If you are trying to make sense of the current real estate market and get a better handle on the type of offers you should be making and advertising, you are not alone.

There is a lot of confusion over the state of the economy. Some claim it’s red hot. Others feel we are already in a deep recession.

The claims of many major news outlets, real estate brokerages, and what others in the business are predicting may not line up with each other or your experiences.

Even the Fed seems to change their mind about the economy and their plan to fix it every day.  So, how are real estate investors to make sense of the direction of the market, how much they should be bidding for homes, and what they can expect to flip houses for?

Consider these alternatives to headlines or all the questionable claims and data out there…

Ask Your Local Pawn Shop

Pawn shop operators have a great pulse on the market. They know if people are buying and paying back loans fast, or whether they are losing their stuff, and are having to bring in family heirlooms and their personal valuables for whatever few dollars they can get.

Go To The Gym

For one, you’ll see how many people are still paying for their gym memberships. You’ll also overhear whether others are buying, selling, investing, refinancing, or moving, and get a real feel for the local market.

Talk To The Cops

The Sheriff’s office handles evictions. They’ll know if there is a surge in squatting incidents, homelessness, and evictions. Which also indicates how healthy landlords’ finances are.

Check Out Old MLS Listings

How many aged MLS listings are there? Are days on market growing? What percentage of home sellers are making price cuts? Are agents offering bonuses for fast sales or offering to cut their commissions?

Run Some Ads

Put up an ad for a house for sale. Are you swamped with immediate full priced offers? Or are you only getting occasional low ball offers and questions from buyers that don’t follow through?

Get On Tinder

Financial distress causes a huge amount of relationship stress. Money is the number one reason couples seem to end up arguing. Divorces also drive distressed listings and rental demand. So, is your local Tinder pool swarming with new dating profiles? Or is it shrinking as couples get together and move in together?

This is a fantastic time to be wholesaling real estate. Of course, that means that many others are hunting for deals too. If you believe that there is a shortage of publicly listed properties for sale, that may make it even more challenging if you’ve relied on that for deals in the past.

Here are five more ways to out maneuver and beat your competitors to the punch.

Failing Competitors

Even though the real estate investment remains strong and attractive many started folding their businesses out of fear at the beginning of COVID, then as rates hiked.

Even though they may have stopped actively investing, many have portfolios of properties they are holding. Or at least sizable databases of seller leads.

You may acquire their company, their real estate assets at a discount, or their lead lists.

Insurance Agent Referrals

Insurance agents are among the first to find out when people find themselves in a crisis. That may be a health issue, a car accident, or damage to their properties.

In a few cases their clients may get payouts that make them strong cash buyers for your properties.

In most cases insurance companies do not pay claims. If they did, they wouldn’t be in business or so big. In these scenarios policy holders may have to sell their homes fast for cash.

Lumber Company Leads

This is another untapped referral source. When trees fall on garages or homes, lumber and tree service companies get the first calls.

In other cases these referral sources can tell you when prospects are desperate for cash and are trying to sell their trees cheap. Or where there may be a property which also has a lot of value in timber rights. Money that may be used for helping to acquire or extract extra value your competitors don’t see.

The Unemployed

The AI revolution is creating levels of unemployment and interruption to income at a scale we’ve never seen before.

The vast majority of property owners cannot afford to carry their mortgages for even a month or two without a paycheck.

Depending on your contacts and access to data, you may find these sellers by tracking employers that are making layoffs, through recruiters, new credit defaults, and job wanted ads.

Be The Fastest And  Most Attractive Buyer

Have your proof of funds in hand, along with a contract, and be willing and able to close faster than your competition. Those things can mean a lot more to sellers than the top line price today.

Be sure to check out our Fall Deal with interest rates as low as 1% on loan amounts over $600k.

If you’ve been laid off, see it coming, or have even just had your hours and income cut back, is wholesaling real estate the answer?

Mass unemployment is snowballing faster than most realize. It’s a domino effect that isn’t just going to wipe out far more jobs, but also most retirement accounts that are not anchored in tangible assets.

If you or someone you know is in the path of this financial avalanche, wholesaling real estate may be the only thing to cling onto in order to survive it.

Mass Unemployment Is Coming

It’s already surging under the radar of official statistics and lagging data. Don’t be surprised if we exceed 20% unemployment by next year.

Consider that out of just over 330M people in the US, only just over 60% of those have been participants in the workforce.

Then look at all the big corporations and tech companies that have been laying off tens of thousands of employees. Including Goldman Sachs.

Then you have AI and automation replacing your gas station and grocery store clerks. Then soon all of your delivery drivers, warehouse staff, and uber and truck drivers.

On top of that the Bureau of Labor Statistics puts around 10% of the entire population working in customer service. About 20% of the working population. All of whom could be quickly unemployed by new technology.

Then another 18M freelancers working on jobs that could soon be replaced by robots. Even if those robots do a terrible job.

In turn, the fallout will force other businesses to fold and make layoffs.

With hiring freezes in place, don’t count on finding another job.

What Can You Do?

You can’t just live off of your savings. You can’t take a job that doesn’t keep you ahead of real inflation. Which by the way is still up by high double digits. These are just paths to a slow financial death, and a lot of stress and sleepless nights.

Entrepreneurship and investing seem to be the only viable answer. To be creative and find a way to create your own income, without relying on anyone else.

Of course, most businesses still have high startup costs, and are slow to produce any meaningful income.

Trying to sell enough products on Letgo or Amazon to pay your bills is going to take a while to build up.

Real estate obviously stands out as an answer. Though most do not have the very, very deep pockets needed, or capital of their own they can afford to bet on rental properties and fixing up and reselling homes. So, what’s left?

Wholesaling Real Estate

For most, wholesaling real estate may be the only thing that can save them.

Using transactional funding, you can have 100% of your deals financed, including closing costs. Even if you’ve taken some credit hits lately.

This is a real estate strategy that allows you to get in, out and paid, in just days. Providing anywhere from $5k, to $50k, to over $500k in profit per deal.

You probably don’t need many of those each month to replace your old income.

Now is the time to get ahead, even if you haven’t been laid off yet.

New data from ATTOM and Bloomberg shows that 50% of home purchases are now being made by cash buyers in some cities.

Why are there so many cash buyers in the market right now? Why should you be connecting with more of them to fuel your investing? How do you do it?

The Rising Percentage Of Cash Buyers

New data reveals that cash home buyers now make up 50% or more of all transactions in at least 13 major cities. Including Atlanta.

Recently the media has spun a lot of negativity about the economy. Which may or may not be accurate. Though it may make it surprising that so many cash buyers are showing up to purchase homes.

However, in this next phase of the market when traditional retail mortgages can become harder and more expensive to get, cash buyers certainly do rule.

They are certainly the preferred choice for real estate wholesalers looking to turn their deals fast, with certainty, and the fewest risks of falling apart before closing.

Who Are They?

ATTOM poses that institutional investors have actually pulled back a little, with regular retail home buyers jumping in as these cash buyers.

This is great for wholesalers who can find well priced deals, and still sell at retail, and close to top of the market prices.

Of course, many institutional investors have been working on liquidating old inventory, and are preparing to make more acquisitions as the market balances out.

This may be a great time to jump in while there is less competition and find more profitable deals.

Many of these retail buyers may include those selling homes with lots of equity and looking for new destinations to live in. As well as those relocating to more affordable areas. And those cashing out poorly performing retirement accounts, and looking for something more solid to put their money into.

How To Build Your Cash Buyers List Now

This next phase of the real estate cycle is one in which cash buyers are always extremely important.

In many cases traditional retail mortgages become very elusive. Cash buyers are the most reliable end buyers to wholesale your deals too. Those who control the most qualified buyers will be those that win the most. So, how do you line up more of them?

SEO, and publishing blogs and articles is still the highest ROI way of attracting real estate leads today. According to Whatconverts, it can be 3x or more profitable than other forms of online marketing.

However, the same data set shows that by adding a little PPC to your marketing mix can actually exponentially drive up the results of your SEO and content campaigns.

With all the new technology and noise out there, human connection, relationships, and better customer service have also only become more important and valued. So, also look for opportunities to build an offline community and network to build those real connections with those who are likely to be cash buyers.

Contradictory trends in the economy and real estate market are creating countless new opportunities for large profit spreads, and plenty of volume for investors.

This is the time to take advantage of the mayhem in the markets, and all of the uncertainty and flip flopping about the economy in the media.

On one hand we have huge amounts of capital being invested in real estate, with a lot more being loaded to the pipeline as crypto and stocks stumble. While on the other hand, more distressed and motivated sellers are willing to sell at discounts.

Tesla Vs. Microsoft

The current situation is perfectly summed up by this contrasting situation.

In the past couple of months, Tesla has announced at least two new gigafactories to be built. One may cost as much as $10B, and the other in Texas an estimated $700M. Of course, those new manufacturing projects and facilities will involve a lot of work and jobs as well.

Contrast that with Microsoft which just announced it will be laying off around 5% of its workforce, and consolidating its office space. In turn Bill Gates recently had to list his daughter’s NYC apartment for a quarter of a million dollars less than he paid for it. It may sell for a lot less than that.

Many other corporate giants are making massive layoffs as well. While there are many more tech companies you probably haven’t heard of that are currently investing $100M to $1B in new real estate projects.

While a few may find new employment, many others are going to see their situation snowball for the worse. Layoffs and corporate downsizing causes stress at home, divorces, and the splitting of households. Which means motivated sellers, and then more renters as well.

The big question for investors is how to thrive through all of this.

Find The Buyers With The Money

Begin by building up your buyers lists. Today this may include landlords and corporations looking to spend large on commercial properties, as well as helping their staff with housing.

Find The Motivated Sellers

Then, find the sellers willing to accept a fair, but deep discount to be able to sell quickly, and you’ll find a nice profit spread in the middle. Today, this group may include big corporations, wealthy individuals, and countless tech workers who are being laid off.

Could expanding welfare and stimulus programs lead to a new surge in housing prices and rents?

COVID stimulus certainly brought a boost to the economy, along with hyperinflation. With more crises seeming likely, and more government welfare programs being expanded, might we be on the verge of a new surge in prices?

What might be the downside of this? How can investors invest through this?

Is The Recession Over?

According to the latest government data, the recession is already over. The economy reportedly rebounded with a strong 2.6% rate of GDP growth in Q3 2022.

Of course, there don’t seem to be any CEOs that agree with this. 98% or more of them are planning to deal with a recession over the next year. Even Jeff Bezos faces a $23B cut to his net worth as Amazon cuts its expectations for the end of year shopping season.

Moving To A Welfare State

Arizona, Massachusetts, and Oregon appear to be test subjects in dramatically expanding welfare programs.

New initiatives in these states have begun using medicare and medicaid funds to pay for just about everything, including housing, appliances, and furniture.

With previous COVID stimulus trailing off, a new Newsweek poll reports that 63% of Americans support sending out new inflation relief checks. Funds that would help offset the Fed’s recent rate hike spree, though obviously would spike inflation even further.

Of course, this is like catching a double edged sword. More government welfare and stimulus has to be paid for in new and higher taxes. Ultimately, pushing those on the edge into needing full time government assistance. Or just making it so unprofitable to work that it is better to stay unemployed and live on welfare permanently.

Will More Stimulus Stimulate The Housing Market

Housing prices and rents soared with COVID stimulus money. With more money like this in the economy, and the government absorbing inflation in rents, it is quite likely that rental rates could continue to rise fast. Low end house price increases may also surge.

The middle class being taxed out, and who just can’t keep up with extreme inflation in food and living costs may be more likely to let their homes go and fall into distress. Lowering homeownership rates, and creating more rental inventory.

Investing

Whether we fall into a new depression, or government programs flood the economy with cash and fuel inflation, real estate investors can find some sweet spots to operate in.

Most notably, these may be wholesaling affordable housing, and flipping rental housing, including whole communities to bigger funds.

New data suggests that the shift to the new remote work economy has been responsible for the bulk of house price appreciation.

How much can investors expect this to continue to add to home values? What else may compound this shift in equity and wealth?

60% Of House Price Growth Linked To Going Remote

Moving to remote work has created hundreds of billions in wealth over the past few years.

According to data from San Francisco’s Federal Reserve Bank, 60% of house price appreciation is directly tied to the move to remote working.

Even though we have already seen the majority of workers go remote, some still haven’t made the switch yet. Others are remote, but haven’t yet relocated. Leaving more room for this transformation to drive wealth creation.

The 1% Rule

Coverage of the data by Bloomberg shows a direct correlation between more workers going remote, and house prices. Saying that for every 1% that switch to remote work, house prices go up by 0.9%.

With 20% to 40% of the workforce still left to make the shift, there could be a lot more fuel for house prices left in the tank.

Where The Money Is Going

Of course, these house price increases do vary greatly depending on where remote workers are moving.

Where they are relocating to is seeing substantial house price growth. While the areas that they are snubbing and leaving behind are suffering equal losses.

This is clearly likely to be compounded by the need for affordable housing, and a desire for a better quality of life, less crime, and more enjoyable places to live.

It is true that a huge effort is being made to promote a return to the office. Mostly by those that don’t know how to operate and stay competitive in the new economy, or who have made misguided investments in office buildings which are no longer indeed. It is unlikely that is going to stick, even if they invest millions in hyping it up.

Investing

The big question for investors is whether they will be investing for the growth in the areas remote workers are flocking to. Or investing in the distressed areas where prices are going down, and negative equity is growing.

Among the many types of inflation battering are many forms of taxes. Some of these new taxes and tax hikes have been highly publicized. Others have been snuck through in other bills and legislation.

You don’t want to end up with any more big surprises from the IRS or other taxing authorities at tax time in the new year. So, what do you need to know? How might you be able to find a better way to cleanly and legally avoid over taxation on your real estate business?

Disclaimer: This is purely for informational purposes, and should not be deemed as tax advice.

New Taxes For Real Estate Businesses

As a business owner you should already be aware that many taxes are going up. Potentially including income tax rates and property taxes. Depending on where you are headquartered and do business.

The budget reconciliation bill passed last year also established a new minimum tax for corporations.

However, Forbes has discovered another tax hidden in that bill which impacts small businesses and their workers, and there could be more.

The Hidden Retirement Tax

Hidden in the budget reconciliation bill is a new retirement plan tax discovered by two Forbes contributors.

Beginning in 2023 the ruling forces businesses with at least 5 employees to provide and automatically enroll employees in a retirement plan (IRA). 6% of their pay will be automatically rolled into this plan. Which will automatically increase to 10% of pay.

These funds must go into specifically mandated and managed plans.

The real catch that could trip up many real estate business owners is that this was written into law as a tax. So like Obamacare, if businesses don’t have this in place, they will be taxed $10 per day, per employee.

For those with 10 employees, that’s an extra $3,000 per month in taxes. Or $36,000 per year.

What To Do About It

The most obvious fix might be to comply with this mandate, and simply give all of your employees a 10% plus pay raise to account for the funds that they will be missing from their paycheck each week.

Other options include optimizing your team. You could combine roles, and get down to four employees to avoid this tax. Such as having your copywriter also handle your SEO, PR, and other marketing tasks.

The other option is to stick to remote and independent contractors only. Though you may need to reestablish and incorporate your business out of areas like California which are striving to classify all workers as employees.

You can simplify your business, by focusing on wholesaling houses instead of buy and hold, and in turn reducing the amount of employees you need.

Invest profits for more tax deductions, such as with cost segregation, and participating in building Airbnb units managed by partners.

If you are stuck with some properties, you could donate them for a tax break, like Jeff Bezos' ex-wife who just donated $55M in real estate.

Revisit your business structure. Is a S Corp, LLC, or trusts best for you and your taxes?

Above all, get a great CPA and accounting firm who can help you legally minimize taxes, and maximize your net gains.

Most real estate is a collection of rights. These rights may be bundled or separated when buying and selling real estate. Which can substantially change the value of your investments.

This is a part of the industry which many investors overlook. Yet, it can be very impactful. It may become far more important to many investors in this changing market.

Especially for those who are embracing new niches, property types, and areas as they strive to keep up their deal flow and incomes. As well as when dealing with increasingly motivated sellers who need to move fast.

Real Estate Rights

There are many types of rights. Newer investors often take for granted that all of these rights are bundled together and are included in the purchase when they are buying property. That’s not always the case.

Some rights may be specifically excluded, or no longer owned by the seller. In other cases, just the rights can be bought, sold and leased.

By being alert to these factors, you may be able to strike deals where others fail to see the true value. Or be able to extract more value than just from the land and existing improvements. At a minimum, this awareness can save you enormous headaches and financial losses. You’ve got to know what to look for.

Types Of Rights

Oil and mineral rights can be a big one. In places like Texas, it may be very common for land to be sold separately to the rights to the oil and gas underneath it. Be sure you keep this in mind when looking at comps.

Water rights may be one of the most important. This can apply to water access and ownership rights. There have been notorious cases when waterfront property has been sold, only for new owners to later find out that they don’t own their docks or rights to water frontage.

Access to water under the ground is huge too. Whether it is for drinking or irrigation, rights to use that water, and how much can make a huge difference.

Air rights determine what can be built, and may or may not obstruct views from neighboring properties.

Rights of way and easements dictate access to a property. Either by the owners or others. Easements may make some of the land unusable. Or may be vital to accessing your property, without getting landlocked.

Think about these factors, and how you can work them into your checklists, or use them to create more value and income.

 

What are your big goals for the next year?

If you are tired of cliche new year’s resolutions, that is understandable. Yet, this is still one of the best times of the year to invest in goal setting and planning for your finances, investments and real estate business.

You’ve got to have goals. If you are going to have goals you might as well set big ones. At a minimum we should all be shooting to beat our current personal best, and last year’s results.

However, there is more than one way to set your goals. Here are four of them to consider…

By Deal Volume

One way to set your goal for this year, and to build on your success so far, is to set it by deal volume, or transaction count. So, if you recently started in real estate investing, and did 10 wholesale houses last year, and want to 10x it, and go full time this year, you would set a goal of 100 over the next 12 months. That’s about 8.5 per month, or a little over 2 per week.

By Gross Revenue

When people say “I want to make $X this year.” they are often or typically talking about the topline, or gross revenue.

Depending on what stage you are at, that may be $1M, $10M, $1B or $1T over the next year.

Some count the dollar volume of real estate value they trade. So, 10 $100,000 would be $1M in volume. Though of course, you don’t get to touch all of that money. So, the gross income to your business or investment account would be a better metric. If you made an average of 10% per deal, then that would only be $100k in this scenario.

By Net Profit

It is probably far more meaningful to count the net profit you actually make in real estate. That’s the money you can actually use, spend, and reinvest in your real estate business.

This is important, because it is entirely possible to break your record for deal volume, and still actually lose money at the end of the year. Just ask Zillow. The same goes for gross revenue. Zillow was bringing in billions of dollars each year when it went bust.

Watching your net profit, including taxes, will make sure you are not caught by surprise in a similar situation. It will also help you focus your time, dollars and energy on the deals which are most profitable, versus just being busy and putting up vanity metrics to impress others.

By Desired Giving Or Impact

Giving and impact are often after-thoughts for many individuals and organizations. Even those that say they will give 10% to charity. Often there may be nothing left to give when they calculate their net.

If helping others or a certain cause is what you are really most passionate about, consider talking this another way with your goal setting.

You could make your main goal to give $X to a certain cause, or to house 100 families this year. Make it big, and you will be well compensated for achieving your mission.

Remember that achieving these goals will largely be driven by your marketing. Take this time of the year to back out the numbers on how much marketing you need to do to hit your goals. Hire the best help you can, and get ahead of the game.

 

NFTs appear to be the latest fad in investing. So, how do they stack against real estate for investors?

If you’ve heard your kids chatting about NFTs, but haven’t explored them yourself yet, it stands for Non-Fungible Token. These are forms of digital art that people can buy and invest in.

Almost anything can be a NFT today. From digital movie tickets, to collectible pictures, to in game purchases.

Some of these have sold for tens and even hundreds of thousands of dollars. Like the cryptocurrencies which are often used to buy them, they may go up and down in value. But, how do they stack up against proven investments like real estate?

Buyer Pool

One of the strengths of real estate is that there is a huge resale market for it. At the right price point the potential resale market for a wholesale property, house flip or rental apartment may be tens of millions or even of a billion customers. That creates liquidity and value.

Not many people are in NFTs yet. Meaning that there aren’t many people to sell your virtual Logan Paul playing card, virtual home in a game, or old movie tickets to.

Need

Real estate is a need. A forever need. People will always need shelter. It is even more urgent than food and water. This will never change. Even in a recession people need shelter.

When things get tight, there may be little need or desire for digital art.

Hard Assets

Even physical artworks used to be valuable because they were rare and tangible. Going digital changes these dynamics.

The problem with public stocks, crypto and other virtual assets is that they can go to zero and leave you with nothing.

Even in the worst case scenario in real estate. You still have the hard asset. You can still get cash flow from it. It’s value will eventually exceed its previous high.

Cash Flow

It may be possible to get cash flow from NFTs. Perhaps there is someone willing to pay to rent your virtual playground online, or to pay for a viewing of your favorite athlete's photo.

However, we do know that people will for sure pay for rent on real homes and other property. Being able to generate that consistent cash flow is a critical financial difference.

Leverage

You may be able to borrow against your bitcoin or use a credit card to leverage your NFT purchases. Though, the market for financial leverage in real estate is clearly far larger, more liquid, and can provide even the average new investor access to millions of dollars in financial leverage to scale quickly.

Summary

NFTs may be fun and interesting. They may even be a gateway for getting your kids interested in investing and to teach them some valuable financial lessons.

They may not be the safest or most profitable investments by any means, but if you are tempted, then it doesn’t hurt to throw $10 or $100 of play money at them that you make from investing in real real estate.

 

The three most important days of the year for investors are upon us. Will you make the most of them?

Tax refund season may fuel renters and retail home buyers with down payments and moving money. The summer may have traditionally brought peak home buyer season in many destinations. Fall usually brought a dip in asking prices and more negotiability for wholesalers. While the end of year brought a sprint of closing as individuals and businesses sought to save on taxes.

Yet, this year, we have three extremely pivotal days that investors should be leveraging to their fullest. Don’t miss out.

Thanksgiving

No matter what your beliefs about this traditional holiday or how you’ve celebrated it in the past, this is a powerful day for leveraging the value of gratitude.

If you have already experienced its value in your life, there is even more reason to make a whole day for it. If you haven’t made it a part of your daily success habits, use this day to kickstart it.

Dig into all the things that you are thankful for. Go deeper and broader than you can with a few minutes each morning. Consider all of the opportunities to be grateful for.

Black Friday

Black Friday may prove even more pivotal this year. Sure, there will be some people who live all year waiting for Black Friday. Especially retailers, and individuals who really should be doing anything else but splurging on unnecessary items.

This year may prove to be more pivotal, with so much hype about scarcity and such extreme price inflation manipulation.

It is a day to lead by example. Are you going to be sold and fall for the mayhem? Or are you going to use your funds to make smart and profitable investments? Find sales on properties, or be the one benefiting by selling a lot of them on Black Friday.

You can bet there will be plenty more sales through the end of the year, and the beginning of next year if you need to go retail shopping.

Giving Tuesday

It’s been Cyber Monday every day since COVID restrictions came along. Amazon and Apple will be just fine without you spending even more with them for a day. American Express will also be okay if you don’t use their cards to splurge on Small Business Saturday. It’s worth supporting small businesses, but Giving Tuesday may be even more impactful.

If you like you can even give grants to others to start their own small real estate investing businesses this Tuesday.

With so much to be grateful for, and so many deals you could have been selling on Black Friday weekend, you as a real estate investor are probably one of the best positioned to give.

It doesn’t just have to be a handout either. You can give for charitable tax deductions. You can give investments to your family and friends. Or you can give the gift of knowledge of real estate investing to others so that they have more to give next year.

 

This is the year to be supersizing your real estate investing business.

If you thought last year was big, this year should be even bigger for you. If you missed out on the massive surge last year that saw many investors, and the whole market setting records, then don’t miss out this year.

The Market

Last year saw almost 7M homes being sold. Property prices hit new highs, and most wholesalers couldn’t keep enough inventory on the shelf to meet the demand of their buyers.

Looking at the state of the current market and the outlook for this year, the fundamentals are all lining up.

We have:

• Low interest rates

• Plentiful capital, cash and equity in the market

• Record setting demand

• Large amounts of supply in private marketplaces

With the USA forecast to outpace most of the world in economic growth this year, we can also expect a massive resurgence of inbound international investment.

There may be holes in the market which are suffering as millions of households restructure this year. Though there are also just as many, if not far more housing markets benefiting from this shift.

Are You Thinking Big Enough?

Often the only thing standing between an investor and far bigger goals and rewards is thinking big enough.

Like, often when people first get into real estate they think $1M is a lot of money. A year in they realize that isn’t much at all. There are other people out there not only shooting to build billion dollar businesses, but $50B to $100B plus businesses.

If you aren’t sure if you are thinking big enough, then consider these two recent deals.

One Miami restaurateur just sold a single family home within 24 hours of listing it, for $12.5M, after multiple offers. He had purchased the place for just $3.59M. Not a bad margin on a single deal.

Then there is the fund that just bought an entire new home development of 124 houses for 50% more than the builder expected to get for the homes individually on the retail market. This now seems to be a common practice in which big funds are bidding over overpriced deals and are borrowing hundreds of millions of dollars to do it.

Now we also have pension funds and other institutions which used to invest billions in office space looking to move into residential. Some builders are now tracking how much they are wholesaling in bulk each quarter.

How Do You Make The Leap?

Start with big goals.

Expand what you are looking at in size and volume. Don’t think about what you can afford, but instead how and where to get the funds. Then get busy building your network of bigger buyers and sellers.

 

Check out these developing real estate trends that could continue to change how investors participate in the real estate market, and the best strategies for balancing risk and reward.

Developers Kicking Out Pre-Construction Buyers

Just as we saw in the run up to 2008, big real estate developers are again finding ways to pull contracts from buyers as prices have risen during the building period. With prices up some 20% or more, builders see a great opportunity to back out of contracts with pre-construction investors, and then try to resell units at new market highs. This is a huge burn to those investors who took a chance on them. Investors who will be looking elsewhere for deals with their capital.

Construction Material Costs Rising

The dramatic inflation over the past year hasn’t just been limited to groceries. A surge in home repairs, remodeling, building and emergency maintenance has driven up the price of construction materials as well. Walk around your local Lowes or Home Depot and you may find some line items are priced at 2-3x what they cost last year. This can be quite a shock to rehabbers when they go to pick up materials for a new deal they just bought and find the numbers no longer work. Expect this to encourage more investors to stick to wholesaling real estate and wholesaling direct to end retail buyers.

Extended Eviction Ban

The new white house administration recently extended the national eviction ban at least through to July 2021. While many landlords may still be surviving on multiple layers of government stimulus, these unprecedented measures have certainly changed everything they thought they knew about the security of passive income assets. Many will liquidate their rental portfolios. Others may switch to shorter term investing strategies that don’t rely on tenants.

Housing Inventory Shortages

While there are many commercial buildings which are now ripe for being converted into housing, many markets are finding they are currently suffering major inventory shortages. Florida in particular saw listing inventory drop around 50% in 2020. Many markets only have 4-7 weeks of inventory. This in turn is driving up prices fast, with intense bidding wars common. While this demand remains strong, expect prices to keep surging until they become unsustainable.

Ongoing Lockdowns & Restrictions

Ongoing restrictions in some states, along with rising taxes and increased demand for single family homes instead of apartments and condos is likely to continue to drive moving and buying activity. This will fuel great leaps in prices in target cities, while alleviating inventory shortages where people are leaving.

All put together these trends suggest that real estate wholesaling will offer even better risk-reward balance through 2021. It offers high short term returns, and far less exposure to the risks plaguing other strategies. All with plenty of leverage available.

 

Whether you are just starting out building out your team for investing in real estate or are scaling fast with all of the opportunities out there this year, much of your success will rely on how well you manage your remote team members.

This year, many real estate investors are finding that they are new to remote hiring or are making the leap from 1 to 10, 10 to 50 or 50 to 100 team members. It’s a great time to grow, and this is definitely still a people business. Those who master the art of managing remote teams through this season will be best positioned to enjoy a new year that is even better than this one.

Here are some of the top questions you may be asking, and best practices that can set you apart from the pack…

How Much Time Off Should I Give Remote Team Members?

Time off is vital. Too few investors, CEOs and remote workers take it. That leads to all sorts of burn out, poor performance, bad decisions, hire HR costs, and more. The opposite is also true. Refreshed and recharged teams think better, perform better, and deliver better returns.

Don’t expect your remote team members to schedule their own vacations and time out. They can be workaholics as much as you.

The last two weeks of the year are notorious in the real estate and finance space. Everything is lagging because everyone else is in holiday mode. Little usually gets achieved. Using this time to destress, get inspired and recharge may be the best return you can get on this time. Consider rotating time off for yourself and team members during these weeks, or give them the full period to really get back in the game and get pumped for the next 12 months.

How Much Should I Give Remote Team Members As A Bonus?

Year end bonuses and raises seem surprisingly popular this year from government to C suite executives, and five figure relocation packages for other staff members. You may not be in a position to hand out such large year end bonuses. Especially for part time freelancers you use a few hours a month. However, a little can go a very long way in good will. However much it is will probably be cheaper than finding someone new, testing them and training them and earning their loyalty. It could be a month’s worth of earnings, the average they would earn on a single project with you, or just enough to put a great meal on the table for their family during the holidays.

How Much Should I Prepay Remote Workers For Tax Benefits?

By paying expenses for next year in advance you may be able to generate more write offs and tax deductions. A full year’s salary might be too much when you don’t know if the relationship will last that long. Though paying ahead for work through the first month or quarter of the year could really motivate them, while improving your bottom line.

Team Building & Company Culture

Experienced entrepreneurs and executives know that team bonds and company culture are actually the most important parts of building a business. That can be tricky in a remote environment. Meetings may be kryptonite to efficiency, productivity and profits, even over the phone or Google Meet. Yet, even in this ‘new normal’ getting your team together offsite can yield incredible benefits. Take them camping or to a resort bubble and build the human connections that will strengthen your business.

Empower Them & Get Out Of The Way

If you are hiring right, there is no need to micromanage, unless you really like inefficiency and wasting money.  You might even defer many of the other decisions on this list to someone on your team. Hire well, point them in the right direction, go do something more important.

 

Summer is here. It is peak season for the real estate market. Here’s what you need and want to give to make the most of this historic couple of months.

This summer is shaping up to be even better than ever for US real estate. Buyers are motivated, and sellers are too. In spite of all the recent mayhem and disruptions out there, property prices still seem to be going up. There’s no telling how long that will last, but this is a pivotal moment for real estate wholesalers looking to expand and boost income, as well as those looking to get started investing.

Of course, no matter how strong you have been financially up until now, and how much or little you have to start with, more capital is certainly always welcomed, and can help speed up results and lower risks.

Fortunately, while other types of credit may be contracting, Best Transaction Funding is still providing investors with 100% financing for their wholesale deals.

We also offer Proof Of Funds letters and Verification Of Deposit (VOD) services to help investors get more of their house offers accepted and under contract.

From Father’s Day, through 4th of July and this summer we’re offering special deals, including almost 80% off our VOD service.

We feel it is one of the best ways we can help support those getting over the fallout of COVID-19, for those out there working hard to support their families, and to help good real estate businesses do even more to help others.

These are also some of the most meaningful and powerful gifts you can give to others this season. Whether it is a son, father, neighbor, or someone else in your community, imagine the impact of being able to tell them you can help them fund all their deals, with all the money they need to close and wholesale all the houses they can handle, as well as giving them the proof of funds they need upfront to get great deals under contract. That can be life changing for most people.

Check out the VOD deal here.

Even better, we’ll give you the gift of a healthy referral fee when you introduce others to this funding. Check out how to get started HERE.

 

Wholesaling is hot. It’s a fantastic way to get started in real estate. More opportunities appear to be popping up to be flipped as wholesale deals for those who want to scale their businesses.

One of the biggest hurdles some investors will have to overcome to cash in on these opportunities is the lack of trust the rest of the industry has for wholesalers. Realtors, rehabbers and rental property investors often have little faith in them. That can be a real drag on business, even when you are offering awesome deals. Of course, it is not too unlike investors, landlords, Realtors and real estate attorneys or mortgage lenders in general. So, why the lack of trust? How do you beat it to close more deals?

Value

Whether it is out of greed or not understanding the local market, one of the top complaints about wholesalers is that they are asking too much for their ‘deals’. Be sure you know the current value, ARV, and current market trends. Know what other investors are willing to pay as a percentage of ARV for real deals today. Offer value and you’ll move plenty of properties.

Property Condition

As a wholesaler you may never lift a hammer or swing a mop, but you’ll move far more properties if you get a good handle on the current condition and pass the most comprehensive and accurate information on to your end buyers.

If all you send is a couple of photos, they are going to have to assume the worst case scenario. That is that all the guts are bad and they may have to do a complete teardown. That pricing obviously isn’t going to line up with what you are asking in most cases.

So, is it just cosmetics? How is the expensive stuff like roof, plumbing, AC, and electrical?

Transparency

Lack of transparency is a big roadblock. Many investors have dealt with wholesalers who are tangled up in all types of chains and who don’t know what they are doing. Most wholesalers out there today don’t want to provide any transparency into their end of the deal. Typically because they are just trying to assign contracts and are not using transactional funding to buy and resell and protect their interests. By double closing you can avoid being cut out of the deal and protect your profits. So, you shouldn’t be too averse to sharing what you are making and being open to some negotiation.

Short Term Thinking

Most people in the industry are only thinking short term. They are only thinking about making money on this one deal. They are only thinking about the bills next month, this year’s goals or maybe 5 years out. If you can show buyers that you are serious about long term relationships and offer deals that reflect that everything changes. You earn trust. After a couple of deals, your buyers will just know that this is a buy and will take it. Sure, you may make a little less on this next deal, but you’ll may turn that buyer into someone who buys ten a month from you every month.

 

 

Watch out for these common mistakes many real estate investors are making now and determine to excel.

There are still lots of profits to be made in the real estate market. Some are enjoying more than others. Some are positioned to keep growing in the months and years ahead, while some may be feeling like their businesses have already peaked.

These are the blunders investors need to avoid and overcome now so they can make more money and sustain their success…

Marketing

Many investors are not marketing nearly enough. They aren’t investing enough in their channels to really make them work. Or they aren’t diversifying into enough channels to keep business consistent. Some keep floating between what they see others doing or promoting, without listening to their marketing teams who already know their business. What works may be slightly different for each entrepreneur and brand. Though, even once you’ve stumbled on it, you’ve got to put enough effort into it to yield good results.

Market Changes

It’s undeniable that the market is changing and evolving. How long this run will last in some areas may depend a lot on changes in the economy and lending world, as well as the media. Yet, investors should have already been preparing to adjust and thrive ahead. That may mean withdrawing from speculative investments in new construction, switching markets, exiting declining investments, and releasing or leveraging equity which is a sitting target for deprecation.

Personal & Business Brands

A recent executive survey shows that the online reputation of the CEO of a company is critical for being able to attract and retain talent, attracting investors, and growing a business. Yet, many real estate execs are not putting a priority on building their own personal brand. Or they have a confused relationship between their personal and business brand. Reputation management should be a proactive mission, that has its own budget and tasks to be done every month. Separating personal and business branding carries all the advantages of separating personal and business credit.

Hiring Remote Workers & Experts

Despite the fact that some real estate businesses have been run entirely virtually for over a decade, and that even in industrial cities like NY 40% or more of the population are freelancers, many investors are still struggling to hire and manage great talent in this environment.

In many ways it is the opposite of old school HR. Instead of making it tough to get hired or micro-managing, you’ve got to make it incredibly simple for great talent to start working with you, and just let them get on with their best work. At least if you want the best results in your business, and to remain competitive.

Taking Advantage of the Market

While most are bullish on the current property market, and are enjoying great incomes, most are not taking full advantage of the opportunities while they are here. They are doing mediocre volume. You might have to look in new neighborhoods or states, find new ways to fund deals, or reach more of the buyers out there. Make the money while the going is good, and build up a chest of capital for when times are leaner.

 

How can real estate investors really find out what’s going on in a real estate market?

More new investors are getting into the game, and more experienced investors are finding they have to move into new neighborhoods and cities to get the same returns they were a couple of years ago. To make smart investment moves investors not only need to know the numbers on the deal they are looking at, but what the local real estate market is like too.

There are tons of online tools and resources at our fingertips today. Most of the best known ones are also best known for being wildly inaccurate. The numbers can lie. You can buy properties sight unseen in destinations you’ve never been to and make really good money. However, you can really lose your shirt and get stuck with dead weight that you can’t get rid of either. When you can, you want to get boots on the ground and get a real feel for a real estate destination yourself. When you do, here are five of the resources where you can learn a lot about the local market, without ever having to go online.

The Gym

Head to a few local gyms when you get in town. They will instantly tell you a lot about a destination. What gym brands are in town? How recently did they do their research and choose to make an investment there? This is a lot like tracking Walmarts and Starbucks. What are the people like when you get inside? Are there short term passes available (suggesting the area gets a lot of visitors)? If there are no gyms that may be a red flag that the area isn’t doing that well economically.

The Supermarket

Supermarkets and grocery shopping will tell you a lot too. What types of chains are in town or are moving into town? Is there a Walmart or Whole Foods? Supermarket chains can instantly tell you a lot about the strength of the local economy and whether it is a wealthier area or low income area, as well as what brands are betting on growth there. What types of foods do they have? Just the basics or gluten free, organic and more fashionable luxury items?

The Coffee Shop

Coffee shops are a great place to get the inside scoop on a potential investment destination. Are they serving fancy coffees or the basics? Is Starbucks moving in or shutting down stores there? Are there a lot of deals being made around you and people working online? Are people rushing or have the luxury of plenty of time to hangout? How much are they spending on their coffee? Talk to people and find out how they feel about the market. Are they buying, selling or investing?

The Park

If you’ve got kids the playground and park can be especially great places for some recon. Talk to other parents. Are there a lot of local activities for kids? How are the schools? How safe is it for their kids to run around by themselves? Are they finding enough house with their budget to fit their growing family into or are they thinking about moving somewhere cheaper?

Hotels

Local hotels will tell you a lot about who visits, passes through and lives nearby. They say a lot about housing costs, what type of workers are being housed there to develop infrastructure, and the features that are in demand. The hotel staff can also be a great resource for learning where the average local worker lives, how much they pay in rent, how much they make, and where they’d prefer to live.

 

New record levels of home equity could spur a new real estate buying spree this year.

According to Freddie Mac US homeowners are enjoying a new record high level of home equity. Freddie Mac puts this at close to $14T as of last year, and only growing. What will the impact be for the real estate market and investors?

Black Knight Data & Analytics says that US homeowners have at least $5.5T in tappable home equity. That’s without them having to break the 80% LTV mark with home mortgages, and leaving a nice 20% equity cushion in their homes.

This makes home equity loans and HELOCs one of the biggest loan trends this year. It is going to be one of the saving factors for banks and conventional mortgage lenders. Expect them to compete heavily to make these loans through 2018.

In fact, CNBC reports that homeowners have already been tapping into billions of dollars of their home equity through new loans and lines of credit. Billions have been spent on remodeling, and investing in stocks and even bitcoin. A lot is also going into real estate.

This sizable equity position puts homeowners in a great position for selling their homes, and buying new ones while interest rates are low. For some, this will be downsizing and keeping the change. For others it will be moving up. Many could use this cash windfall to invest in real estate.

All real estate investors need to be aware of this situation and trends. It is a huge opportunity not to be missed. Educate and make others aware of the home equity and finance options they may have. Let them know about private money lending opportunities for funding rehabbers, or rehabbing homes and loaning to rental property investors. You may even want to get them on new lists for marketing your real estate opportunities so you can sell deals to them, or partner with them.