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US Home Prices Hit New Record High

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on Thursday, 30 November 2023
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The S&P Case Shiller Index reports US home prices have hit a new record high, after posting 8 straight months of consecutive gains.


Just how high are home prices in the US now? Why are they going up so much? What does it mean for property investors?


Record High Home Prices

While all real estate is local, and there seem to be many ways to calculate ‘average’, Forbes recently put the average home price in America at over $495k.


Including interest for retail buyers that use financing that means the average home can now cost homebuyers well over $1M.


The average rent households can expect to pay in their lifetimes may well be over $500k as well.


The Ideal Conditions For Real Estate Wholesalers

The mainstream media say that house prices keep going up due to a lack of homes for sale. Of course, high inflation on everything is certainly adding fuel to the fire as well.


Many industry experts, Realtors, veteran investors, and home sellers may disagree with these findings too. Some are certainly seeing transaction volume down, longer marketing times, and buyers wanting to pay less.


Recent bank data shows that there is a mountain of distressed debt growing. Including defaulting credit card payments, auto loan repos, business loan delinquencies, and construction and commercial mortgage defaults.


This signals great distress behind the scenes, with many ripe to be motivated sellers. Together with fast rising prices, and a shortage of publicly marketed units to meet demand, these are the ideal conditions for wholesaling real estate.


Connecting The Dots

There is great need out there. With millions of individuals, households, and businesses needing help. Real estate investors that can help bridge this divide stand to be very well compensated in this market.


While many motivated sellers have not listed their homes, they are out there. Many more would love to, and need to sell, if they can get a reasonable offer. Consider how to identify their distress, and reach and and connect with your purchase offers.


There is plenty of investment capital that needs to be put to work as well. In the form of transactional funding, this money can be very cheap. With current deals on jumbo sized loans coming with as low as 1% interest.


Then it is about presenting this inventory to end buyers. These may be other professional investors, movers seeking to downsize and find more affordable housing, or affluent families looking to protect their wealth in real estate. Find out where they are, and market to them.

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How To Find More Motivated Sellers In This Market

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on Thursday, 09 November 2023
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How can real estate wholesalers find more motivated sellers and buyers in this market?


Securing the most valuable and profitable property deals, and getting the best ROI on your time and marketing efforts all comes down to finding and connecting with motivated sellers, as well as buyers.


This requires understanding who is motivated and what trigger points will lead them to convert.


Who Are The Motivated Sellers In This Market?

There are both institutional and individual motivated property sellers in this market.


The overriding theme here is high inflation and high living costs, which could last for many years according to some experts. A factor which may also be compounded by soaring unemployment due to high costs and the rise of AI.


According to Axios, small US banks actually hold 70% of all commercial real estate loans. They also hold almost 40% of all residential real estate loans. These institutions are coming under increased financial pressure as consumers run out of money and demand their deposits back, and default on loans.  They need to convert more assets to liquid cash. Which could make them a prime source of wholesale property deals in the near future.


For those that don’t think they are in trouble, it is worth noting that a coalition of these small banks have been pleading with the government to insure all of their deposits for the next two years.


Then there are all of the individual homeowners who are grappling with financial and emotional struggles.


What Is Convincing Property Owners To Sell?

Owners generally don’t take the action to actually sell and go through with the process unless they are really feeling stress in their current situation, and perceive more relief and pleasure from it.


According to a US News & World Report, the top things keeping people awake at night this year include high living costs, pandemics, gun crime, climate change, and the presidential election.


How To Put This Into Play In Your Business

Utilize the above information to hone in on who your highest converting prospects are likely to be.


Use it to craft your marketing campaigns and in how you pitch your purchase offers.


Then use this same data to understand how to best pitch your properties for sale to meet the needs and desires that your prospects are looking for. Highlight how your properties check their boxes.


Now check out our Fall Loan Deals for financing as low as 1% on your wholesale properties.

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Why Never To Buy Real Estate In Associations

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on Thursday, 01 June 2023
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Why is buying a property in a condominium or homeowners association such a bad idea?


Condos, townhomes, and single family homes in associations can seem cheaper than their comparable counterparts that are not subject to associations. There is a good reason for that. They are at least riskier investments at best. They can also be financial traps that really wreck your plans, portfolio, flow, and cash flow.


This is just one of the nuances of investing in real estate which many don’t understand is an issue until they’ve made the expensive mistake, and have gone through the immense pain associated with it.


If you are tempted to invest in these properties anyway, here are five things you need to be prepared for.


Financing Challenges

Many loan programs require condos and HOA projects to be specifically approved in order to qualify for financing. Which includes evaluating the association’s make up of owners and investor ratios, how much the association has in financial reserves, and any legal issues they are involved in.


This means your pool of end buyers can be far smaller than on a similar single family residence in the same area. So, it can take longer to sell as well.


Deed Restrictions

Condo associations have especially become more of a nuisance with a wide variety of creative deed restrictions on units in their communities.


They can make up just about any rule they want, and apply it to governing your unit.


That includes restricting how many years you must own it before you can rent it out, minimum and maximum lease periods, and even how soon you can resell your property.


If you can’t rent it out or resell it for a year, that is a problem for most buyers. At a minimum it puts a serious hole in your returns, and means you are bleeding negative cash flow through that period.


Approval Of Buyers & Tenants

You don’t just get to decide who you can sell or rent your property to either. Even if they are paying all cash, and have perfect credit.


Virtually all associations retain the right to approve tenants and buyers. Sometimes this is a multiple step process, with various master and sub-associations involved.


Those handling these approvals are rarely motivated to move quickly. Their criteria can be very murky and often seems ambiguous.


This again slows you down, and shrinks your end buyer pool.


Constant Headaches

From rogue members, to greedy lawyers, and corrupt board members manipulating budgets and rules for their own personal interests, associations can be non-stop headaches.


If you don’t show up to meetings and vote, then who knows what they will do in your absence. If you do, you can still be drowned out in the vote.


Special Assessments

This is one of the biggest risks of associations. They may apply special assessments to units at any time. This can be to fix urgent damage, such as after a storm. Or it could just be for improvements a few board members want everyone to pay for, for their own personal benefit.


These can be thousands and tens of thousands of dollars. Which becomes a debt on your unit. If you don’t pay it, your new buyer must agree to take on this additional debt at closing. Meaning it is a lot more expensive for them, or you’ll have to discount your asking price.


If You Do…

Of course, you can make money buying and selling these properties. If you do, make sure you read through all of the rules and know them. Read through the financials of the association, have a good lawyer on retainer, and price in this extra risk to your purchase offers, and financial projections.

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Preparing To Buy All The Deals From The New Dot Com Bust

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on Thursday, 04 May 2023
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All the dots seem to be connecting for another dot com and technology company implosion. That stands to create a lot of real estate buying opportunities. Are you ready to capitalize on it?


The New Tech Bust

Recent bank failures are just the tip of the iceberg. Those liquidity issues are directly impacting the tech world. Especially those highly inflated companies that have grown fast, have weak fundamentals, and need more money. Which is the vast majority of them.


These companies that constantly run at a loss, or are reliant on fresh injections of private and public capital are going to quickly run out of gas.


They may have gotten away with a lot of bad practices and decisions while they were flush with cash can could afford to keep losing money. Yet, these issues will be greatly magnified and compounded without money to hide them.


Most notably including poor customer service, not so intelligent AI, and blatant abuse of their customers and their data and identities. Upwork and Coinbase are just two of the big and obvious recent case studies of these issues.


The Side Effects

When that bubble pops there will be even more layoffs, bankruptcies, and much higher unemployment.


While much of this is currently being hidden in the data by the shuffling of assets and paper debt between banks and other organizations, we can reasonably assume that there are already masses amounts of distressed commercial real estate and related debt hiding in the shadows.


In turn, this hits the residential sector when entrepreneurs, their employees, and local small businesses and workers depending on their revenues end up not being able to pay their bills.


Getting Ready For A Buffet Of Property Deals

There should be no shortage of deals for real estate investors this year. You will only be limited by your goals, marketing, and the financing partners you’ve chosen to align with, or not.


Still, it is wise to watch macro trends in addition to what’s happening in the immediate real estate and economic cycle. They may impact the height and localization of the ensuing rebound.


The British Empire, Rome, Machu Picchu, Tulum, and Detroit seem unlikely to ever regain their glory days. Something which may also be true of some recent financial and business hubs of super prime real estate.


Though the suburbs, tertiary cities, and towns around them, may well surpass them. Offering both better growth, and more downside stability.


These are places, where even if there is never another dot com bust, will continue flourishing, and see property values rising. It’s a win-win for real estate investors.

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Laid Off: Is Wholesaling Real Estate The Answer?

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on Thursday, 09 March 2023
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Have you been laid off or see the possibility of it coming in your near future?


The world’s biggest and wealthiest companies have all joined in to create a massive layoff tsunami. In addition to hiring freezes, meaning no new jobs to get for many.


This will no doubt keep on trickling down from tech, banking, and other professional jobs to hit those businesses that have relied on their spending. In turn, that means even more people will lose their jobs.


This is largely a result of recent monetary policy designed to do just this. Recent announcements that the Fed is planning bigger rate hikes, and aiming for a higher peak will quite likely fuel high inflation in the short term.


At the same time, the data shows the value of retirement savings plummeting, leaving most with little to no financial back up.


Whether you see the potential for being laid off in the near future, or have already been let go, there is an urgent need to generate income now. Not in two months or six months, but to stay ahead of the bills due this month.


Secondary to that is rebuilding cash reserves and savings for larger expenses and the future.


Why Wholesaling Real Estate Stands Out As The Only Answer

For the majority in this situation, wholesaling real estate is really the only solution. And it is a highly attractive one.


First, it enables you to get paid fast. If you dive in, you can probably make money in wholesaling a lot faster than it would be to get a paycheck from a new job. Plus, there are no interviews to ace, no requirements to pass, or tests to take.


It is also one of the few things that can provide a high enough income to keep up and create a surplus.


Additionally, it provides lump sums of cash to rebuild reserves.


Unlike fixing and flipping houses or buying apartment buildings, you can use transactional funding to finance 100% of your purchase price and closing costs, so there is no money out of pocket.


This is also something you can do anytime, anywhere. You can do it from home. You can do it through a pandemic or recession. You get control of your financial future, and are not relying on others for your income or financial health.

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Real Estate Contracts Being Canceled At New Record Rate

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on Thursday, 18 August 2022
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Home sales contracts are falling apart at the highest rate since the depths of the COVID lockdowns in 2020.


Why are all of these pending home sales failing? What does that mean for you as an investor? How can you most profitably navigate this phase of the real estate market?


New Record High Number Of Contract Cancellations

According to new data from Redfin, the number of home sales contracts has hit its highest levels in two years. From back in the pit of the lockdowns when nothing was moving.


Both June and July saw increases in contracts being canceled. Nationally, that stands at 16% of all pending deals falling through. With some markets in Nevada and Florida seeing almost 30% of deals failing.


There may be a variety of reasons for this. Including lenders changing their minds after providing loan commitments, as well as rising interest rates which can kick buyers out in the middle of the process.


Buyers may also be canceling if they fear values may come down. If lenders see declining markets it can lead to a spiral in re-appraisals, lower LTVs, and even fewer contracts making it to closing.


Managing This Factor For Real Estate Investors

The number one thing this means for investors is that they need to build in these ratios to their numbers. If you put 10 deals under contract next month, only expect 7 of them may close. Or if your goal is to sell 20 properties a month, you may need at least 30 under contract to hit that goal. Expect this failure rate to increase as well.


One of the best strategies to beat this is to focus on real estate wholesaling. Meaning you don’t close on the buy side until you have it sold. This way you won’t get stuck with properties. Additionally, this strategy enables you to finance your acquisitions using transactional funding that doesn’t rely on appraisals to close.


In order to keep your ratio of contracted to closed deals strong you want to be extra diligent in vetting buyers and their offers before locking into them. Prioritize cash buyers, big down payments, higher credit scores, and faster closings.


You may also build in steeper financial penalties for those buyers that do cancel. For example, larger, non-refundable deposits, to compensate you for your time and potential losses if they cancel the contract.


You can also prevent issues by pricing your deals lower. Instead of pushing the peak of the market, list under market value to give them a better deal, and remove the risk of financing issues.

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What Deals Should Real Estate Wholesalers Be Focusing On Now?

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on Tuesday, 22 March 2022
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What are the best deals for real estate wholesalers to be working now?


As the market continues to change and revolve, where can wholesalers find the deals? Where can the good deals be found? What moves might you not want to make?


Foreclosures

Foreclosures have been growing again. While the actual number of foreclosures is relatively small on a national basis, there are pockets of higher activity.


ATTOM Data says foreclosure filings rose almost 130% over the past year. Still, with only 25,000 or so filings in a given month they can be snapped up quickly by a hungry market.


However, there are cities and zip codes where 1 in every 300 to 400 housing units is receiving a foreclosure notice. Those are 2008 level numbers.


These areas include Cleveland, OH, Kissimmee, FL, and West Palm Beach.


Distressed & Motivated Sellers

Banks still seem to be holding very few REOs. They are being auctioned off first, or sold fast.


Wholesalers may find better deals, and less competition if they market directly to distressed and motivated sellers.


This may include leads on homeowners who have large amounts of consumer debt. Those who have fallen behind on credit card and car loan payments, or small business loans.


HOA Properties

Rampant inflation is everywhere. Recently property owners have been complaining that their condo or home owner associations have raised their dues by 300% to 400%. That means many won’t be able to afford to keep their units.


If you are in and out fast, and can flip them to more affluent buyers these could be great deals.


Commercial Real Estate

It’s no secret that the residential market is heated and hyper competitive. Switching to commercial properties could lead to less competition, and bigger paychecks.


Consider which properties are most in demand by end buyers, which types are being liquidated, and which will do well in a new crisis.


This can include self-storage, multifamily, and office buildings.


The Deals You Have Pre-Orders For

The smartest and most profitable way to wholesale is not to speculate, but to simply fill orders for your end buyers. This way you don’t get stuck with properties, and you can use transactional funding to finance your entire purchase price.


Find volume buyers who will stick with you through the changes.


Moves Not To Make

With the way the market is evolving some wholesalers have considered fixing and flipping, buying and holding, or getting into Airbnb properties. This can be a huge mistake. It means moving down the food chain to more labor intensive and higher risk deals.


You do not want to be stuck with properties that have peaked.


If you looked at who survived previous crises best, it seems to be those that stuck to wholesaling.

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New Credit Scoring Changes Could Prevent Millions From Buying Homes

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on Thursday, 03 March 2022
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New changes to what is being reported on credit reports could hit many potential home buyers hard, and keep them out of the market.


Along with rising interest rates, new hits to credit scores could take more home buyers out of the market. This may be welcome news to some investors who have been craving less competition.


While credit scores may not be needed to obtain transactional funding to wholesale properties, investors should also be watching out for the impacts on end buyers, and who may end up not qualifying or being able to close.


Buy Now, Pay Later

One of the latest moves by the big credit bureaus has been to include buy now, pay later loans on credit reports. This includes TransUnion and Equifax.


According to TransUnion, this is being done in the name of “inclusion.” It is estimated around 100 million Americans use this type of financing each year. It’s already a $91B market, growing at over 45% per year. It is expected to become a $4T market by 2030 according to Allied Market Research.


You’ve seen these ads online. Now when you go to check out you may see payment plans being offered by Buy Now, Pay Later companies like Affirm, Zezzle, Klarna and After Pay.


It seems convenient, but this could also create major problems.


For a start, borrowers using these loans for items as cheap as $50 can’t really afford them. It is also multiplying inflation. Now fashion companies can quadruple their prices, because consumers can pay over time. So, instead of a pair of yoga pants being $25, they may sell for $100. Then there are many hidden costs or interest involved in some of these types of credit.


This is during a time when there are already tens of billions of dollars in spiking business and credit card defaults and late payments.


The lenders want this credit on reports to motivate people to pay on time. Or perhaps because they are not paying on time. Including them on credit reports may only exclude millions of borrowers from homeownership.


This also comes in the wake of some lenders counting recent COVID forbearance programs the same as foreclosure. A move that takes even more out of the buyer pool. Even if their mortgage company put them into forbearance without their permission.


Summary

Be wary of convenient looking buy now, pay later deals. They are not designed for the benefit of consumers. Now they might exclude millions from being able to buy homes.


On one hand this may free up more inventory and lower competition for investors. It also means that while it won’t affect you obtaining 100% transactional funding for wholesale deals, it may mean many end buyers won’t qualify to buy your deals with financing.

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4 Factors You Didn’t Know Impacted Property Value

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on Monday, 01 November 2021
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Do you know what adds value to a property, and what doesn’t?


This is one of the most critical parts of investing in real estate. Sadly, even many Realtors have no idea what truly adds value to a property. You certainly shouldn’t be basing your education on ‘reality’ TV show makeovers or Zillow either.


By now, hopefully you understand that upgrading flooring and accessorizing don’t add real value. In fact, most home ‘improvements’ lose money. Which is a large part of why real estate wholesaling is so much more attractive than rehabbing or fixing and flipping.


It can take quite a few years, and hundreds of transactions for real estate investors, Realtors and even mortgage brokers to really be able to catch many of these nuances of this business. Important valuation factors which can make or break deals.


Many issues arise in mortgage underwriting. Even if you are paying all cash or are using transactional funding, where these aren’t problems, they can be incredibly problematic when it comes to your end buyer obtaining financing.


Then there are also quirks, like some of those below which may influence how much others are willing to pay for a property, regardless of what the comps may indicate based upon the numbers alone.


City Names

Some city names and mottos are certainly more attractive than others. Who wouldn’t want to move to the ‘Sunshine State’, the ‘City of Angels’ or Paradise?

Then we have those like Slaughterville in OK, Scary in WV and Hell in MI. They may certainly have some niche appeal. They may be a hit for some on Halloween. Not so much for the rest of the year, the bulk of the buyer pool, or those seeking an Airbnb escape.

Don’t forget Toad Suck, Arkansas, Boring, Oregon or Roachtown, Illinois.


Street Names

It is often bewildering to see some street names, and to try and imagine who thought they were a good idea.


Who wouldn’t want to live on Happy St.? It is a real one. Or how about Freedom Ave?


Then you have movies and events that destroy the value of streets too. Like Freddie Kruger. The Guardian reports that homes on Elm Streets all over now sell for 70% less than competing homes.


Industrial & Commercial

Having views of industrial and commercial real estate from your residential property can also be a huge issue for many mortgage underwriters. Many will just turn applications down.


Property Taxes

Homes are much more attractive in low tax destinations. Those in high cost areas can be dramatically different from one unit to the next. Often based on the owners appealing their assessments. There can sometimes be a 50% difference in the property taxes on almost identical units. Which would you pay more for? This can directly impact value when properties are being evaluated on their profitability and cap rates too.


What quirks have you found that have surprised or frustrated you, and you want to warn others about?

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5 Factors Real Estate Wholesalers Should Be Watching

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on Tuesday, 19 October 2021
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Here are the factors real estate wholesalers should be monitoring as they plan acquisitions and marketing campaigns now.


The Supply Chain

Manipulated or just messed up, the average US household is finding supply chain pains and disruptions very real.


Some are ignoring it and hoping it passes. Others are stressed about it. Some are finding it painful as they can’t find their kids’ favorite foods and the end of year holiday season is a big question mark.


In real estate it means that some construction materials are not available. Furniture is hard to come by, and orders placed are not guaranteed to arrive. Rehabs are taking longer than normal. Fewer new homes will be coming to market.


The Second & Third Home Market Is Growing

According to Bloomberg the demand for second and third homes is growing. This can be a great niche for wholesalers to target. One which is often rich with qualified buyers who aren’t price sensitive.


The New Recession

Some analysts are arguing that by the time the next set of economic data comes out it will reveal that we’ve already entered a new recession. They are mostly basing this on what they see as the leading indicator of falling consumer sentiment.


While the majority of mainstream data being published shows the economy is growing, while mortgage forbearances decline and unemployment is low, it is important for investors to seek out the raw data to draw their own common sense conclusions as well.


On the bright side, recessions are a great time for real estate wholesalers to find distressed inventory.


Though any new stimulus and new policies could easily mask a dip or extend the current run up.


Warp Speed Inflation

Those making less than $250,0000 are probably feeling the impact of rampant inflation already. It is at the grocery store, the gas station, and in the tax bills. There is no sign of it slowing.


The good news is that real estate keeps growing faster than inflation. That includes house prices and rents. Many of which are up 50% to 70% this year alone.


Liquidity & Credit

How fast things can continue to grow versus running into a financial crunch depends a lot on credit markets. This includes interest rates, international credit, and mortgage availability. Some markets have been seeing close to 60% of home sales going to cash buyers already. Financing is essential to keep things moving. Right now that money is available. Especially for real estate wholesalers. Take advantage of it.

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Why Finance Your Investments When You Have All Cash?

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on Wednesday, 21 April 2021
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Many real estate investors are finding they are cash rich right now. With stocks, crypto, and other types of investments still looking incredibly risky and overpriced, why should you be financing your real estate deals, even if you have the cash on hand?


Why Not Use Financing?

It can sometimes be tempting to use your own cash to fund investments. Sometimes financing, and especially mortgage financing is seen as an extra step and cost.


It is worth pointing out that the richest billionaires and investors typically don’t use their own cash. They still use loans when they could pay for a property many times over. So there has to be some sense in it.


Financing doesn’t have to mean extra cost either. Not when you factor in the reduced risk of using leverage, the advantages of diversification and being able to do more volume, and the supersized true high cash on cash returns from putting less of your own money in.


This is especially true when interest rates are so low. Besides, when you are wholesaling and are in and out in a matter of hours or days, it doesn’t make much difference whether rates are 1% or 18%.


Stay Liquid

As much as that money may be burning a whole in your pocket, and you really want to use it, it can be even more important to have liquidity. They say that “cash is king.” That means having free cash on hand, not paying with cash.


Having more cash on hand means you are covered in emergencies, and the constant unexpected, and will remain a stronger borrower.

You will also be prepared to seize on even better and bigger deals as they pop up. The ones you usually have to kick yourself for missing out on because all of your cash is tied up in deals.

Invest Your Cash In More Profitable Things

What do you do with the cash if you can’t bear the risk of it just being eaten away by inflation or sitting in a bank?


There are certainly more profitable uses for it. Other ways to multiply it in your investing. Like putting it into marketing to find more and better deals, and finding better buyers who will pay more for your deals on the sell side.

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The Other Benefits That Make Wholesaling Real Estate Irresistible

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on Thursday, 15 April 2021
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Wholesaling is a preferred real estate strategy for a variety of very obvious reasons. Yet, there also some very important benefits both new investors and veterans of other strategies will find make this play irresistible.


You are probably familiar with wholesaling being the low risk, no hammer needed, fast way to get paid in real estate, and enjoy large lump sum gains. Then there are the tax benefits and supersized returns.


However, the benefits don’t stop there. In fact, for wise entrepreneurs and experienced investors the following reasons may be even more vital and urgent drivers to choose wholesaling.


Scale

Wholesaling is not only an easy strategy to scale up, but also down. This can be incredibly important during rotating cycles. Done right, you don’t have to worry about laying people off, defaulting on office or storefront space, or carrying too much overhead.


You can also scale up and down on-demand, whenever you like. Do more when you want to boost your income, and scale down when you just feel like taking it easy.


Vacation Time

Landlords never get the luxury of vacations. Rehabbers certainly can’t afford to take time off in the middle of a project. They aren’t even getting nights and weekends off. As a wholesaler you can choose to hit pause any time you want. You can pause your offers, and take a long weekend staycation. Or pause for two weeks and go to Hawaii with the family. All without really putting much of a dent in your income.


No People, No Property Management

You can certainly hire a small army of remote staff to really scale your wholesaling business. Though you can also make some pretty good money doing it by yourself. You don’t have to be recruiting and managing a lot of people. You don’t have to deal with all of the headaches of property management or have to step in when they let you down.


Never Be Worried About The Market

Almost everybody is concerned about the market and where it is headed next. It is stressful, and 90% of the time leads to bad decisions. Wholesalers don’t have to worry about that. They are always in and out and paid before anything changes on them. When things are ugly out there, the deals get even better and more plentiful. When the market is on fire and accelerating fast it is easy.


Easy 100% Financing

Sure, there may be ways to get really creative with the paperwork and deal structuring and blending funding options to finance buy and hold rentals and fix and flips with no money down. Though it will always take a lot more work and energy, and is never guaranteed to close. In contrast wholesalers can finance 100% of their purchases with the easiest financing available. Even with no appraisals or credit checks.

 

So, are you wholesaling yet?

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How Do I Sell My Real Estate Investment Business?

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on Thursday, 21 January 2021
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This is the moment in the cycle when many real estate business owners may consider a new chapter for themselves. That could include selling your company. What are the steps involved in doing that?


Buying & Selling Real Estate Businesses

Structured well a real estate business itself can be worth even more than the sum of its assets. In this phase of the cycle some operators are going to be actively looking for other businesses to acquire. Others may be considering moving on, and selling or merging with another company can be a great way to exit. So, how do you get started in selling your company, or at least seeing what those options look like?


Learn How To Value Your Real Estate Business

Understanding how much your business may be worth is a good first step in exploring this process.


There are several types of valuation methods for business. Which is used will often demand mostly on who your buyer is. Private equity funds focus mostly on the traditional business numbers and your income. Strategic buyers may be more interested in your technology, talented team, brand name and customer base. It could be worth a lot more to them. Others may be more interested in acquiring your real estate assets, and place most of their valuation on those.


Optimize Your Value

Having an idea of the most likely type of buyer of your business you can then begin optimizing to get the most out of a sale. This includes cleaning up the accounting and legal paperwork, restructuring finances and getting rid of bad debt, etc.


Create Your Materials

Be ready to showcase how great your business is, and its potential value in the hands of a new buyer with careful creation of a pitch book, putting up a virtual data room and preparing marketing and PR to position your company for the best bids.


Get Help

What level of help makes the most sense will depend a lot on the value range of your business. At the low end you may be fine with your attorney or a business broker. At the higher end you may benefit a lot from a professional M&A advisor or investment banker.


Learn The Paperwork

Just as knowing the ins and outs of your real estate contracts and paperwork can make a huge difference in the deals you do every day, so can it when it comes to all of the documents for selling your business. Know the purchase agreement, and the most important clauses, gotchas and calculations that can impact you the most.


Determine What Is Most Important

What are your top priorities in this sale? Is it the speed of closing? Price or net proceeds, or the freedom you’ll have afterwards?

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The 7 Things That Will Make Or Break You As An Investor This Year

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on Tuesday, 22 December 2020
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2021 is going to be one of the biggest years for real estate investors yet. Not everyone may enjoy the ride, but make no mistake that some will easily add double digit percentage points to their wealth and emerge as far bigger players over the next 12 months.


These are some of the most important factors that will determine how it goes for you.


Mindset: It Is What You Make It

You can choose to cringe and shrink and be fearful every time you are challenged. Or you can choose to find the opportunity and to create opportunity in every scenario. It is your choice how you choose to see it and act.


Commitment Vs. Flexibility

Stay committed to your goals, but flexible in how you achieve them. Expect shifting market trends, migration, curveballs, and more. You may have to adapt your tactics, but don’t back down from your goals.


Financing & End Buyers

Expect there to be some twists in lending over the next year. Banks and conventional mortgage lenders may change their underwriting criteria and appetite for making loans. There is a lot of cash out there, and those with capital will have to choose to back someone with their capital. Being able to adapt to who has the cash and can borrow money for your real estate wholesale deals will make a huge difference in your deal flow and volume for the year.


Data

Be knowledgeable and wired in. Don’t rely on the media headlines and fake social media spin for figuring out what’s happening in the market. Get the best data you can, as early as you can and stay ahead of the curve.


Focus

Focus on your own business and serving your customers the best. Worry less about what the rest of the world is doing.


Marketing

Today, the reality is that 90% of your success in real estate relies on marketing. You should strive to have great product, systems, and service, but it won’t make a dime of a difference without marketing to match.


Your Network

It is times like these in which who you know and who knows you will make all the difference. Work on expanding and strengthening your network.

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4 Factors Impacting The Market Now

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on Friday, 27 November 2020
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What do real estate investors need to know now for mastering the market?


There have been and continue to be some notable changes around the finance and property market. Staying alert to what these mean is important. Some may be obvious to you, others require stepping out of the weeds for a moment and taking a big picture view.


Selling Real Estate

Rising property prices from a recent shift in the population and in demand property types has many sellers and property owners feeling over confident. This applies equally to investors as it does for regular homeowners.


Just as many homeowners dragged their feet selling in the run up to 2008 and continue to swear Obama was going to personally bail them out, we are facing similar circumstances now. Sellers held on, often in default, dreaming they would be saved. All while their property values actually crashed, and they ended up running out of options and losing their homes.


Some properties are going up in value fast. Others are actually crashing already. More of this diverging trend will be seen next year. Waiting to sell can be a huge and tragic mistake.


This is especially true when sellers could be cashing out with a nice amount of equity, instead of waiting and losing tens and hundreds of thousands of dollars. Many sellers are already offering owner finance deals, but are asking for outsized down payments. After having already marketed their property for a year, they face negative equity positions, and have lost thousands in potential monthly payments, all for the sake of not lowering the down payment ask. Don’t be one of them.


There are two solutions for investors trying to help these owners and acquire these properties. Verbally arguing with them over their misconceptions of the market isn’t likely to help make a deal. So, one solution is using more online content to educate these sellers on the current market, threats and what terms they should be asking for. The other is to simply focus on those sellers who have already decided to sell and are being more realistic.


Taxes Rising

Taxes are almost certain to rise in 2021. The new administration has promised a slew of new taxes. Expect federal and state income taxes, property taxes, investment income taxes and more to rise. As an investor you must get ahead of this curve with new strategies.


Rising Bank Fees

Banks have already been slashing credit limits and hiking fees. Most notably on those who need help the most and are in the tightest financial positions. Expect this to continue to cause a deterioration in credit quality. Keep this in mind for adjusting criteria for renters and seller financed buyers. As well as when expecting to sell to borrowers getting a mortgage.


The Next Pandemic

Bill Gates who predicted the coronavirus pandemic has now forecast another global pandemic is quite likely to happen in the next few years. It may be three years or 10 years away, but it is probably going to happen. That may come just as we’ve wrestled our way through the coming second and third waves of COVID-19. Consider the impact that will have on what property is in demand, and not.

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New Major Lawsuits Could Create Massive Change In Real Estate & Finance Costs (For The Worse)

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on Thursday, 05 November 2020
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A big new lawsuit and investigation could significantly change the costs of buying and financing real estate in the very near future. What’s happening? How is it going to impact you and those you care about?


Redfin & Opendoor

Discount real estate brokerage Redfin is in the hot seat. They are now the target of new fair housing lawsuits claiming they are racially discriminating by limiting their service by minimum home prices. That can be as low as $250,000 in some markets, compared to the national average home price of $350,000. They are being sued in Seattle, and have been asked to stop the service by a city councilperson and mayoral candidate on the east coast in Baltimore.


Opendoor, the big iBuyer and house flipper which has partnered with Redfin and has filed plans to go public with a value of close to $5B, is also the subject of an FTC investigation into its advertising.


While no one should be discriminating, period, and we don’t know the real intentions of these companies, these legal challenges could have the opposite of the declared result and prove counterproductive and harmful for those who need the help the most.


Here’s what it means for others and the real estate industry in general…


Fewer Services & Choices Of Help

It has become clear that through a series of lawsuits like this, that if you have a public website you are a target. Many may need to take their services back to being private, rely on referrals, and other mediums to do business.


These risks and liabilities are also reducing the number of those who will want to try and innovate and change things for the better in this industry, and who will be willing to risk backing them with capital.


Higher Costs

If mortgage lenders and real estate brokers are forced to do away with minimums or must provide their products to every zip code in the nation, then they will have to either end services or dramatically increase the costs of services for everyone.


This would likely end discount real estate services and loans that would help borrowers with less than perfect credit and big incomes. This might seem to be great for the largest companies and Realtors, but will penalize the majority.


More Inequality

Higher costs and less help, means those who need the help most, especially for entering homeownership and investing are going to be sidelined even more, while others can get far better deals from personal connections. It will widen the divide between the uber wealthy and everyone else.


The Bottom Line

The increasing liability of having a public website means the need for real estate investors and business owners to start exploring other alternatives as a plan B and C. Discrimination is bad, but lawsuits like this can be more counterproductive. Be sure you are building your personal network of buyers, sellers and lenders now.

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Real Estate Investing: How To Minimize Risk

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on Thursday, 02 July 2020
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How risky is real estate investing really?


Investing in real estate is often promoted as a super low or zero risk business or investment. All with many great benefits. Yet, many would be investors get stuck on the sidelines, worrying about risk. It paralyzes them into inaction.


So, what are the real risks? How can you eliminate and minimize them?


What’s The Real Risk?

The truth is that there is no such thing as a 110% risk free investment. They don’t exist. Just like there is no guarantee you won’t slip and fall getting out of the bed in the morning, or a plane won’t crash through your roof and get you in bed in a freak accident if you don’t get out of bed each day.


In real estate there is a risk that property values will fluctuate, that malicious tenants and employees will try to sue you, that scammers will sue you for your website features, that tenants won’t pay, or even there could be an earthquake, wildfire or global pandemic virus that prevents you from collecting rents.


However, small the chances, these are potential risks. The most important question that investors should be asking is whether the risks outweigh the rewards or vice versa? Or even more critical, does failing to invest in real estate bring even more risk than doing it?


What if you don’t invest in real estate? What if the money under your mattress gets stolen or is devalued due to inflation? What if your own home catches fire and burns down? What if your bank goes bankrupt or leaks your information and you lose all the money in your checking and savings accounts? These may actually be more serious risks than investing in real estate.


What if none of those things happen, but you one day simply can’t work anymore or are laid off, and don’t have enough money for you and your family for 30 years of retirement? All because you didn’t invest in real estate.


When you dig in. what’s really scary is NOT doing it.


Ways To Reduce Risk When Investing In Real Estate

It seems far less risky to take action and invest in real estate. Yet, it would be foolish to completely ignore the potential risks either. Fortunately, there are several ways to minimize these risks, and boost your upside potential.


The top risks of investing in real estate seem to fall into these buckets:


  • Falling values of properties you are holding onto

  • In ability to collect consistent rents on properties you are holding long term

  • Malicious business and personal injury lawsuits

  • Exposure to losing any money you have tied up in properties

 

Here’s how to crush that risk…


Get Insurance

Insurance can help defend and against direct loss and damages to properties, as well as potential lawsuits.


Use Financial Leverage

If you don’t have any of your own money tied up in a property, then you can’t lose it. If you pay all cash for a property and sit on it, you are a target for lawsuits. So, what if you were able to use other people’s money to fund 100% of your investments? You’d have nothing to lose and everything to gain. That’s exactly what Best Transaction Funding does for you.


Secure Your Profits & Exit In Advance

The smartest, wealthiest and most successful investors don’t put out a penny unless they know they have a dollar coming in. They don’t buy inventory unless it is already presold. You can do the same thing with real estate through wholesaling and reverse wholesaling too. Find the end buyers, use transactional funding to finance the deal, and you are in, out and paid right away. You know you are going to profit before you buy a property, or spend an hour looking for one.

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5 Of The Best Tools For Flipping Houses When You Are In Lock Down

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on Thursday, 02 April 2020
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With much of the world facing being locked down and quarantined, what are the top tools for investors to use to keep flipping houses and bringing in an income?


Whether it is the 2020 COVID-19 lockdown, the next one after that, or simply moving to a more efficient and profitable business model, here are some of the top tools to be using now.


Mailchimp

Email is still one of the top ways to communicate. Especially in real estate. If you slacked on building your list before or just haven’t worked it well, this is a great time to start. Mailchimp is one of the fastest email services to set up. It is one of the easiest to use. It is free for most small users. You can even use it to create popups, forms and landing pages.


Close.io

Close.io is a simple to use cloud based CRM. It is also packed with awesome features, such as one click calls, the ability to text message leads and record calls. Use it to manage and nurture your leads and your team as you work remotely.


Whatsapp

Video calls are becoming more important. Especially for those who really hadn’t grasped the ability to work virtually before. You can use it for file sharing, team meetings, working with buyers and sellers, as a live chat tool, and for video tours, showings and inspections.


There is a lot of buzz about Zoom right now. Of course Zoom is also now one of the most targeted apps by hackers looking to take advantage of the chaos.


FaceTime and Google Hangouts are options for simple chats and video calls. Whatsapp stands out with a large user base around the world, easy use on both Apple and Android devices, as well as a desktop version, and being able to use it over WiFi in case of phone service issues.


Google Drive

There are lots of project management and collaboration tools out there. Be wary of getting lost in exploring them, learning them and getting your team to adopt them, as well as adding extra overhead. Most people already use Google tools. Drive is free. It’s easy to use for collaborating on documents in real time, storing files, and much more.


Best Transaction Funding

We could once again see many lenders and banks failing, as well as small private lenders pulling back. You’ve got to have leverage. Access to more leverage will help you move fast and lower risk, while doing more deals. Best Transaction Funding is still financing deals, with up to 100% LTV loans. Use it.

 

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4 Types Of Financing Wholesalers Can Use To Make More In 2020

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on Thursday, 20 February 2020
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2020 is looking like another fantastic year for most real estate investors. If you have even bigger goals for deal volume and profits this year, here are the financing options that can help you achieve them.


1. Transactional Funding

Wholesaling is about speed and volume. Conventional mortgages and types of funding just don’t work when you need to go fast. Yet, with the right leverage, you can be working a virtually infinite number of deals at the same time, skyrocket your cash on cash ROI, and lower your risk at the same time.


Transactional funding is the optimal solution for this. Get 100% financing for your deals, without any of the hassle of other funding channels.


2. VA Home Loans

While many real estate wholesalers focus on flipping to other investors, selling retail has huge advantages in this market too. You can get a lot more for your properties. A recent change in mortgage lending could really help open up this opportunity even more.


VA home loans have been great for veterans and their families. They provide 100% financing with no down payment, and the ability to financing in closing costs. All with pretty lenient underwriting.


Finally, the VA has just removed their loan limits. That means no cap on how much veterans can finance on 1-4 unit properties. So, they can be used for 100% financing on small multifamily properties for $1M and up. This will also help many veterans start getting into real estate investing.


3. Personal Loans

Many wholesale properties are so cheap that the problem is no end buyers can find a mortgage loan small enough to finance them. Banks don’t want to do mortgages that small. Though they might be just out of range for an all cash purchase.


Fortunately, many banks, lenders and credit unions are being very aggressive with unsecured personal loans. In many cases buyers can go get a $20,000 or $40,000 or more personal loan and pay cash for a property.


4. Business Lines Of Credit

If you are wholesaling to other investors who have a lot of their capital tied up in other deals, you might want to let them know about merchant cash advances and working capital loans. If they’ve been doing business and flowing money through their accounts, they could get tens of thousands of dollars or over $100k to act as a cash buyer.


The more you help your end buyers get financed, the more deals you can sell, and the more of an indispensable partner you become.

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Funding Real Estate Deals: What You Need To Know In 2020

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on Thursday, 09 January 2020
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What do you need to know about financing real estate deals in 2020?


It’s shaping up to be another exciting year for real estate investors. Financing is expected to continue to grow in use this year, and it will be a big part of every real estate investor’s business. Here’s what you need to know.


Interest Rates

The great news is that interest rates ought to remain low through 2020. They will need to remain low to prop up the economy and keep things going through the presidential election. Of course, that didn’t stop the fed from sabotaging the market back in the run up to 2008. Though rising rates shouldn’t be an urgent concern, yet.


Available Capital

There still appears to be more capital than deals. Big funds, banks and international investors are still looking to deploy billions of dollars in US debt. Lenders are still wary of lending to owner occupant home buyers, and that will probably increase with current market trends and more states demanding lenders go through judicial foreclosures. Investors will benefit from this.


Declining Markets

Watch out for the snowball effect from declining house values. Some homeowners are already experiencing deep declines in their equity and potential resale prices. When lenders deem certain areas as ‘declining markets’ it can be very difficult to finance houses there. They can get blacklisted. Or at least expect lower LTV loans, repeat appraisals to keep up with declining values, and tougher underwriting. Credit lines may also be cut off.


More Competition For The Money

Investors have plowed an enormous amount of cash into the US real estate market over the past decade. Some have severely depleted their liquidity already. With the threat of a recession and downturn on the horizon, it is smarter to keep more cash. Instead of just 3 to 6 months of living expenses and operating costs as an emergency fund, upping that to 24 months of capital reserves may be a crucial move. That means more investors competing for loans. Even many who have only used cash up until now.


More Mortgage Defaults

Expect to see even more homeowners in negative equity positions and defaulting on mortgages this year. It’s worth noting that Zillow stopped up dating their data on mortgage defaults and underwater properties back in 2018. That could be a sign that there is a lot more happening under the surface than most are aware of.

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