even with a lower offer.


How To Find & Buy Them

If you are diligent as an investor you should already be tracking all of the properties in your market, and specific target properties you really want. You should know what comes on the market, when it does, when properties sell, and more.


You can also run regular searches for withdrawn and expired listings.


Before they get pulled off market, and it becomes harder to reach a decision maker, you may target aged listings and listings with price cuts.


There are other properties and sellers you can target too.


Such as by the amount of equity in the property. By who has the most room to deal, or needs the least cash to do a deal.


Or you may find data (if you are legally able to use it) on recent mortgage inquiries, suggesting owners have tried but failed to refinance, those who are late on payments or property taxes, or who have adjustable rate mortgages or large amounts of credit card debt. All people who are suffering from fast rising payments on debt.

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Surviving The Next Phase Of The Real Estate Market: What Not To Do To

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on Thursday, 01 December 2022
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As the real estate market changes there will be a few big winners, while the majority of players end up folding and going to try and find jobs elsewhere.


This clearing out of competition, the bad apples, and those with poor operational skills is a great thing for serious real estate investors and business owners.


In order to be one of those survivors that comes out stronger, with more credibility, and in an even better financial position it is critical to avoid these classic mistakes which can take down the largest companies, as well as newer business owners and individual portfolios.


It’s really all about avoiding falling into scarcity mode. You must keep up that positive mindset that got you the great results you want more of.


Stripping Service & Product And Charging More

This is always a huge mistake. If anything, customers want and need more value and better deals. If you cannibalize your most loyal customers they won’t forget. It will cost you a lot over the long run.


We’ve seen this with banks like Wells Fargo in the past. As well as streaming services. Recently Mercedes Benz thought it was smart to start charging an extra $1,200 a year if you want your car to accelerate at its full capacity. No doubt leaving many customers frustrated that they aren’t getting what they thought they paid for.


Thinking You Can Get Away With Faulty Products

Some get desperate and will find all kinds of excuses to justify selling faulty and harmful products. In the past we’ve seen it with house flippers going into areas hit with flooding or hurricanes and simply covering over the dangerous mold. Or builders building new home developments on contaminated land. More recently there has been a huge movement among victims of Camping World which has developed a reputation for selling RVs that are leaking when brand new, and may have mold and other dangers for families. It will catch up with you sooner or later.


Burning Your Sellers

Developing relationships with buyers and sellers is vital for long term success and profitability. Especially volume buyers and sellers. Don’t burn relationships that could be a steady source of income each month for one deal. Such as by backing out of contracts. Do your due diligence first. Don’t tie them up and cost them money, only to leave them hanging.


Letting Great Talent Go (To The Competition)

The majority of companies, all the way up to the largest and best funded global corporations seem to be making mass layoffs and are freezing hiring. Many may have hired far too many people, too carelessly, and too fast. You may have to right size your team too.


However, great talent is your best asset. Great people are extremely rare to find. Don’t let them go if you have them. Or they will go to the competition and become your competition.


Skimping On Marketing

You’ve got to show up stronger than ever right now. Those that keep marketing will keep on gaining market share as others slow down or try to be cheap and publish lower quality content. This keeps shifting the power and profits to fewer players that keep getting stronger.

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What’s Motivating Sellers As Mortgage Performance Stays Strong?

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on Wednesday, 09 November 2022
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What’s motivating sellers to sell their properties in this market?


Finding motivated sellers is critical for house flippers, real estate wholesalers, and acquirers of buy and hold income properties alike.


However, the latest data shows that mortgage borrowers of all types may be in a much stronger position than believed. At least for now. So, if they aren’t falling into foreclosure yet, what are some of the motivators that make for good sellers and deals in this market?


Mortgage Debt Performance Stays Strong

The latest round of data from banks reported by DistressedPro shows that mortgage lates and defaults have fallen across all sectors. Including residential, commercial, and farm loans. There are almost no REOs being held by banks.


Many thought there would be a lot more foreclosures and defaults by now.


Thanks to many locking in very low rate long term loans, there could be a stronger foundation in the market for this cycle. Which supports property values, and helps to avoid a new massive foreclosure crisis.


Buyers & Sellers Get Bearish

In spite of the above data, Fannie Mae has been one of the most bearish on the housing market. Predicting trouble in the real estate market could throw the entire economy into a new recession next year. Even though we just exited one.


Their recent survey shows just 16% of home buyers think that this is a good time to buy. With only around 40% of sellers thinking that this is a good time to sell.


How Do You Find The Motivated Sellers

Of course, just because it may not be as an attractive time to sell a home for regular homeowners as in the summer, that doesn’t mean people won’t have to sell.


Layoffs are surging, with few new jobs due to hiring freezes. Along with diminishing affordability due to inflation, and consumers defaulting on more credit card debt, auto loans, and business loans than any point in the past two years, many are in financial distress.


There are lead lists that can help identify these markers. Investors can also use SEO and content marketing to educate owners about their options and lead them to getting an offer.


Other real estate companies, businesses, and even the world’s largest banks have been selling off real estate assets to recoup capital to keep operating. Even at prices much lower than they were valued at a few months ago. Try direct marketing to them.


Falling home prices could be the most pressing motivator right now. In the past three months alone an estimated $1.3T in home equity has been lost due to declining prices. Any seller with some common sense, and educated on how much further prices can go down will see it is better to cut their losses now, than to wait and lose more.


Trying publishing more educational content around this. Whether it is on your blog, or via email or print newsletters.

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Who To Wholesale Houses To Now The Market Has Changed

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on Thursday, 13 October 2022
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Who should investors be wholesaling their properties to now that the market has changed?


Even those that denied the change was coming have joined the mainstream media in admitting that the economy and real estate market has changed. Some have become very bearish on the outlook.


Of course, this is the best time in the market for wholesalers to finally pick up some of the best discounts on properties that have been available in over a decade.


There is no shortage of deals to acquire. The big question many may be grappling with now is how to organize their businesses to keep a great flow of deals and income. After all, you don’t want to load up on properties that you can’t immediately unload and convert into cash profits.


It is pretty clear that the middle class retail homebuyer is in deep trouble. Between skyrocketing everyday living costs, taxes, and interest rates, most are being blocked out of the housing market. So, who does that leave?


Wholetailing To Affordable Home Buyers

The middle class is now flocking to more affordable housing. Including new areas they never would have considered moving to before. Lower income buyers are also benefiting from new home loan programs that are offering zero down payment options.


Wholetailing To Luxury Home Buyers

The luxury end of the market still seems to be enjoying blissful ignorance about the current recession and inflation that is crushing the middle class. Even when they do feel it, real estate is often a go to for securing their assets.


They are still buying big ticket properties. In many cases they buy teardowns in prime locations which are perfect deals for real estate wholesalers.


Wholesaling To Veteran Investors

Just like many lenders, Realtors, and others, many real estate investors that jumped into the market over the past decade are going to bail out and find jobs elsewhere. Many already are.


Look for those who kept flipping through 2008 and COVID lockdowns, and are eager to take a high volume of deals from you over the next few years.


Wholesaling In Bulk To Funds

Funds are still active. Especially buy to rent funds. They are snapping up multifamily buildings, and entire SFR projects.


Which of these end buyers will you focus your business on?

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Hurricane Ian: Should We Keep Rebuilding In Disaster Prone Areas?

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on Wednesday, 05 October 2022
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Hurricane Ian has again ignited the big debate over whether disaster prone areas should be rebuilt, or not.


This has yet again been another huge tragedy. The loss of life, and livelihoods, and entire lifetimes of memories and hard work cannot be taken lightly, and should not be forgotten quickly.


Still, while fresh at hand, it is an important moment to revisit this question. So, what are the arguments and math for rebuilding or not? What should investors, homeowners, homebuyers, and even renters be thinking about?


Refusing To Be Beaten

In many scenarios in life and business, including disasters, it is noble to refuse to quit, and to be determined to rebuild.


This can certainly be true of one time events. Or even ultra rare events. In fairness, some areas impacted by Hurricane Ian have been hit the hardest they have in 100 years.


Yet, there are many parts of the country, where hurricanes, blizzards, tornadoes, wildfires, and earthquakes are a common occurrence. Even having their own season every year.


If you really love where you live and own property that much, and that is worth more to you than the money and hassle of rebuilding, then no one should hold you back. Providing you are covering the bill, and not them.


With great insurance, or plenty of other investments elsewhere, this may not be a problem. You can have a brand new property. Which may be even better than the last one.


The Futility & Economics Of Rebuilding

At the same time, it is wise to remember that these events can be very regular and predictable. You may have to deal with three storms like this in a single year.


In many areas around the country incurring major damage is not a matter of if it is going to happen, just when, how often, and how hard.


In reality insurance never seems to covers enough. Even if you do get your claim paid it may only come after a long fight that lasts years. Along with lots of legal expenses. All while paying for somewhere else to live in the meantime.


For real estate investors it can mean no income from rentals, and dealing with no utilities for a month or two. With storms like this, it seems that no matter how strong homes are built, they can be wiped out.


It can be a vicious and expensive cycle. One which many have not priced in when they are buying property.


The Options For Investors

As an investor, this is a reminder to build in risk based pricing. Do the math on long term rentals, including if you have to rebuild at least once, and go another 12-24 months without income. Consider how that may change your offers.


Investors can help those deciding not to rebuild and moving to other areas that offer more sustainable living. Either by giving them good deals on housing where they are moving to, or acquiring old homes at a fair price for the current condition and flipping them.


They can be sold to those who are still bullish and wanting to rebuild or live there. Which, again is perfectly fine, if this is extra play money you can afford to lose every few years and the return on the experience works for you. If you have $1B in the bank, and it’s worth $10M every few years to have a vacation home with your perfect view, then why not.


Rehabbing is certainly questionable. There will be a lot of remedial work and dangerous mold to get rid of. It is probably better to wholesale properties as is. Especially in a declining market, with infrastructure issues, labor shortages, and high material costs.


Summary

There are arguments for both rebuilding and quitting disaster prone areas. Have you moved away, stayed, invested elsewhere , diversified better, or started using risk based pricing to account for these cycles?

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Finding Deals: Home Builders Stuck With Oversupply

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on Thursday, 11 August 2022
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While some real estate commentators have continued to take to the media to proclaim the housing market will stay strong due to underbuilding and a need for more inventory, a new report from Bloomberg argues that builders are already suffering from oversupply.


Why is there a disparity in these claims, what do the numbers show, and how can struggling home builders become a great source of deal flow for real estate wholesalers?


Too Many New Homes

A new report from Bloomberg states that US home builders are already being lumbered with too many unsold homes.


Inflation in living costs and rapidly rising interest rates have been pricing many buyers out of the market. According to data from the National Association of Home Builders (NAHB), this June saw the most new homes delivered to market in 12 years. The same month, buyer activity dropped to its lowest level in 10 years.


Figures from the US Census Bureau show new home inventory has rocketed to almost 10 months of supply. Compared to the competitive market in which homes were recently selling in a day with multiple offers or waiting lists.


Some builders fear that they are going to be stuck with more unsold new homes than in the last crisis.


Why Are Builders Getting Stuck?

Common reasons that builders are finding themselves in this situation, even when the existing home sales market may be stronger include:


  • Pricing new homes at the peak or above market value

  • Lack of affordable housing

  • Building the wrong type of inventory for consumers

  • Overbuilding in the wrong areas

It is worth noting that the most recent data from BankProspector also shows a dramatic spike in construction loan defaults. Lenders may be slowing down draws, and are fearful of extending more time to builders who are hitting maturity dates.


Turning Builder Surplus Into Deal Flow

This surplus of inventory can be great deal flow for investors.


You can help builders close out communities by acquiring their last remaining units so they can get cashed out and onto the next project.


Many builders may be stuck with furnished model homes that they would like to liquidate.


In other cases, those at the front end of new projects need to pre-sell a percentage of units to obtain financing. You can step in and grab multiple units as sizable discounts.


Or perhaps you can acquire and wholesale stalled construction projects and unfinished homes for flippers and other builders who will finish them.

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5 Smart Plays To Win In This Real Estate Market

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on Wednesday, 27 July 2022
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Here are the smart plays to make to not only be one of the last standing after this next phase of the real estate market, but to win big while others are freaking out.


Eliminate Exposure To Risk

A lot of players are currently exposed to massive risks. Solo investors, top selling Realtors, banks, and multi billion dollars funds and tech startups won’t be immune to the evolving market. It may take time for the waterfall effect to hit them, but once it does it can be too late to escape bankruptcy.


Holding onto properties, and holding debt are two of the biggest risks.


Eliminate your exposure by liquidating all of your mature investments, and switching to a wholesaling model. Use transactional funding to finance 100% of your deals, so that you are in, out, and paid in hours, without capital at risk.


Expand Your Network

Your network of contacts is what will get you through the next couple of years, and determine your level of success.


If you’ve been neglecting it, revive it now. Expand your database with new connections. Invest in  strengthening your relationships.


They will all be lead sources soon. Including Realtors, attorneys, other investors, bankers, etc. They may not want to sell on your terms right now, but they’ll soon need you too.


Educate Your Sellers

It may be hard to get sellers under contract for 30% of recent asking prices when they keep on hearing about how fast the market is growing. Some just won’t get it. Arguing with them will only turn them off.


Instead, take a consultative and educational approach. They may not sell now, but they will respect you later, and know who to contact to sell when they need to.


Educate them on market changes, how prices are formulated, and their options as they get into uglier situations.


Do this by publishing content online, by mail, email, and text message.


Don’t Let Leads Get Wasted

Investors have been spoiled with leads in recent years. They cost a lot, are hard to land, and easy to burn. Find a way to make money on them. Instead of only cherry picking the one or two out of a hundred you love, find a way to turn them all into dollars. Wholesale, keep them, refer them out, or find a partner for a JV.


Play The Long Game

Shred your five year plan. You’ve got to keep making money now. Yet, to get through this, and stay on top, you’ve got to think long. Think about where the market is likely to be in 7, 14, and 21 years, and how that will impact your liquidity, net worth, and lifestyle.

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