Now both the Fed and Bank of America are reversing their forecast for a new recession. What does it mean for real estate investors? What if they are wrong?

Which Way Is The Economy Headed?

In spite of projecting a $50B loss just a few weeks ago, Bank of America has now joined the Federal Reserve’s messaging that we no longer need to worry about a looming recession.

Recent GDP data suggests that the economy is growing well again. Though other data compilers suggest business tenants are falling delinquent at high rates, and foreclosures are rising again.

Some may say that this disparity is due to misleading averages. With a small percentage of people and companies making outsized profits, and the majority seeing their finances contract.

Of course, while fundamentals are the reality we have to build with, as we’ve experienced in the past, sentiment alone can drive or crash economies and individual market sectors.

What New Optimism Means For The Real Estate Market

New optimism in the economy, especially driven by the Fed and major banks is likely to lead to more interest rate hikes, as well as an easing of lending. With more private capital flowing as well.

In the current environment, this would also mean fueling inflation. As well as the potential for more hiring and salvaging jobs that may have been in question a few weeks ago.

This would support more confidence in buying and leasing both residential and commercial real estate. In turn, driving up prices even further.

What Happens If The Experts Are Wrong?

Of course, those top headline news stories are not always something you can rely on. No one gets it right 100% of the time. Especially when it comes to pinpointing turns in economic and market cycles.

If this rebound does not appear, then we could see even more layoffs, loan defaults, and bankruptcies.

Perhaps what is most important as an investor is to remember that every segment of the market, and every location is on its own timing in the cycle. It’s about finding the gaps, and bringing together the distressed opportunities and motivated sellers, with motivated buyers who see the value in paying more. Focus on this, and the fluctuating forecasts don’t have to impact you and your income or wealth. Decide to control your own destiny.

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

 

Higher Interest Rates, More Economic Turmoil

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

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

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

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

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

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

Use Short Term Real Estate Financing

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

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

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

Find The Distressed Owners And Sellers

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

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

Find The Hungry Buyers

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

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

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.

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

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

Change Is Coming Faster Than You Think

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

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

Double Digit Unemployment

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

It’s already happening.

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

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

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

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

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

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

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

Discounted Real Estate Buying Opportunities

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

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

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

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

While many parts of the country are seeing very strong and growing real estate markets and home prices, new data seems to reflect a sizable amount of stress still bubbling under the surface.

What does it mean for real estate investors?

Bank Of America Expects To Lose More Than $50B

While the Fed has proclaimed that banks have been passing stress tests with flying colors, Bank of America seems to be among those that are much more pessimistic.

The Feds have predicted the bank will bring in a lot more revenue, with fewer losses than the bank is forecasting. Which across anticipated losses on loans and credit, and goodwill, they expect to exceed $50B, in just a nine month period.

Interestingly, while the Fed is expected to continue hiking interest rates, they are also calling for banks to have higher capital reserve requirements.

We can expect these trends will make banks even more cautious about making loans, and their capability in doing so. Especially on the consumer and homebuyer front.

Airbnb Revenues Crashing

While Airbnb hotly contests the numbers and say they are growing, one short term rental data analytics firm has proclaimed that hosts are suffering a 50% drop in revenues.

Altogether the above suggests that many short and long term rental property landlords may be about to run into more issues. Both in being able to get financing and making ends meet.

Real Estate Wholesaling

While there will continue to be buyers of income properties, that pool may shrink. There are also likely to be a lot more distressed asset sales coming down the pipe.

Real estate investors that are on the front lines of this may find it high time they switch to a real estate wholesaling model.

This enables you to get in, out, and paid, without worrying about long term financing, or renter dynamics. Nor being pinched between inflation and rent controls.

Best Transaction Funding is also continuing to actively lend on wholesale deals.

If you need to keep your income up, profit margins up, and utilize smart leverage, it could be time to embrace this model.

Bloomberg has just mapped out a recent $100B shift in wealth in the US. Where is the money leaving and going to? How can you make sure you are a beneficiary rather than a loser in this transition?

Wealth Is On The Move

According to a new map from Bloomberg News, $100B in wealth has already shifted. Mostly to the south. Much of it out of California, and the Northeast, and even mid-east coast.

Some has gone to parts of central Texas. Though Arizona has been a significant recipient too. With Florida appearing to be the biggest winner. Though, with wealth actually leaving the Miami and South Florida or Orlando areas in favor of more northern parts of the state.

More Wealth Migration Is Coming

There are many factors which are highly likely to keep on moving wealth.

This includes continuing to compound the reasons people and businesses are fleeing, with higher taxes, and unfriendly environments for businesses.

More Fed interest rate hikes are expected this year, which will compound inflation and force more to move out of lack of affordability.

Predictions that inflation will fall by 2% by 2024 are likely just playing smoke and mirrors with the data. Even if it comes down 2%, but real inflation has risen by 30% or more recently, that isn’t near enough of a cut to make a difference for most consumers, workers, and property owners.

The Real Wealth Shift To Care About

The real wealth migration that should be on our minds is that between individuals and corporations, or other entities.

We are probably about to see one of the most significant of these shifts in our lifetimes. The richer are getting much richer, much faster. The middle class and below are going to be bled dry fast.

As a real estate investor you want to make sure you are on the receiving end of this wealth. There are several ways to position for this.

Which includes operating in the states and areas where the money is moving to. When the money moves it, that means big bumps in house prices, local spending, rents, and more. You can target the movers themselves too. Helping them from where they are trying to move out of.

You can invest ahead of this to find the deals, and wholesale them for more.

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

The Push To End Junk Fees

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

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

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

The Irony

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

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

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

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

How It’s Being Applied

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

Airbnb’s shift to offering all in nightly pricing options

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

Simplified pricing on event tickets

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

Summary

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

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

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

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

The Good

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

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

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

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

The Bad

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

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

The Ugly

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

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

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

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

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

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

The retail industry is cannibalizing itself. We are seeing the results daily. With more stocks plummeting, big companies losing market share, and having to conduct huge layoffs.

Yet, many small businesses still think that they should copy some of the very same tactics and campaigns that are sabotaging and bankrupting these companies.

Losing Retail Strategies Not To Copy

Rewards programs have become the downfall of many companies. For a start, they are often confusing and frustrating, and just lead to losing trust and more friction in the hard one relationship.

No one has time to sign up for more rewards or discount programs. If you went around a mall today, and gave out your number to every retailer, you may end up spend half a day of your precious time deleting and unsubscribing from all the junk mail and texts.

Which in turn means that all the effort put into these programs is wasted capital on behalf of the business. It just causes more efficiency and friction at checkout, and ruins the user experience.

Especially in the wholesaling business, if you just give people the best deals, they will keep on coming back. No need for gimmicking programs. The money you save on the junk processes can then be simply passed on in lower prices, earning more business and customer loyalty organically.

This can also apply to online sign up walls, or forced activities on social media like sharing with friends to get a discount.

Similarly, trying to force autopay on customers you finance can wreck the relationship and rob you of repeat business if it isn’t working well.

Another is popups and ads on your website. If one popup ad isn’t working, then adding ten more if only going to hurt you 10x more, rather than helping.

The Essence Of Wholesaling

The very essence of wholesaling is to buy low and sell low. Do this, and provide an efficient and streamlined process with a good user experience, and you will win plenty of customers, and they will keep on coming back, and grow the amount of properties that they are buying from you. They will want to refer others.

Save the money on wasted gimmicks and features that detract from that, so you can give better deals, and enjoy better overall net profits. Then you can also build up your budget to do more marketing and fill the top of the funnel with more prospects. Through ways that give them more value and make their lives better and more enjoyable.

Why is buying a property in a condominium or homeowners association such a bad idea?

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

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

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

Financing Challenges

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

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

Deed Restrictions

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

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

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

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

Approval Of Buyers & Tenants

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

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

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

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

Constant Headaches

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

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

Special Assessments

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

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

If You Do…

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

Inflation still hasn’t stopped. Regardless of the official numbers being reported or restated, real inflation in the street seems like a runaway train that has to hit a wall and crash eventually.

Hiking interest rates was supposedly the way to kill off inflation. Of course, it only fueled it instead.

Interest rate increases alone haven’t been enough to achieve goals, so, we now have other things, like higher taxes, more taxes, and minimum wage hikes of as much as $33 being floated in some places.

Something Has To Break

History, and the state of many other countries tell us that inflation can go a whole lot higher. Fixed rate, long term loans can disappear altogether. Mortgage interest rates have and can go above 20%.

Things can be made so expensive that just being able to afford food and toilet paper is hard.

When you can’t walk out of the ‘dollar store’ without spending $60-70 for a few snacks or a day and a half of food, nor run into the gas station without spending that much, it’s going to be a problem. Even with a $15 an hour minimum wage, that’s a day’s worth of work. Not counting housing, insurance, or utilities. All of which are going up too.

Then, not only are interest rates going up, but so are overall loan and borrowing costs. For those that can afford homes, now even putting in a few plants is a luxury expense many won’t be able to afford.

What exactly will break, when, how, and how badly will have to be seen, but it doesn’t appear to be sustainable. At least not while maintaining the lifestyles Americans have become accustomed to over the past couple of generations.

$190B In Real Estate Debt Being Sold At Discounts

According to Bloomberg, there is $190B in real estate debt being sold off at discounts around the world.

There are likely a variety of reasons for this. Chiefly being highly motivated sellers. While physical property values may not have changed, financial positions have.

Some are liquidating because they failed to plan and prepare for moments like these and are losing money. Others can’t get any more credit to stay afloat. Some just want more cash on hand. Or the banks that have failed have seen their assets literally bought for pennies. Which can now be cashed in on.

Interestingly, most real estate pros you’ll speak to will say that housing prices are still strong. In some pockets of the country there is more demand than ever. Open houses are busy, and are attracting multiple bids. There are cash buyers who still feel rich, coming from more expensive destinations, to new ones with lower taxes, and less crime.

So, there is currently this sweet spot, with inflation tragically bankrupting many businesses and families. Which means discounts on real estate. While strong demand means there are still great profit margins on wholesaling houses swiftly.

Those that take advantage of this, will find it is what keeps them and their own finances ahead of inflation.

As capital flows get interrupted and shut down, and borrowing becomes much more expensive, what options are left to fund your real estate deals and business?

Capital Markets Face New Tightening Again

It appears to be that time in the cycle again when capital and credit tightens up, and becomes much more expensive.

Capital markets and especially venture capital for tech startups appears to be contracting. Which will likely prove to be a downward spiral as more of those businesses implode, and their investors become even more fearful.

Failing banks mean fewer options for traditional commercial loans and home mortgages. With higher interest rates making borrowing more expensive through these and other working capital channels.

New regulations to tackle the above may in turn give banks even less liquidity to lend.

So, what are some of the ways that you can continue to fund your real estate business and deals?

Private Funds

Some private funds may still have capital they need to deploy. Or cash from recent exits that they need to put back to work in real estate and mortgage loans.

Friends & Family

Many of the people in your life are currently also eagerly and urgently looking for ways to protect their money from failing banks, a declining stock market, and poorly performing retirement accounts. All while trying to find ways to avoid recent tax hikes and new taxes, while trying to keep up with extreme inflation.

You can help them by putting their money to work, and giving them strong returns.

Grants & Awards

If you are interested in interest free and non-dilutive capital then look around at the various grant programs and competitions available.

You may find additional funds that don’t have to be paid back. Which can also help build your credibility.

Transactional Funding

Perhaps easiest and most efficient of all is transactional funding for your wholesale real estate deals.

Best Transaction Funding can provide 100% financing for your deals, at low rates, and keep your business and income flowing smoothly during these times.

You are in real estate to make money, right?

Yet, the irony is that today so many businesses are making it increasingly harder for potential customers to give them money.

The slower money comes in, the higher the risk you will run into cash flow shortfalls, and miss out on the best buying opportunities.

The harder it is for buyers, renters, and investors to give you money, the lower the value of your product and service to them, and the higher the likelihood that they will just go fuel your competition with their capital instead. Today, convenience is even more important than price. Otherwise we wouldn’t have companies like Uber Eats, Doordash, and Instacart, all valued at over $20B.

Critical Mistakes Not To Copy For RE Pros & Businesses

One of the biggest problems in this industry is that so many otherwise highly intelligent real estate professionals and business owners think they ought to copy the competition, who they view as being successful.

Odds are that you don’t really know what’s working internally for others, or how broke they really are, and where they are bleeding money and customers.

Today, what is even more important than how many people are buying from you and giving you money, is how many are not, and who are going to feed your competition with more money to use against you.

Payment Options

Are you providing the payment options that work for your customers and are giving them the flexibility they need to pay you fast and consistently?

That may include Paypal, personal checks, bank wires, Cashapp, Bitcoin transfers, cash, or incorporating Buy Now Pay Later. Whatever your business model, incorporate as many as possible.

There should never be an excuse for them not to give you money.

Messy Websites & Detours

Some website operators appear to think that if one popup ad doesn’t work, it will work better if they throw up 5 or 10. More often than not, this is just going to turn off prospects instead.

You want to remove all roadblocks and streamline them purchasing from you, not add more hurdles.

Make sure your buy now button is big and obvious, and the process is simple.

Many sites now force people to sign up or register, which just sends qualified and serious prospects to the next competitor.

While list building can be useful, data is also becoming a bigger risk for businesses to collect as well.

Customer Service

Forget wasting money on expensive automated phone systems or chat bots that just drive customers crazy until they quit trying.

Whether you are renting or flipping real estate, investing $15, $33, or even $60 an hour for an on demand live phone rep to provide human service can more than pay for themselves. Especially when you consider the alternative is missing out on a $1,000 rent check, or $40,000 plus profit on a wholesale deal.

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

The New Tech Bust

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

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

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

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

The Side Effects

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

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

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

Getting Ready For A Buffet Of Property Deals

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

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

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

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

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

It is almost always best to get boots on the ground and meet the neighbors of a property before you make new acquisitions.

Failing to do so can bankrupt you fast. It only takes one or two duds weighing down your portfolio, or eating up all of the profits and cash flow from your other flips to really kill your flow.

So, how do you balance these best practices with efficiency? Why is meeting the neighbors so important and valuable?

Remote Versus Local Wholesaling

Virtual or remote wholesaling has become far more popular in recent years. Especially thanks to COVID lockdowns, new technology, and real estate investing courses promoting it.

It works. It can be hyper efficient and profitable. Especially at high volumes. However, while buying property sight unseen can be great in so many ways, it can also be risky.

Fortunately, you can find some balance. There are still ways to get the best deals and most fast, without getting lumbered with dead weight properties. For example, going out to meet the neighbors of a pending deal after you already have a contract signed with contingencies on it. Or hiring local contractors to go out and do some leg work for you.

So, why can meeting the neighbors make all the difference?

Avoid Grossly Overpaying

The last thing you want is to proudly show up at a property you just closed on, only for the neighbors to tell you that you paid double what it is worth.

Identifying Problem Neighbors

It is not uncommon for there to be problem neighbors. Some just don’t want neighbors or may be mad because they hoped to buy the property themselves. They can make it hard to do what you want with the property, or can actively block resales or rentals, versus becoming allies. You don’t want to be stuck with a property that you can’t flip or rent.

Problem Properties

There’s only so much you can see on Google maps or other virtual tools. There is only so much that you can see in person on any given day and time. Neighbors have a lot more information on whether there have been environmental problems, frequent flooding, or other issues that you just would never uncover until it is far too late.

Summary

By all means go fast and do a high volume of real estate deals remotely and out of your immediate area. Though, whether it is yourself, or a team member, meeting the neighbors before you close on a new deal can save you large amounts of stress and money, or cost you everything if you neglect it.

A new FHFA mortgage rule that goes into effect on May 1st aims to penalize those with higher credit scores and down payments, in favor of subsidizing higher risk borrowers. What does it mean for the real estate and mortgage market? What is the impact for investors?

New Mortgage Rules Going Into Effect

The new rule being instituted on May 1st switches around the long term trend of lower interest rates going to the most credit worthy and low risk borrowers.

There has always been risk based pricing in the mortgage market. Though, until now low risk borrowers that have been the most responsible with their credit, and who are putting more skin in the game with larger down payments have been rewarded with lower borrowing costs and interest rates.

Now the Federal Housing Finance Agency is working to subsidize the risk on lending to those with bad credit scores by charging lower risk borrowers more. Then using that money to give low rates to others.

For those purchasing a home or refinancing with a 680 credit score, on a $400k loan can expect to pay around an additional $40 a month, according to coverage from the Washington Times. Right during a time when mortgage rates have already doubled, and housing prices have been sky high, along with other inflation.

Trouble Continues To Brew In The Banking Space

Since the Great Recession FHA and similar loan programs have effectively acted as the new ‘exotic mortgage’. The types of loans that were blamed for the 2008 financial crisis. Loans with low down payments, to those with weak credit, and most likely to default.

This new rule seems to build on that, creating even more risk. Right when banks and lenders are already failing at great scale.

This may inflate that bubble even more, filling it with highly risky loans, and setting those lower credit borrowers up to lose everything.

Where it applies to ‘government backed’ loans, the other risk is of course that all taxpayers will end up footing the bill, and have to bail out these organizations for reckless lending.

The Opportunities

In the mid to long term this seems almost certain to lead to more distress, mortgage defaults, and in turn, more discounted homes and loan notes for sale.

At the same time, in the short term, it could mean an opportunity for those with weak credit and low down payments to still buy a home of their own. Which is fantastic for those that can really afford to sustain those homes long term.

This may be a new area of focus for some investors, who can flip and wholesale more affordable homes to lower income borrowers. Helping to fill the gap between distress and demand.

The good news is that, as a real estate wholesaler, you already don’t need a great credit score or any down payment with transactional funding. It’s a great way to make money in real estate and then pay cash for your own house.

Following on from other recent runs on banks and stocks, last week saw Bank of America customers alone withdrawing $2.3B they had invested in stocks.

What does it mean for real estate investors?

The Big Withdrawal Has Only Just Begun

Warren Buffett recently said that he believes more bank failures are likely. Based on previous financial crises, when 1,000 or more banks and financial institutions went under, it does seem highly probable that we’ve barely seen the tip of the iceberg of this trend.

Expect more runs on banks. Expect more big sell offs in the stock market. As well as withdrawal requests from other funds, and asset classes. Including sectors like municipal bonds.

That leaves millions of people and organizations with the big dilemma of what to do with their money now.

Expect More Capital To Flow Into Real Estate

It is that time in the cycle when more capital ought to flow into real estate.

Gold is already overpriced and provides no income. Venture capital is suffering after years of pumping billions into companies with no real business model or tangible value.

Real estate makes the perfect safe haven for wealth preservation and down side protection. As well as providing new sources of income for all of those losing dividends and jobs.

It is also far better than holding cash that is devaluing daily due to ongoing hyper inflation that is only being fueled by continued Fed rate hikes.

How To Capitalize On The Shift In Markets

This is the perfect time for real estate investors like you to step up and help people on all sides of this equation, and be well compensated and boost your own finances in the process.

On one side there are many distressed sale opportunities. Some of the best value deals we’ve seen in over a decade.

On the other side there are millions in America alone that need somewhere safer and more profitable to put their money.

It’s all about being the connector to help those selling and buying, and make some very attractive profits in the middle.

Now is the time to ramp up your marketing to end buyers who are looking for new homes, fix and flip deals, and rental properties to add to their portfolios.

There are enormous amounts of money out there searching for a home. So, it’s all about stepping up and making sure they know you are there to help.

Whether you believe we are just experiencing a handful of poorly managed banks failing, or the beginning of an epic new economic slump in which 1,000 or more banks will fall, there is no question that there are financial challenges out there.

Most won’t make it through these times. So, how can you embrace the great leadership traits that helped others through previous crises, and may be just what you need to grow through it. Then come out the other side as a market leader?

Stay Objective, Not Emotional

Billions of dollars are being spent to tug on your emotions and to create fear. It’s what keeps the media industry alive. As well as the bulk of the wealth in market manipulators’ accounts.

Stay objective. Think forward. Do adapt, but don’t make knee jerk reactions that will sabotage your career and venture.

See Opportunities Not Problems

Even as a newer business owner or independent professional you’ve probably figured out that your role is pretty much just championing an endless barrage of challenges.

There will be plenty of challenges ahead. Do have a healthy respect for the threats they can bring. Though choose to see them as opportunities to innovate and be creative with solutions.

Maintaining this pragmatic optimism will make all the difference in your short and long term success.

Know Your Cycles & Real Data

It’s sad to see so many investors, property owners, and businesses becoming victims of misinformation.

If you know your business and market cycles, then what’s happening now, and what will happen next is very predictable. Meaning that you can plan and march through it successfully.

However, you also must really know the numbers in your market, and your historical data. Be very, very cautious about trusting stats in media headlines, or averages proclaimed by most media pundits.

Even data from sources like NAR can be revised years later.

If you don’t have access to real data, and a pulse on the street, consult others who do.

Surround Yourself With The Best People You Can

The most successful and experienced entrepreneurs and CEOs will tell you that it is all about the people.

The best team will always win. You can hack decades of knowledge and experience and avoid all the mistakes by leveraging better talent too.

This applies to your department heads, regular employees, advisors, and strategic business partners.

Don’t just recruit and hire them either. Share the vision, and then get out of the way so they can do their best work.

Serve Don’t Take

The best leaders are servant leaders. They are not just trying to take and extract value or drive people by force. They have a mindset of being there to serve others.

That includes serving your team and partners, in enabling them to thrive in their positions.

As well as asking how you can serve more customers, better, and provide more value to them.

Understand Your Number One Job As A Business Leader

Your number one job is really to ensure that your venture does not run out of financial fuel. Find new sources of financial leverage, and working capital to keep the machine moving.

A new survey reveals that over half of Americans expect to lose everything in a new recession. Most believe that recession is already here.

While that is tragic for all of those individuals and families, it does create an enormous opportunity of a lifetime for real estate investors to help, and to be well compensated for that.

America Is Going Bankrupt

Big bank failures, and the dollar amounts involved are likely to make the last great recession seem miniscule in comparison.

If the world’s biggest banks can go under so fast, then not only will that have a waterfall effect on other businesses, but most individuals stand little chance of making it.

55% believe they will lose everything in a new recession. Close to 70% believe that recession is already here in 2023. While some at the very top and bottom may be insulated from this, it seems like there are many more who are not in tune with the economy, or do not have a healthy appreciation for just how fragile their financial situation is.

Here are the three main things this means for real estate investors…

Millions Of Motivated Sellers

The US population is estimated at around 336M in 2023. Around 60% of households are homeowners. That suggests at least tens of millions of those individuals who are becoming uber motivated to sell their properties before they lose them.

Some will need to be educated and nurtured through your funnel. Others will require creative solutions. Yet, not even all the banks left standing will be able to buy all of these deals. There is so much opportunity.

Massive Housing Needs

The flip side of this is that all of these tens of millions of households will need somewhere new to go.

Many may have to rent. Many will not be able to due to destroyed credit, and lack of documentation that has now made it harder to rent from all of these corporate landlords than to get a mortgage.

So, there will also be millions needing to buy new homes. As well as other investors looking to load up on supply to meet the booming demand for affordable housing and rentals.

People Need To Make Money

Jobs are being obliterated. Fed monetary policy continues to push toward creating more unemployment to deflate the economy.

Many are losing all of their savings in bank crashes and a tanking stock market or other exotic investments.

This is a great time to build out your own team with the best talent. Including training others how to help you wholesale houses so that you both win.

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

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

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

Relying On Others For Liquidity & Access To Funds

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

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

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

Allowing Your Reserves To Be Depleted

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

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

Slowing Down Your Marketing

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

Robbing Your Most Loyal & Profitable Customers

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

Doubling Down On Bad Decisions

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

Spam

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

Living It Up, While Hurting Customers

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

Giving Less Instead Of More

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