Although some commentators in the media are extremely bullish about how strong the housing market is right now, there is no question that more deals are becoming available to investors.

Sellers are becoming increasingly stressed and motivated. Which means more cheap house deals.

Distressed Sellers

Between inflation, squatters, new property tax bills, higher interest rates, and a deteriorating employment market, owners are under a lot of pressure to sell. In many cases, they feel they need to not only beat creditors in selling fast, but to race against what may be a declining market in some parts of the country.

A surge in foreclosures and abandoned properties also means that local authorities once again need to get ahead of a potential zombie home crisis. In Baltimore, MD, this means that homes are being offered to buyers for as little as $1. A common strategy in times like these.

Contrast this with inflation at retailers. The Dollar Tree says they will now begin targeting prices at $7 an item. Along with some closing stores.

So, we have this interesting market dynamic where distressed sellers are selling cheaper, and yet on the other hand, retail end prices are going up. Those are ideal conditions for wholesalers.

Buyers Are Being More Selective

While real estate is an ideal and essential investment at this time, and buyers still have plenty of cash, they are being more selective.

Expect buyers to be a little more cautious, more selective in their acquisitions, and to conduct more due diligence.

Wholesalers should stay ahead of this, and keep their pipeline moving by providing as much upfront detail as possible.

Squash concerns and objections in advance with information on flood zones, rehab estimates, and realistic market data.

Not All Cheap Houses Are Good Deals

Whether a house costs $1 or $1M is really irrelevant in terms of it being a deal, or profitable.

Look at the margins and dollar potential for your end buyers, along with their perceived needed room for error.

It’s a great time to buy low, and sell low to serious investors who are still financially strong. Many of them have been sidling capital just for this moment. Show up, give them confidence in your inventory, and you can win some new high volume clients.

 

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.

 

There are a lot of myths and misconceptions about real estate that can confuse investors. That’s in addition to changing trends which can lead to focusing on the wrong deals or not being active enough in the right areas.

Here are some of these factors that you want to be alert to now, and use to guide you in maximizing your potential this year.

Community Isn’t Really That Important

As with micro lofts, and tiny urban condos before, there has recently been a lot of hype about multifamily, and developers building in fabulous community spaces.

According to Pew Research, 69% of those surveyed found the most meaning in their life within their families. Just 16% said they were attached to their local communities.

That may suggest the real estate that is most in demand is going to be single family homes, or multigenerational homes in the suburbs and beyond, rather than tiny spaces in dense urban areas.

Big Flips Are Being Supported By Inflation

We are currently experiencing some of the most fierce inflation in almost 250 years. That’s bad for most people, but is definitely working in favor of real estate investors, flippers and wholesalers.

Rental rates are up 70% in many areas. 30% plus home price appreciation seems very common.

This is enabling investors to make amazing profits. Such as the recent $190M flip by fund billionaire Dan Och, who more than doubled his purchase price of $93M in 2019.

Yes, They Are Making More Real Estate

One of the biggest myths in real estate is that they aren’t making more of it. That’s simply not true.

It is an old saying used to pump up offers on prime real estate. Yet, over the past couple of decades we’ve seen that it is possible to create more land.

Dubai has been building artificial islands for luxury real estate projects for many years. All of the space exploration we’ve been doing is even opening up the potential for real estate deals on other planets. Now, one professor has recommended expanding Manhattan artificially to lower property prices, and for building thousands of new affordable housing units.

Some may be disappointed if they held onto once prime real estate too long under the cloud of this myth. Yet, you can still make uncapped money wholesaling in old and new areas.

TikTok Overtakes Google

Last year TikTok overtook Google as the most popular website in the world, and surpassed Facebook as the most popular social network.

This is likely changing how people get their information, their perceptions and tastes, and more. Consider that when you are evaluating which properties will be in the most demand.

 

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.

 

Check out these evolving trends in real estate…

Understand how these changes are influencing the market, creating opportunities, and how you can invest to benefit from them.

Taxes, Taxes, Taxes

We already seem to be in a year of unprecedented tax hikes, the addition of new taxes, the stripping away of long used breaks and deductions, and proposed taxes.

One of the most notable of these new tax proposals has been the targeting of tax saving retirement accounts, including IRAs. Now, despite saying it won’t cost anything to pay for the new $3.5T spending bill, the government is proposing a new tax on unrealized gains.

That means you would pay taxes each year on the increased value of assets. While the ruling is still very cloudy, that would take away the interest or advantage into holding onto homes, retirement savings invested in long term hold real estate, stocks and even precious metals.

It may mean more cash being spent in the economy in the short term. Further supporting price growth. If you are going to pay the taxes each year anyway, then turning around house flips fast for lump sum gains just seems to make more sense.

Extreme Inflation

Hyper inflation seems unlikely to subside anytime soon. This certainly applies to construction materials and labor. Materials are costing even more due to shortages, increased delivery costs, and gas prices. Hyper inflation in gas and daily living expenses means construction workers need to get paid a lot more to justify going to work every day too.

This means the market favors real estate wholesalers far more than rehab flippers and house builders.

Soaring House Prices & Deep Discounts

If you haven’t noticed, the real estate market is in a really weird place too. In some cases house prices are up almost 100% year over year. In others oversupply means desperate owners and builders who are offering extreme discounts. Even though rents there may also be rising by 70% or more each year.

Financial Leverage

Real estate investment businesses and funds are trying to leverage even more capital now to take advantage of all of the opportunities out there, and to benefit from extremely low interest rates. Traditional mortgages may be virtually dead right now, but there is a ton of investment capital ready to be deployed.

Many real estate investors seem to be trying to create ‘pitch decks’ to raise capital like they see tech startups doing. Yet, few really understand what a modern pitch deck should look like, and how a good fundraising process is run.

With transactional funding wholesalers can skip all the hassles of borrowing and raising capital, optimize their leverage fast, and sell for cash quickly to those that have it.

 

This is one of the best times for wholesaling property that we’ve ever seen. Just make sure you aren’t falling into these mistakes that many wholesalers are making out there right now.

Buying Flooded Property

Disasters like hurricanes and floods can yield some great inventory and discount opportunities. Yet, for the many real estate wholesalers who are now working remotely online, it is important to know what you are getting.

You can’t expect to buy a flooded out, underwater property and sell it for the same amount as local comps which are high and dry. This is a big issue right now with record amounts of storms and rainfall.

If you do find you’ve bought a property like this, then you are probably going to have to at least seriously discount it below other comps to move it.

Properties With Non-Performing Tenants

There are end buyers who may be willing to take on these properties. Yet, expect that number to be far fewer than there were two years ago.

Now there is really no telling when they will ever be able to get that occupant out, and what their real financial bleed and costs will be until that happens.

Again, this is something that needs to be priced into your offers.

Accepting Cashier’s Checks

Payments have changed a lot in the past few years. Now some can not only pay for properties with credit cards, but PayPal or bitcoin transfers. Still, some old school investors are relying on some antiquated payment methods like cashier’s checks. They used to be considered guaranteed funds. They are not any longer. They don’t have any more value than personal checks. Do not sign over any property until you have cleared funds in your account.

Pricing In Costs For The End Buyer

Not only may your offers and asking prices fluctuate with the market, but they should also take into account inflation and property specific costs.

End buyers, especially landlords and rehabbers have to price these line items into their offers and what they are willing to pay.

Recently there has been massive inflation in installing utilities, new construction, labor, and building materials for rehabs.

If it is costing them 30% more today, then if you don’t price that in you may be sitting on that deal for too long.

Property Values

Property values seem to have been soaring. Yet, there is a massive difference between actual sold and recorded transfers and asking prices. Don’t rely on rumors or listing prices. Overpriced properties may still have been sitting on the market for two years or more. Look at recently closed comps.

Not Maximizing Financial Leverage

It is a fantastic time to scale your real estate wholesaling business. Yet, many are feeling uncertainty about the future. Maximizing your leverage with transactional funding will dramatically reduce your risks, while greatly elevating your capabilities to do more deals.

 

Almost 65% of millennials now regret their home purchases according to a new Bankrate survey.

This may be a shame for all of those who got caught up in the home buying frenzy of the past year. Yet, it also signals some new opportunities for real estate investors as well.

Homebuyer Remorse Grips Millennials

According to the data the majority of millennials now regret buying homes.

Some of the top reasons they are giving for this distress include:

• Additional homeowner expenses like maintenance costs

• Buying a home that is too big or too small

• Home mortgage payments and rates too high

• Buying in a bad location

• Overpaying for their homes

It seems millions just jumped into the market on a whim, without really thinking the decision through, doing a budget, analyzing what was important in a home, or educating themselves about the market.

How Wholesalers Can Help Out

In many scenarios these homes have quickly become a burden for homeowners. It’s now just a big payment each month. One that prevents them from enjoying the life and freedom they really want. It’s stressful. For a lot of homeowners it may be unsustainable.

As a real estate investor you can help them out. Even if they bought at the peak of the market in the past year, soaring inflation and frenzied competition means those properties could easily have 20% more equity in them now. For some, that is enough money to make a decent profit on wholesaling them.

All many of these owners probably want is enough money out to go move into a nice rental.

Some won’t act in time, and unexpected maintenance, repair and property tax bills will bankrupt them. That can turn into nonperforming loan notes and REOs. Both of which can be buying opportunities for investors.

Wholesaling To Landlords

Equipped with this information and facing a changing market, investors may want to expand or change up who they are reselling properties to.

Many retail buyers are getting priced out of the market. It is true that interest rates are low. Yet, recent data shows that it will now take South Florida homebuyers 17 years just to save up a 10% down payment. That’s 34 years to save a 20% down payment. That could certainly lead to a decline in homeownership.

While many rehabbers have been sitting on the sidelines during the pandemic according to ATTOM Data, and will continue to due to hyperinflation of construction materials, other types of buyers are scaling up.

Buy to rent landlords are growing as fast as they can with cheap money, and in anticipation of a new wave of renters coming to the market. These end buyers may have lower profit expectations, and are likely to be bulk or repeat buyers too.

 

Valentine’s Day brings the opportunity for real estate investors to make a huge difference in others’ lives. Here are just some of the ways you might have an even greater impact this year…

The Gift Of Real Estate

Real estate is one of the best gifts you can give at any occasion. It won’t collect dust in a closet, or be exchanged at the store. It can keep on giving for a lifetime and multiple lifetimes.

It can be especially meaningful at this time of year. This may include new homes, vacation properties or income producing investments for those you love and care about.

This doesn’t have to be limited to your partner or immediate family either. It could be a cause you really care about. This timing may also produce some great tax benefits as you are filing income tax returns.

Giving the gift of real estate may sound expensive, but it doesn’t have to be. Given how cheap wholesalers can find properties, you may find deals that don’t cost much more than a handful of new phones, or a week vacation in a nice hotel or Airbnb.

This may make this a viable giveaway to run a competition or lottery to give a home or lot to someone in your community.

Give Better Deals

If you are not yet in a position to give away a property, maybe you can just run a special for the month and offer extra special deals for buyers and sellers.

With the market so hot you may be able to offer or sell for 10% more or less. This could make all the difference for another aspiring investor who is trying to get started, or for someone who wants to do something really meaningful for their family this Valentine’s Day.

The Gift Of Knowledge

Real estate is a pretty solid gift. Perhaps the only thing that can trump it is the gift of knowledge. No one can ever take it from you. It can’t burn down or be flooded or foreclosed on.

Consider giving the gift of real estate investing knowledge to someone else. Then they can go on providing for themselves and others for the rest of their lives.

It can even be as simple as tickets to a seminar or a grant for tuition for a short course.

Set Up Better Investment Vehicles

Some investors do so well at hustling and making moves themselves. They may build great incomes and wealth through real estate. Then fail big when it comes to their real driving purposes - passing those benefits on to their spouses or kids or causes.

Without the right legal structures a whole lifetime of wealth can be rapidly depleted due to taxes, or tied up in probate courts or poorly managed and wasted by heirs.

Self-directed IRAs and trusts can go a long way to avoiding these issues and ensuring your real goals are achieved.

 

It’s that time of year to be polishing and refining your plans for the next year. But, are you thinking big enough?

Before you ink those new goals, share them with your teams, make budgets, and commission marketing materials, are you really sure you shouldn’t be thinking bigger?

We have a whole new year that millions of people are looking forward to with optimism. Don’t count on an end to the mayhem commanding the news headlines for the past 12 months, but that shouldn't get in your way. Bigger income, more wealth, more impact, and more of the lifestyle you want is possible, but don’t expect bigger results, without bigger thinking. In fact, 90% of your results in the next year are all about what you think about over the next couple of weeks.

If you want more, why waste time? It takes the same energy to think and do big as a little. It doesn’t take much more effort to close on a $100M home than a $10,000 home. Or to close on a 100 unit apartment building instead of a 10 unit one. So, go big. There is so much good you can do with it.

Need some prompts to think bigger?

Property Prices

There are plenty of properties to be bought and sold at the low end of the market. Yet, how many more deals do you have to do in that range compared to being in the luxury range? A new Beverly Park, CA listing just hit the market for $160M. While it may sell for well below $100M at auction, it wouldn’t have to be flipped for much more to return more in a single transaction than most real estate wholesalers aim to make in a year.

On the commercial real estate front companies like Google and Apple have been setting up the $1B mark as the new price tag for acquisitions, and big tech companies are making more than ever.

Volume

If you feel you missed out on the incredible opportunities of 2008, consider that 2x more properties may now be in distress than during the Great Recession. In many areas demand for homes hasn’t been this strong for a long time either. What if you started buying in bulk?

Geography

Travel may still be limited through 2021, but that’s not a roadblock to serving investors worldwide, or diversifying your investments and wholesale deals around the country. You can now get in front of billions of customers, and trade from a pool of over 100 million properties right from wherever you are.

Before you start doubting yourself, remember the key to making these leaps is not about your resources. It is about resourcefulness. Don’t say “I can’t,” but “How can I?”

 

These are the essential skills real estate investors must have, develop and lean on over the next year.

If you want to survive and thrive, here’s what to focus on mastering…

Maintaining Integrity, While Exuding Optimism

There is a huge need for optimism in the world out there today. Even more so in real estate and financial markets. Of course, in reality there is a lot for home buyers, owners and individuals and families to be concerned about and to consider. It is times like these when most novice real estate agents and investors keep denying there is any distress. They fill their email newsletters, social feeds and sales pitches with blind fluffy optimism and fear scaring off customers by telling them the truth about the changing market, foreclosures, and risks.

These things are obvious, even to outsiders. By glossing over them and trying to cover them up, you only lose your integrity, trust and respect. Not to mention a lot more sales.

Instead, be transparent about the good and bad, and make your case for why they should still take action with all the facts on the table.

Negotiating Skills

The market is changing in such diverse ways and the media is such a mess that there are many unrealistic sellers in the market. Many are far overvaluing their properties and far over-estimating the demand for them. Even many investors and wholesalers are falling into this trap. Don’t be fooled, there is a lot of persuasion of buyers to be done. Being too arrogant or out of touch with the real data will break you. Don’t waste leads. Learn to negotiate with them better.

Delivering Customer Delight

Standard ‘customer service’ or ‘satisfaction’ just isn’t going to cut it. You’ve got to wow your leads and customers. This should be the number one priority in your business, even above sales and dollars. If you delight potential customers, the rest will take care of itself.

Discipline

You must keep investing, but stick to your numbers. Don’t gamble and speculate. The market and world is changing so fast. Not even by the day, but by the hour. Don’t assume anything about the market. Invest by the numbers and lock in your exit before you enter a deal.

 

Just as there is plenty of fake news in the media around elections and celebrity gossip, there are plenty of misleading real estate market headlines too.

Falling for false market data may not only bankrupt you as a real estate investor, but can really hurt the local market and industry too. Here’s how to avoid that, and ensure you don’t get caught out.

The Danger Of Dead Weight

For wholesalers who are paying cash or using credit lines to buy properties with the hope of reselling, it only takes being stuck with one or two dead weight properties to really mess up your model and finances.

Instead of those deals being resold for lump sum profits in a couple of days, you may end up like all those crusty Craigslist ads that have been trying to sell the same properties for years.

During this time you’ll still be coming out of pocket for property taxes, insurance and have to risk further devaluation on a daily basis. This money has to come from your personal income or savings, or the profits on any other deals you do successfully wholesale. It can quickly eat away the profits on good deals you complete.

Looking at the bigger picture, if wholesalers have swamped a local market with tying up properties they don’t close on, or deadweight properties they are asking too much for, it can send signals to everyone else that the market has stalled. Days on market will appear very long, it could bring down values, and sellers will be more wary about who they contract with.

The Numbers Do Lie

Salespeople like to use numbers, because they appear factual and indisputable. In reality, the numbers lie all the time.

It’s not uncommon to see two contradicting new headlines on the direction on the market on the same day. Sometimes even from the same publication.

Numbers and statistics can be manipulated to tell just about any story the storyteller wants to spin.

Zillow was notorious for poor real estate data. It now appears they have stopped reporting on most statistics. Even the National Association of Realtors went back and restated several years of home sales data after the 2008 crisis became undeniable.

Realtors twist it all the time. With most preferring only to show the optimistic data, and hiding anything that may turn off their clients.

We’ve also recently seen a variety of big claims about new pending sales, home prices, and the traction in the housing market. Some of it may absolutely be true, in some places.

In other cases, few of those pending sales may actually close due to lenders changing their minds, tightening up and being too afraid to lend. While some properties may seem to sell fast, there may been many listings which have been on the market for 24 months or longer.

Perhaps most impactful, asking prices can be completely unrelated to actual closed sales prices and values. If you buy based on the crazy overpriced listings of a few people swinging for a lottery ticket sale, you might find the market thinks you are just as crazy.

How To Avoid A Glitch

The most obvious way to avoid this trap is to dig into the real data yourself. Know your market intimately.

Look at public records, know the neighbors who have actually sold, and have an appraiser you can pick up and call for questions 24/7. Look at how much properties are actually closing at, and any concessions which may impact the true net price and sold comps.

Having alternative exit strategies to avoid being stuck with a property is good. Like being able to offer it as a rent to own.

Savvy real estate wholesalers go even further by securing solid preorders and preselling deals before they even sign the buy side contract. Then they use transactional funding, so that they aren’t trying up any of their own capital in the deal.

 

Are you getting freaked out by these giant iBuyers in the real estate market yet?

Giant tech and real estate companies are moving into the market. They want to own it. It’s a major shift every investor and business in the industry should be paying attention to. Here’s the good, the bad and ugly of what you need to know about them and their impact.

The Who, What & How Big of iBuyers in the Real Estate Market

There are three really big players in this space, with even bigger funds behind them. We’re talking about this new breed of supersized online home home buyer who is offering sellers cash for their homes and the promise of a quick transaction.

In addition to Facebook and Amazon who still very much want to get involved and stake their claim to the US housing market, there are OfferPad, Opendoor and Zillow.

OfferPad recently inked a deal with Keller Williams to buy up homes. Opendoor has forged a similar partnership with Redfin. They’ve also hooked up with Lennar to promise movers one seamless transaction for trading up from their old home to a newly built one. Opendoor has raised hundreds of millions of dollars from very powerful venture capitalists. Zillow is notorious for being willing to lose billions of dollars just to buy up market share and drown out the competition.

What They are Doing Well, and Not

These companies are doing great about making noise, getting in the press and raising money. If you just giant companies like these, then they may also carry a lot of credibility.

They have mountains of cash to buy homes. They have great infrastructure for turning around and wholesaling or flipping these homes for a small profit in just days. The amount of capital they have and authoritative voice on prices also gives them a lot of power to manipulate home values and the market in their favor.

Of course, with all giants, they are pretty slow moving as well. Each focusing on expanding to a few major metro areas at a time and have very tight buying criteria.

The numbers show at least half of sellers have been rejecting their offers, so they may not have nailed this model yet. At least not at scale.

How Big iBuyers are Helping You

No small company or individual real estate investor should be wanting to take a billion dollar giant head on. It will get ugly.

However, these companies may be helping wholesalers and house flippers more than you realize.

• They are making selling your house online to a wholesaler normal

• They are leaving plenty of properties un-served

• Their heavy 7% plus fees leave room for better offers

• They are still essentially working as Realtors, and many sellers don’t like that

• They could be your biggest end buyers

 

Underwater mortgages and negative equity homes are back again. Just how bad is it? What does it mean for real estate investors?

The latest statistics from ATTOM Data show a resurgence in underwater homes in 2019. ATTOM’s latest report measures this metric by the number of properties that has serious negative equity, and owe at least 125% of their home’s value on mortgages.

Seriously Underwater

There were at least 5.2M homes in this situation as of Q2 2019. That’s about as many homes that sell in an entire year in a strong market.

This does not count all of those who just have zero equity or too little equity for a conventional sale using a Realtor. If you added in, all those that owe 90% to 124% of their property value on mortgages this number could be dramatically higher. It will get higher every day as prices float down again.

Then if you count other debt and liens that may mean owners have even less equity, that number may already be at crisis level. Think past due property taxes and code violation fines.

Some zip codes are already seeing negative equity properties return to 2012 levels, with upwards of 20% of properties in trouble. In at least 32 zip codes more than half of properties are seriously underwater.

Equity Rich Properties

The good news is that there is a large number of equity rich properties out there as well. These are those with a loan to value of 50% or less.

While this number is shrinking, and has been since 2017, nationally, 25% of homes were considered equity rich in Q1 2019. Most of them being in California.

What it Means for Real Estate Investors

While there do still seem to be speculative buyers willing to pay 150% of the real value out there, many more property owners are finding themselves stuck. They simply can’t sell conventionally. It’s going to take seller financing and creative financing to make it happen.

The great news is that all of these equity rich properties are really ripe for wholesaling. Those equity cushions will shrink if the market keeps contracting, but wholesalers who act fast still have plenty of potential properties to pick from.

 

Numerous Opendoor style websites are popping up to compete with wholesalers on a whole new level. What important lessons do wholesalers need to take away from this? How do you keep making money with all this pressure?

#1: It’s All About Marketing

Big companies like Zillow, Opendoor and now Redfin have transformed this space in months. They’ve given it legitimacy and visibility. Of course, if Zillow’s buying program is anything like its Zestimate tool, it’s terrible. Redfin Now reportedly takes a 7% fee to the seller on the purchase price of the home. That’s a lot for a ‘discount’ real estate service. Startups like Opendoor are attracting millions in VC investment, despite not really being unique. It’s all about the marketing. You should offer better deals and service, but it’s clear that winning is all about lots of marketing and making a lot of noise about your business.

You Can Think Bigger

One reason these companies are where they are is that they just think bigger. If you are only shooting for a handful of wholesale deals in your local market each month, that’s probably what you’ll get. These companies are coming out of the gate thinking about dominating on a national scale. They have the potential to at least do hundreds of deals each month. With Best Transaction Funding to finance your deals, you goals are the only thing to hold you back. Do you need to think bigger?

Clean Websites

In general real estate investor websites are ugly. They are outdated and ineffective. There are countless of these Investor Carrot type sites out there that really aren’t serving investors well. Can you imagine Redfin, Opendoor or Zillow soaring to fame with an ugly site? No. Aesthetics do matter.

Don’t Lose Money

Just because they are big, making lots of noise, and often in the way doesn’t mean these big internet wholesalers are making money. Zillow has been infamous for losing billions of dollars. As are many other tech startups. They might look cool, but all that attention isn’t worth much if you are losing money. If you are in real estate to make money, focus on profit. You can make a lot more by focusing on profit margins, and less on volume. It’s all about the bottom line.

You’re Onto A Good Thing

Wholesalers have been picked on for years. Especially in online forums. Realtors and other investors have long been jealous of how easy wholesalers can make so much money. This new trend is great validation that you are onto something great.

You’re Going To Have To Be More Creative

Most real estate wholesalers can’t afford to out market these big tech driven companies. They can’t afford to throw away billions just to stay visible. Fortunately, you don’t have to. Though you will have to be more creative to get the deals. Think guerrilla marketing, being earlier to the punch in making offers, making stronger offers, better positioning, and more focus on personal relationships.

 

 

It looks like a new real estate correction is already in the works. It’s just the news many experienced investors have been waiting for. Now it’s time to get busy putting money into action and wholesaling those properties.

The New Housing Correction

The data is clearly showing a correction. It may not have arrived in your market yet. Though it is probably coming in the next couple of years. Your market may experience a spring in new growth and capital as investors ditch markets that have already peaked. Or yours could have already passed the peak and see some sellers letting properties go with steep price cuts.

Why It’s a Good Thing

Many investors have been waiting years for this moment. It may not feel good in the medium term for those that get caught slacking on protecting their recent windfall in equity. Though it can be cashed out or leveraged now, and it will bounce back.

Even more important than the return of better pricing and more negotiability for buyers is the certainty this data brings. As Fuquan Bilal of NNG Capital Fund puts it, now investors know where they are in the real estate cycle. They have a clearer vision of what is ahead. They can make moves with confidence.

It is very difficult for even the most experienced pros to perfectly time the market. You don’t have to. If you negotiate deep enough discounts you can still flip for a handsome profit with a decent discount left for your end buyer.

We may not be near the bottom yet, but historical data on your local markets will give you a great idea where that will be. For some this is now the ideal time to sell and cash out. For rehabbers, home buyers, and landlords this can be a better time to buy due to access to capital and rates. The wholesaler in the middle can profit while helping both parties.

 

Who will be the biggest winners in the real estate market this year?

These five factors will be among the most significant differentiators between the winners and leaders versus the rest in real estate for this year and beyond…

Follow Up

This is still the number one make or break factor for real estate professionals. Fortunately, it is still probably the easiest way to get the edge. The vast majority of Realtors, wholesalers, builders and sellers seem to be doing terrible at this. In fact, their follow up is mostly non-existent. Most deals are lost and leads burned because of a simple lack of follow up. Just one more email, text or call could have converted those leads. Those buyers and sellers are all going to buy or sell. Just normally with the professional who keeps following up after the others drop the ball. Make sure that’s you.

Staying Healthy

You don’t need six pack abs or the best squat game in town to win in real estate, but if you’re out sick you aren’t making money. If your supply line dries up, your users are going to the next wholesaler in line to fill their deal flow needs. It will be far harder and more expensive to win them back. So, take time to stay healthy and avoid burnout.

Anticipating & Overcoming Objections in Advance

Most sellers, agents and buyers won’t take the time to layout all their real objections. They’ll just pawn off the easiest excuse on you. The most successful are those who invest the time to foresee and overcome objections in advance. It’s basic sales 101. What questions or concerns could hold sellers and buyers back from taking your offers? What can you do to champion that ahead of time?

Marketing

Fear will cause some to pull back on their marketing this year. That will be another nail in their coffins. Others are doubling up on their content marketing. Make sure you are consistent, are looking for voids to fill, and are focusing on quality marketing that makes you stand out.  That may be online, in mailboxes, through networking, or sheer hustle and asking for the business. Most important as the market changes will be the ability to create product and demand.

Eye on the Big and Long Game

 

The focus should probably no longer be on what you earn this year. That should be the result of the seeds you planted last year. Most of what you are doing this year should be setting up your success and revenue for the next 2+ years. This mindset helps avoid dangerous short term thinking while ensuring long term survival and growing profit margins.

 

Looking for more real estate wholesaling leads?

There are many ways to find wholesale house leads today. There is one which is frequently overlooked and can provide some of the easiest to close and most profitable deals.

Leads for Real Estate Wholesalers

With the booming housing market investors are enjoying right now even the MLS can produce house deals to wholesale and flip quickly. Then there are bulk REO and note buyers that frequently have volumes of properties they hope to shed, as well as new software and list sources which help pinpointing off market prospects. Plus, it’s never been as easy or affordable to run inbound online marketing campaigns.

No wholesaler should be coming up short on deals right now.

Tap into Rehabbers

While there are plenty of sources of potential deals and lots of properties being floated and passed around as deals today, wholesalers still need to make sure they are contracting on house deals that really offer good spreads and are getting a good overall ROI, including their marketing.

This makes today’s house flippers and rehabbers one of the best and most overlooked sources of quality leads.

Fix and flippers are putting a lot into marketing directly to owners for deals. They are mailing, cold calling, emailing and running ads and signs. Most only end up being able to do a fraction of the leads that come in. Most rehabbers have tight criteria for the homes they will work on, and have limited capital and time to work on fixer uppers. That means they are typically left with dozens (if not more) motivated seller leads each month. Most just let them collect dust, because they don’t know what to do with them.

As a wholesaler this is your chance to step up and create more win-win-win scenarios. You can help the sellers actually sell their home, the rehabbers to monetize those leads and do more marketing and your buyers list to get more deals. Plus, you win too.

How to

There are a number of ways to tap into this lead source, including:

• Responding to their mail pieces

• Networking at REIAs

• Pick up the phone and call

• Get on their email lists

There are many ways to take down these deals too:

• Visit job sites and make offers on rehab houses before the work is complete

• Arrange to buy excess leads in bulk

• Co-wholesale them together and split the profits

• Take assignments and close with your transactional funding

• Take live referrals on deals they can’t handle

If you aren’t coming up with all the deals and dollars you hoped to from wholesaling try tapping into this lead source.

 

Transactional funding has become an essential and invaluable tool for real estate investors. Multi-pronged benefits make it a vital tool for both experienced high volume investors, and crucial for those looking to get started in real estate investing.

Here are just some of the reasons it has become so important..

Liquidity

It doesn’t matter if you start investing in real estate with millions or are making seven figures a year. That cash can become tied up quickly. Without liquidity investors get stuck, and everything grinds to a halt. That cannot just be financially perilous, but means missing out on the best and most profitable opportunities. Transactional funding breaks that cycle, even as the wider mortgage market looks to become tighter, by offering virtually limitless capital.

Fast Funding

Sellers and Realtors don’t want to wait around anymore. They don’t want drawn out closings, and will give preference to offers that promise a quicker closing. Investors don’t want to be playing the waiting game for months either. The faster you can close and flip it, and get paid, the higher your annual returns and income. Transactional funding can be closed in just days.

Access to Credit

Transactional funding offers access to credit for those without perfect credit or all the paperwork that conventional lenders are demanding today. You don’t have to worry about the IRS speedily sending copies of tax returns, how backed up real estate appraisers are, or if you have an error on your credit report that just won’t go away. This provides a desperately needed service for new investors looking to change the dynamics of their finances.

Ability to Act as a Cash Buyer

The best transaction funding enables investors to act just like cash buyers. The money is there, and available to close in just days, without worrying about all the micro-underwriting of most banks. For sellers and Realtors, that makes wholesalers using transactional funding as good as cash buyers.

Protecting Your Deals with Legal Double Closings

Unfortunately, the market continues to be rife with unscrupulous buyers, sellers, and agents who try to go behind the backs of investors. It doesn’t matter how good of a deal you seem to give some people, they still try to manipulate the system, and think they can get away with it. Instead of relying on assignments and assigning contracts, transactional funding provides the ability to double close legally and quickly, and protect all the investment made in marketing and securing buyers and sellers.

Why do you use transactional funding?

 

Is is smart for more house flippers to be seller financing their deals to retail buyers?

The latest figures from ATTOM Data Solutions’ house flipping report shows that flippers are down to a record low number of deals, only around 65% are using cash for their deals, and it is now taking over six months to turn the average flip. With this in mind, many house flippers could find offering seller financing on their resale properties helps a lot.

Rather than getting easier, there could be more difficult in obtaining home loans for end buyers ahead. Offering to hold the mortgage, do wrap around deals, or short term lease options could all help.

For a start, it can dramatically speed up the resale. Instead of sitting on the market for six month collecting dust, and going down in value in the perception of buyers, advertising seller financing could lead to a very fast resale deal.

Higher resale prices are another reason to consider this strategy. The types of buyers who are most likely to take these offers are not as price sensitive. They know there is a trade off in price versus terms. They are more worried about the ease of getting in, and the monthly payments.

In taking a seller held mortgage, investors are creating a new flexible paper asset. It can be held for ongoing passive income, sold quickly for cash, or a combination of both.

As a wholesaler you may be able to afford to do this if you are buying super cheap assets, say $4,000 to $40,0000. Or connect your flippers you are selling to with rehab lenders and private lenders who will give them a year to pay them off. The more you help your flipper clients, the more they can buy from you.

The owner financing concept can work well, IF sellers are providing attractive and competitive terms, and a trustworthy presentation. Many are not. They are asking for way too much in down payment, are not leaving enough spread in payments for a buyer to rent out the property, and are not squashing concerns about the seller being able to live up to their end of the deal. Keep these factors in mind.

 

Recent California wildfires have displaced thousands of residents. What help is available? How can real estate investors lend a hand?

The latest round of CA wildfires have dealt what may be one of the most catastrophic seasons on the state, with new record costs, and thousands forced from their homes. According to the state government website, 2017 has seen almost twice the average amount of acreage burned, with damage that could cost at least $1B, if not close to $5B. This includes around 8,500 residential homes which have been damaged or burned down.

The IRS has responded by extending some tax deadlines for those affected until January 31st, 2018. Victims may also be eligible for FEMA of up to $34,000 to help with funeral costs, emergency hospital bills, and housing expenses. There are also going to be a variety of agents and real estate investors looking to help house those displaced, and to offer quick sales for those who don’t want to, or can’t hang on and rebuild their homes.

A new report from UpNest shows data that suggests recent years of fires have not have much impact on the state’s property prices or demand. Yet, there are clearly many property owners who have lost everything, are still struggling to get back on track years down the line, and whose land is still badly scorched. The most immediate impact for real estate appears to be even worse lack of available housing, and rocketing rental and housing costs.

There is a huge need for fast acting real estate investors who can go in and help owners liquidate fire damaged homes, as well as for rebuilding and renovating them. Real estate wholesalers can play an urgent and much needed role in this, by finding, contracting to buy, and providing inventory to other investors who have more time and capital to reposition, remodel, and build. While fire damage and burnouts can typically be a roadblock for traditional mortgage financing, wholesalers can use Best Transaction Funding to acquire and flip these houses to cash buyers and those with flexible credit lines, that don’t rely on property inspections.

Summary

Data suggests that California housing prices are not likely to be slowed by recent fires. There is a big need for housing, and funding is available for fast flips. Wholesalers can help out by getting product in front of those with the time, money, patience to rebuild or rehab, while giving sellers the quick cash they need.