According to the narrative the mainstream media is selling, house prices are shooting up thanks to a lack of property for sale.

At the same time, common sense, and the data suggests that there is a tremendous amount of financial distress out there.

So, how can you find the houses and do more wholesale real estate deals?

Sure, there are many tools being advertised online for identifying properties and leads virtually. Of course, this may not work as well as it is marketed, and may now be saturated with competition.

Try these ideas instead…

Realtor Yard Signs

It may sound counterintuitive. However, many properties do not sell simply because agents fail to answer their phones or respond to leads.

Try calling on the for sale signs you see. If they answer, you may be able to strike a deal that way. If they don’t, then you can bet the owner is stressed and frustrated, and is looking for another way to get their property sold. Just be mindful of the rules regarding commissions being due.

Old Listings

Brand new listings get all the attention. You’ve probably got alerts to new listings yourself. That’s often not where the real deals are.

When was the last time you scraped older listings on Craigslist for example? Ads that may not be getting any competition. By now the owners may be even far more motivated to strike a deal and offer a discount.

Private Lenders

Private lenders have been incredibly busy putting out money over the past few years. Now many of their borrowers are not paying. Even though there may be equity in properties, and lenders have more than made their money already.

Lenders may foreclose and flip you these deals. Or simply introduce you to their borrowers to work something out.

Blog About It

Social media may be super saturated with cheesy junk, and so many ads that users have become immune to them. Yet, when it comes to homeowners searching for help, they’ll still most likely end up on Google. Which is going to feed them articles, blogs, and websites around their search terms.

Try starting a blog, or reviving and scaling one you’ve already got. Publish some content focused on how to sell your home in a variety of situations, and become the trusted advisor they turn to.

Inherited Property

A grim, but true statistic is that almost 3.5M people die in the US, every year. Based on homeownership rates, more than half of them may own a home at the time they pass away. This alone is a huge pool of properties.

Heirs and loved ones left behind need help. They are often left with a big debt that they cannot carry, and a lot of work. Often they just want to turn those properties into cash as quickly as possible.

However you plan to find your house deals, check out our Fall interest rate deals from 1% for funding your next acquisitions.

The Dallas Federal Reserve Bank says that its modeling anticipates the recent rise in interest rates will bring home values down by another 20%.

With the recession reportedly behind us according to recent government data, could this really happen? What other factors might put even more downward pressure on home values? What does it mean for formulating purchase offers?

Interest Rates & Home Values

Mortgage rates have already risen by more than double this year. Many believe that the fed isn’t done with its rate hikes either.

From 2006 to 2009 the Dallas Fed estimated house prices went down by over 30% due to rising interest rates at that time.

As we are already at an average of around 7%, it’s not a stretch that we could see many borrowers paying 9% or far more for mortgages in the near future. In the past they have been as high as 14%, and even 20%.

The higher they go, the fewer buyers that qualify for home loans. The fewer homes that may be sold. Which in turn puts more downward pressure on prices.

The Impact Of New Airbnb Changes

Airbnb has been busy making changes this year. Among their latest announcements are changes to pricing, and trying to attract millions of new listings. Even though they already grew by 15% over the past year.

Many existing hosts seem to think that this is resulting in fewer bookings, and more pressure to reduce prices.

In turn this could make acquiring and holding short term rentals much less profitable. Given this has been a major driver of some markets, any dip here could impact surrounding home trading prices as well.

Other Factors Impacting Home Prices

If the bulls are right, then if we are in a new upward phase of the economy none of this may be worth worrying about.

Of course, last week we covered several data sets that suggest borrowers and their lenders may be falling further into distress. The performance of credit cards, business loans, and auto loans all hit their worst point in two years as of the third quarter of 2022. If they can’t get on track, then together with inflation and higher rates, it is easy to see how many could end up defaulting on their mortgages as well.

A lot still depends on the segment of the market. The luxury end of the market still seems well insulated against any issues. Jeff Bezos can easily afford to lose billions, and still be able to purchase a new $100M home for cash.

Age and tolerance of higher rates may also be a factor. Some may just mentally not want to borrow when rates hit a certain point. Others will be more concerned with the monthly payment.

Pricing It In

Just because home values may be falling doesn’t mean it isn’t a great time to invest. In fact, many have been waiting for this moment to act.

However, it is very important to price in this drop when you are buying.

If you are fixing and flipping, and it is taking you nine months to turn around a property, and you anticipate prices down by 20% by then, you’ll need to factor that into your offer and profit margins.

Rental property investors may not see annual rental rates and income affected, though are wise to offer this much less to ensure they are not heading underwater and end up in a position where they cannot sell or refinance for another seven to 14 years.

Fortunately, this is much simpler for wholesalers. Yes, you still want to price in some cushion. Though if you are selling directly to your end buyer within 36 hours of closing, not much is likely to change. Besides, you’ve already resold it.

What’s the smart way to trim your real estate business expenses to survive this phase or the market, so that you can thrive and scale?

The Problem Facing Many REI Business Owners

The vast majority of real estate business owners, investors, and agents have not experienced this phase of the economy and market before.

In just a few weeks they have gone from denying that it is possible, to being on the verge of panic as they see it happening.

Many are experiencing stress and fear as property prices and deal flow changes, and they see many real estate brokerages making massive layoffs, and lenders losing their credit lines and redying for bankruptcy.

What’s ironic is that we are entering the best part of the real estate market for buying the best deals, and making the most money. Many are right on the brink of success, if they would just hold on, tweak their real estate strategies, and optimize their finances and operations.

There are going to be millions of property deals coming, and with Best Transaction Funding they can finance 100% of their acquisitions.

To Quit Or Not To Quit?

You only fail if you quit.

Many may be quite happy going back to day jobs and hourly pay working for someone else in a different industry, if they can find anyone hiring. Yet, for those who are truly entrepreneurs and business owners, giving up now will be a choice that will haunt them for the rest of their lives.

If you really don’t want to put in the effort to keep going, then consider your options before you just throw in the towel and shut it down.

You could potentially sell your entire business and at least wrap it up cleanly and walk away with some cash to get you through the next phase of the economy.

Alternatively, you could merge your business with someone else, or just sell off your assets. This may include your data, other physical assets, and portfolios of properties. There are plenty of other investors who want to buy them.

Where To Cut Costs

This is a good time to trim frivolous expenses that are eating up your cash flow and profit margins.

Subscriptions and software can add up fast, yet are often underutilized. Review your accounts for all those you are still paying for, and cancel all but the essential.

The biggest area to cut for those still working old school is their office and business premises. Not only is having an office unnecessary, it is putting you at an extreme disadvantage against the competition. Both financially and in terms of productivity.

You can also cut labor on unnecessary activities. Like meetings, or low yielding busy work that doesn’t increase profits and revenues.

Where NOT To Cut Costs

Whatever you do, do NOT stop marketing.

If you stop marketing, you stop bringing in deals and dollars. Your business will die. Just more slowly and painfully than if you just shut it down now.

Also be wary of laying off your best talent. You cannot replace great talent with lower quality talent, and expect for things to go well. It is counter productive. If you lose your best talent to the competition, they will use it against you. It is hard to find, harder to keep, and easy to lose.

If you can’t afford your current wages, then consider temporarily reducing and minimizing their hours, until you get your deal flow going again.

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

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

Too Many New Homes

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

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

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

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

Why Are Builders Getting Stuck?

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

• Pricing new homes at the peak or above market value

• Lack of affordable housing

• Building the wrong type of inventory for consumers

• Overbuilding in the wrong areas

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

Turning Builder Surplus Into Deal Flow

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

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

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

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

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

 

The US real estate market is expected to hit new records this year. Yet, choosing the wrong deals and buyers could turn your best year ever into a financial nightmare.

There is plenty of capital for real estate wholesalers to use transactional funding to flip deals fast for big profits. Though end buyers relying on financing could run into challenges in trying to close due to quirks they may not anticipate in mortgage underwriting guidelines.

Even some of the most progressive new private money lenders, and investment property lenders have a lot of rules which can be directly at odds with what investors are being told are good deals this year.

Here are five to watch out for when contracting with an end buy that needs financing.

Square Footage

Unless you’ve run into it before you may not be aware that lenders often have minimum and even maximum square footage they will lend on.

This often rules out tiny homes and small condo units. As do their minimum loan amounts.

Some even have a cap on how big a home can be, and how many bedrooms it has. They prefer average sized ‘bread and butter’ deals that are easier and faster to liquidate.

Mixed Use Properties

There may be more mixed use properties being built, as well as many opportunities to buy now abandoned office and retail space, and convert it into mixed use.

It sounds like a great plan, and they can be great properties. Unfortunately many lenders don’t want to touch them. Especially when you are trying to finance a property which includes residential too.

These properties are much harder to finance, with big down payment requirements.

Acreage

Even though hundreds of thousands, if not millions of US households are heading to the suburbs, small towns and rural areas, many lenders are less interested in funding those properties. Some specifically prefer urban infill.

You may run into lot size caps as small as one acre.

Declining Vs. Improving Markets

Lenders guidelines are typically very specific about lending in improving and appreciating housing markets with strong supply and demand balance.

While many of the deepest discounts for wholesalers may be found in distressed markets, a declining market can be a nightmare for financing, with a drawn out process, repeat appraisals and more.

While most of the country is expected to keep growing this year, don’t be surprised if we see a dip in some once prime NY, CA, and IL markets.

Forbearance & Skipping Payments In The Pandemic

Many borrowers were offered the ability to skip payments on credit cards, car loans and house payments during the pandemic lockdowns. Some banks even automatically threw their borrowers into forbearance plans without them asking.

These plans were offered on the premise that they wouldn’t negatively impact credit and credit scores. Yet, some lenders are revising their mortgage underwriting guidelines to bar applicants with missed payments or that have been in forbearance plans, and consider them a loan default. Make sure your end buyers are aware of this before inking a contract.

 

With new foreclosure and eviction bans being put in place, how can you continue to win as a real estate investor?

For a moment it looked like these moratoriums were over, and lenders and landlords could rush back into the market to load up on inventory. Now these bans are being extended into next year.

While some may be fearful or uncertain about the future, others continue to enjoy their best years in real estate ever, and keep on growing. How can you best navigate these times?

New Foreclosure Moratoriums

Together the FHFA and CFPB have issued new rules for mortgage servicers. They effectively prevent many foreclosures being filed until at least 2022.

They also put new pressure on servicers to grant certain terms in loan modifications.

However, note that there are exceptions. Private mortgage loans are not subject to these rules and bans. Nor are vacant properties, or those on which borrowers have defaulted during trial loan modifications.

Overall CoreLogic has been reporting that mortgage defaults have been declining since April anyway. With default rates less than a quarter of than in 2005-2008. Suggesting these moratoriums may not be necessary at all anyway.

New Eviction Bans

At the beginning of August 2021, and despite previous bans being ruled unconstitutional, the Biden administration worked with the CDC to create a new eviction ban.

This new ban is said to last until November 2021. Effectively, ensuring no tenants will be evicted until sometime in 2022 at best.

This ban is said to be selective and not apply to every county in the US. The Realtors association has already reportedly filed a lawsuit against it. Many more lawsuits are likely to follow. Though, with the government already ignoring judge’s rulings which have deemed them illegal and unconstitutional, it’s unclear how much good they will do, even if they win again.

For Landlords

Some landlords are certainly speaking out against these bans. Especially, when tenants are choosing not to pay the rent, and are spending the money on boats, new trucks and even bigger TVs instead.

However, most landlords, especially those with bigger portfolios appear to be reporting strong performance levels, with few defaults.

Of course, those that are getting the rent paid by the government in one way or another are doing just fine, even if tenants are not paying themselves.

Though perhaps one of the biggest concerns may be how to manage out of state income properties if new travel bans are reinstated as well.

Real Estate Wholesaling

Real estate wholesaling certainly seems to still be the lowest risk, and most profitable strategy among all of this.

Using transactional funding wholesalers have almost no risk in making offers and flipping properties. So, line up your funding, and find sources of properties which you can flip. Including vacant property.

As for who to wholesale deals to, you may focus on rehabbers, retail, and landlords experiencing good performance, and may be using Section 8 or short term rentals instead of old annual leases.

 

At least five new notable changes could be set to fuel the recent real estate bull run even further. If you thought we might be peaking, or have felt prices are a bit too high, these happenings could drive even more action over the next year…

CDC Eviction Ban Ruled Unconstitutional

Two judges have recently ruled that the CDC overstepped its authority with its COVID related ban on evictions. One of them called it unconstitutional. This doesn’t mean that every foreclosure and eviction will now go through overnight, and the CDC is sure to appeal to avoid bankrupting financial losses. Yet, it is a great step in the right direction for landlords and other real estate professionals and businesses that provide them with inventory.

More Government Paid Housing

New changes to HUD housing vouchers are not only injecting an extra $5B in funding into the program, but are also waiving requirements so that the government can pay the rent, even if renters can’t prove their identity or residency status. Fox Business reports that only around 20% of those eligible are currently receiving the help. Under the expanded voucher program, renters are supposed to be able to forward these government payments to any landlord who will accept them. For landlords too scared to take on cash tenants, this could certainly revive the market.

Mass Rezoning To Boost Property Value

New legislation is being used to undo and eliminate exclusive single family home zoning. In favor of making every parcel of land eligible to build multifamily apartments, including in the suburbs. This dramatic change could fuel a massive flurry of new development, and greatly changing the value of lots that single family homes sit on now.

Lenders Easing Up Access To Credit

The Fed reports 27% of banks are easing their lending requirements for credit cards, and 17% are making it easier to get car loans. Traditional banks appear to be starved of growth in their lending businesses after tightening last year, and burning many customers when they wanted help the most. Some like JP Morgan Chase are saying they will even offer credit without credit scores.

The Bubble Is Popping In Other Asset Classes

On May 19th 2021 Bitcoin investors lost almost half of their portfolio values in a single day as the price crashed. Similar hits were seen across other cryptocurrencies, including Dogecoin. Then there is also the anticipated correction in the SPAC market and public stocks. Except another big rush of capital to the safety of real estate as investors see the data.

 

Yes, there is still room in the market for you as a real estate wholesaler. The market needs you.

You may have seen lots of recent success stories about others wholesaling millions of dollars of real estate, and even hundreds of deals each year. You may be seeing an incredible rise in demand for property in your area, and sharply rising prices too.

While you may be attracted to the income this sector offers, you may also be wondering if it is still a good time to get in. The answer is yes!

Not only is there room for you, but great wholesalers are still very much needed.

Market Conditions

We are currently in the ideal market conditions for real estate wholesaling. In fact, these are probably the best conditions we’ve ever seen. There is both a large amount of motivated home sellers, and motivated home buyers.

According to one recent report from the New York Post at least 1 in 10 households are in distress with their mortgages.

At the same time home buyer activity and resale prices are hitting new highs.

To complete this trifecta, transactional funding lenders are actively looking to put their money to work with real estate wholesalers.

Finally, while there are many people trying to wholesale real estate, just like any other profession or industry, most of them are not doing it well. The market really needs honest investors, who want to give everyone a fair deal.

They Need You

Homeowners need you. They need honest real estate investors who will treat them fairly, and won’t just tie up their homes in contract for months, leaving them to lose their homes to foreclosure when they can’t find an end buyer.

Home buyers need you too. They need a reliable wholesale seller who can give them good deals, on homes that will really work for their families.

Investors need you too. Rehabbers and rental property investors desperately need inventory. They need wholesalers they can trust to give them good deals and be transparent about the properties they have. Wholesalers are the lifeblood of their businesses.

The economy needs you. While many love to hate on real estate investors and wholesalers, it was this group which virtually single handedly pulled the country out of the 2008 Great Recession. It is this group which has greatly contributed to the economic rebound since COVID lockdowns started, and will be leading the charge to pull us through the next recession.

This is your chance to provide an incredibly valuable service and be very well paid for it.

 

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

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

Mindset: It Is What You Make It

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

Commitment Vs. Flexibility

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

Financing & End Buyers

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

Data

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

Focus

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

Marketing

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

Your Network

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

 

 

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

Redfin & Opendoor

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

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

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

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

Fewer Services & Choices Of Help

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

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

Higher Costs

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

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

More Inequality

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

The Bottom Line

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

 

Google Ads is changing its rules. How is it affecting real estate wholesalers, other investors and agents and lenders?

Google has announced new advertising and ad targeting rules which will kick in over the next few weeks. This could shut down any existing ads and PPC or CPM ad campaigns you are running and impact your plans for future campaigns. What do you need to know? What are the alternatives? How can you still run effective and profitable Google Ads campaigns with these changes?

The New Rules for Advertising Online

Google issued new policies for advertising on August 18th 2020 which go into effect by October.

The rule changes are heralded as a step towards decreasing the chances of discrimination. Though they may also make online advertising more expensive and prohibitive for small businesses and individual advertisers.

These changes specifically target those advertising anything to do with housing, employment and credit.

The bottom line is that you will no longer be able to use ad targeting filters to reach customers and prospects by:

• Geographic zip code

• Parental status

• Marital status

• Gender

• Age

Facebook and Google have also already been limiting other features, such as filtering and targeting by income levels.

How These New Rules Impact You

As of October 2020 any current ads and campaigns with these targeting features will be shut down by Google.

You can still run ads for buying houses, selling houses, private lending, owner financing and renting. You will just be very limited on targeting. Which means you’ll have to run much broader campaigns which run to many irrelevant viewers and consumers. Total ad cost and cost per lead could then skyrocket. Especially when you consider that 25% of your PPC budget can already be eaten up by click fraud.

One day in the future these new rules may actually be deemed discriminatory in themselves due to turning the tables only in favor of the largest advertisers who can afford to lose millions of dollars, and of course for Google who stands to benefit from higher ad revenues while delivering less results.

The alternatives are to turn to other forms of marketing, such as inbound Search Engine Marketing (SEO), affiliate and referral marketing and in person networking.

The Keys To Creating Effective Google Ad Campaigns

On the bright side, these top of the funnel ad targeting issues are only a small part of running a successful and profitable Google Ad campaign.

You can still relatively easily and inexpensively drive plenty of traffic to your real estate website. Where the difference is all made in actually getting real leads, deals and dollars is in:

• A mobile first website designed to both look great and maximize conversions

• Instant engagement and strong follow up

• Consistency

As you adjust to keep those wholesale deals flowing, make sure you take advantage of our Verification Of Deposit service to get your offers accepted.

 

A flurry of new laws are forcing real estate investors to adapt or be regulated out of their niches or entire businesses. Here’s what you need to know…

These are just some of the recent legal issues, new rulings and proposed laws that might make you want to restructure how you do business, your real estate investment strategy, and where you invest.

ADA Lawsuits

ADA lawsuits have been crippling businesses for years. This is especially true in California where they are rife and there are many professional ‘hitmen’ who are making a full time living from suing business owners. Yes, equality is important and so is providing reasonable facilities to those with disabilities. Yet, some of the mandates put on businesses now may catch you by surprise. Some investors may have thought they were in the clear by only operating online. A recent lawsuit against Domino’s pizza changes that. The supreme court shutdown an appeal by the company which is being sued by a blind man who says he couldn’t use their website.

Education

A recent suit against a real estate education company linked to two reality TV stars may shake up some of the many giant guru businesses that have popped up over the past decade. This is not a new concept. Though it is a warning to be very careful about the information you provide to others, and the legal risks of sharing real estate investing education. Especially if you are charging for it.

Hiring Help

The California Trucking Association just filed a new lawsuit appealing new rulings that could kill off 70,000 member jobs. The new employment rules aim to make it difficult for Californian companies to hire independent contractors instead of full time employees with benefits and protections under that classification. It is also an issue for Uber and giants like Apple and Amazon whose workforce includes many remote workers and contractors. There may have been some bad actors forcing contractors to work like employees. Though a new law of this severity could also kill off much of the progress made in the gig economy and millions of jobs. All while making it less desirable to hire people. Real estate investors may find a work around in asking their freelancers if they have a company they can bill as an outside vendor and service provider instead.

Taxes

Real estate investors also need to watch out for new taxes. If Bernie Sanders wins the 2020 presidential election he says he’ll implement a new 25% tax on house flippers, a vacant property tax, and new tax rate of 52% for high income earners. Investors may be able to avoid many of these bankrupting new taxes by switching from buy and hold and flipping houses to real estate wholesaling instead.

Rent Controls

California and New York have recently brought in sweeping new rent controls and protections for tenants that may prevent them from being evicted. That dramatically increases risk for lenders on properties there, and could put buy and hold investors in the red for a very long time. Expect this to push more to investing in other states in 2020.

 

What are the advantages and disadvantages of wholesaling houses in smaller cities versus larger cities?

Larger cities can definitely offer more action, prestige, and options. Financing is typically easier as lenders prefer markets they know. Yet, more and more real estate experts are heralding the benefits of investing in the suburbs and small towns. So, how do they really stack up?

The Pros of Wholesaling in Smaller Cities

1. Less Competition

Fewer investors operate in smaller locations, meaning there may be less price pressure and may be more value for wholesalers and house flippers. You can potentially also do more deals with fewer conversations thanks to not being out bid all the time.

2. Lower Prices

The suburbs and small towns typically come with much cheaper property prices. That can be attractive for new investors trying to get in, as well as when buyers and renters are fleeing unaffordable cities and downtowns.

3. Easy to Dominate

One billboard, one magazine and newspaper ad, a couple of signs and a couple hundred dollars a month on Google Ads might make you the most visible and dominate brand in a small market very quickly.

4. Great Growth Opportunities

Lower prices and rents now, mean more room for growth. There will be more room to grow in the number of properties too.

The Cons of Wholesaling in Smaller Cities

1. Less Demand

A smaller market also means less demand from a smaller pool of prospects.

2. Lower Dollar Amounts

Cheaper homes and lower entry prices may sound good. They can make it easy to mark up properties 50% or 100%. Yet, the dollar amounts are small. You can by for $50,000 and sell for $100,000, but still only make $50k. In a big luxury market a modest 10% profit margin may at least give you double or 4x that.

3. Returns on Marketing

Smaller markets mean fewer eyes on your marketing. You may only have a couple hundred online searches for your product a month. A few thousand vehicles go past your signs, and a few hundred blog readers. In bigger markets you might get a million views for the same outlay.

4. Little Economic Strength

The one thing that has kept most investors out of small towns, besides the lending issue has been the economic fundamentals. They have little diversification. Normally only one or two major employers. Perhaps all focused on farming and agriculture. It doesn’t take much to crush those towns and leave them with high unemployment. However, this is changing, provided there is good internet, there are millions of high paying remote jobs available that can pay a lot more than local ones.

Where will you invest?

 

There’s no question that the real estate market is changing. They say there are always opportunities. So, where are they now?

These four property types are becoming ripe for real estate wholesalers, and could offer the profit margins and volume investors need to keep up their cash flow in the year ahead.

1. New Construction Condos

There has been a speculative building spree brewing in some hot cities for several years. It’s now apparent that is catching up with some builders who have mountains of inventory they’ve been unable to offload. Even despite offering upgrades or paying association dues for years. In many cases their lenders simply won’t allow them to reduce public asking prices. However, they may be bought off market in bulk at deep discounts. Developers want to cash out of projects and focus on their next move. If you can score deep enough discounts, you can have beautiful product, and still move them at a bargain price that is attractive to end buyers.

2. Multifamily Apartments

Many single family home investors have been trying to step up to apartments. Yet, many are still struggling with their funnels and finding the deals. By building relationships, and with better marketing wholesalers can serve up these deals on a platter. In some cases, whole buildings designed as condos could be ripe for reverse conversions for those seeking buy and hold deals for cash flow.

3. Rural Homes

There are disadvantages of going too rural. Smaller buyer pools is a good example. Yet, with prices so high in urban centers, and little house for the money, expect more buyers and landlords to be hunting for properties on the outer suburbs. There is less competition for now, and the cheap prices could produce big spreads.

4. Ultra Luxury Homes

A new home sales price record was just set for over $230M. Other listings could push that record to $500M and even $1B before long. Even though there may be some concerns over a new recession, the ultra wealthy are normally unfazed. They can lose a billion and still be doing very well. In fact, softness in other markets can drive them to invest more in brick and mortar assets.

What will you wholesale this year?

 

If it hasn’t hit your markets yet, all the data is suggesting a softening housing market is coming your way. How can real estate wholesalers thrive during these times?

Recognize It

Don’t pretend it’s not happening. That won’t stop it. Don’t be scared. It’s just temporary. Instead, focus on being over-prepared. Be objective. Expect an over-correction. Know your numbers and what you’ll have to do each day to make your goals.

Don’t Stop Marketing

90% of the players in today’s real estate market have only gotten in the game post 2008. They haven’t planned for this. They don’t know how to handle this. That’s good for you if you get out in front of it. Whatever you do, don’t stop marketing. That’s what will keep the house deals and income coming in. In fact, try to find the budget to do more, and soak up the void being left by competitors.

Slash Unnecessary Overhead

To survive and thrive in a declining market you’ll need to be lean. Cut unnecessary bills, and gain more flexibility so that you can move faster, and aren’t fooled into making desperate decisions.

See the Opportunity

When the market falls in one city, it rises somewhere else. This may be a different segment of your own city. Like luxury versus affordable housing. Or it may be time to expand to a new market for more value and deal volume. Keep an eye on where other end investors are heading and where lenders are most likely to keep lending.

Bid Smart

Don’t overpay for deals. You can still make great money on wholesaling real estate every day. Providing you don’t pay too much for them. Price in enough profit for your end buyer, and to account for any further dip in prices before you flip it.

Work on Those Relationships

The strength of relationships with lenders, end buyers, vendors, and sellers will get you through. Show they can trust your recommendations, judgement, and service.

 

Watch out for these four real estate and mortgage trends that are evolving now…

The US real estate and mortgage market is changing fast. Many diverse trends and conflicting headlines are showing up. Some of these are local market differences. Like new foreclosure spikes by double digits and declining property prices and rents. Others may have more macro impacts, with bigger opportunities and consequences. If you are out there wholesaling houses now, make sure you know what’s going on.

Mortgage Interest Rates

Bank Rate reports that mortgage interest rates have come down in August 2018. Average 30 year fixed mortgages are only 4.37% and 15 year fixed loan rates are averaging 3.78%. That’s great news no matter what you are financing or refinancing.

Housing Beginning to Drag Down the Economy

Market Watch reports that housing is now finally beginning to pull down the national economy. The chief economist for Fannie Mae says that lackluster building activity, slow sales activity and and brokers commissions are all beginning to become a lag on the whole economy. Other analysts report that only around half the number of people are moving for jobs in 2018, and many home buyers have simply given up. Less building, fewer listings sold, and lower Realtor earnings can all start showing up in unemployment figures, GDP reports, and the balance sheets of local businesses.

While we never want to see other suffers, the sooner agents and sellers who have been overpricing listings catch onto this, the sooner wholesalers should be able to scoop more deals at better prices. If you’ve been longing for the glory days of 2008 and cheaper houses to come around, we could see more distressed sales and motivated sellers ready to take action soon. Providing you are wholesaling and are negotiating at good prices, this is all good news.

Alternative Lending

Investment capital is still plentiful for now. This is the time to use it. Non bank lenders have seen their market share rise over the past 4 years, and made over $60B in loans last year. In addition to transactional funding there are credit unions, crowdfunding portals, conduits, home equity loan lenders and private lenders will to provide capital. Real estate investors can use these sources to fund marketing, make down payments, do rehabs and grow their businesses. Don’t expect this to last forever. So, do take advantage of all the leverage you can get while it lasts.

Just watch out for shady lending and deals in the gray area which could make you a target and scapegoat when things go south. Remember what happened to all the stated income borrowers last time around.

Watch Your Advertising Practices

Facebook just got it with a big suit from HUD. The government agency alleges that Facebook has effectively let real estate professionals and businesses discriminate by providing them with its targeting tools for advertising on the social network. While no one should ever discriminate, many may be accused of it, even though they didn’t realize they were doing anything wrong by trying to market to their ideal audiences. Don’t think for a second that with all the pressure Facebook is under today that it won’t sell out its users and advertisers and give them up to the feds. This may seem extreme, but your financial survival and freedom may rely on revisiting your Facebook ads, promoted posts and social feed and removing anything which shows preference for marketing to any groups of individuals and leaving anyone out.

 

The next week may offer a big opportunity for wholesalers to get up their numbers. Are you making the most of it?

There is often a sweet spot for buying property at the end of the year. With some unique regulatory and trend twists, the last week of December could be especially profitable for wholesalers this year. It’s a short window, but one which can help you finish the year strong, and start 2018 even better.

Time to Buy

There is typically a lot less competition for bidding on and buying properties at this time of year. Realtors and home sellers who aren’t in a good financial position or who aren’t familiar with seasonal trends can be extra flexible and open to negotiating and cutting great deals.

Others are looking to make their annual numbers stronger. That can include home builders, real estate brokerages, and asset managers with REOs who are looking to maximize write-downs and losses for tax purposes.

The new tax bill also threatens to hit many with extra taxes in the new year, unless they downsize to avoid mortgage interest and property tax deduction limitations. Then there is the huge capital gains tax hit which will really hurt those who wait until January to sell.

Selling

While some people are too distracted with the holidays, there can be enhanced opportunities to wholesale and flip houses you find. Real estate is a great holiday present. Many executives and workers will be getting big bonuses this year, and will want to invest that too. Some firms and individuals will be under pressure to spend and invest to minimize tax exposure for the year as well. Then there are Realtors who want to get their numbers up for the quarter and year, and lenders who may be more willing to push through loan applications. There is often a dip in rates right after Christmas which can help buyers.

Investors should absolutely take time to enjoy the holidays, but don’t ignore the advantages to scoop deals, and flip them while others are distracted through the beginning of January.

Peak real estate season is coming up fast. How can investors do more wholesale deals in the months ahead?

Late spring and summer brings the highest volume of real estate transactions for the year. Those who excel during these months gain a great advantage in incoming cash, building a marketing budget for the rest of the year, and in generating ongoing referrals and repeat business. What can property wholesalers do to maximize the number of deals they get done this season?

Build Your Buyers List

In order to flip houses fast and maximize deal volume, build that buyers list in advance. Build your list of lenders too. Have the money and end buyers lined up so that as soon as you get deals you can turn them around and fund the next one. This can be done via direct mail, networking, Facebook, Google Ads, and more.

Market To Sellers Early & Often

Once school is out every Realtor and wannabe investor, along with a new lineup of websites is going to be vying for attention and marketing to these potential sellers hard. Then you have to compete on price and branding. It’s far easier and more profitable if you start connecting and building relationships before the rest of the pack. When they are ready to sell you should already be their first choice to pick up the phone and contact.

Make The Move Easier & More Attractive

Despite the sense in buying, selling, or investing this spring and summer, many will find a variety of excuses to hold back. For some it is the uncertainty of moving into a new neighborhood. For others it is navigating the mechanics of moving. Then there are those who are worried about how their family will handle the move. Teardown these objections in advance. Use your real estate blog to provide clarity on the lifestyle in different neighborhoods and how investments there are likely to perform ahead. Create referral relationships with movers and Realtors to facilitate a smooth process. Team up with new apps that make transferring utilities and forwarding mail a breeze. Build a sales and moving experience clients will rave about to others.

 

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

Want to do more real estate deals?

Who doesn’t right? For many investors transactional funding may be the key to doing more deals. We’re not just talking about boosting your deal volume over the next 12 months, but turning all those leads in your database and on your desk into deals this month.

There is a lot of noise out there in the mortgage lending space right now. Unfortunately, a lot of it just leads to dead ends, dead deals, wasted time, and frustration for real estate investors. So how can Best Transaction Funding Help?

Get Bigger Deals Done

Transactional funding can be ideal for getting those bigger deals done. Perhaps you are wary of taking on a big mortgage or rehab project, but the numbers on the deal work. Transactional funding can be used as ‘dough for a day’ to lock that property down and flip it fast. There are still lots of cheap properties out there, but would you rather make 50% profit on a $40k home or a $4M home?

Get Distressed Properties Financed

There are tens of thousands of distressed properties out there ripe for the flipping. Of course, many of them simply can’t be financed by traditional channels. This can be due to simple issues with missing appliances, worn roofs, old termite damage, or it could be critical fire or hurricane damage, foundation issues, or complete teardowns. Don’t leave these deals for the next guy. You’ll be kicking yourself when another investor makes a mint on them. You don’t have to do the repair work, or put up the cash to fix them. Transactional funding will let you flip them fast to rehabbers or cash buyers, and make a nice profit in the process.

Overcome Liquidity Challenges

It always seems like the best deals come along right when all of your cash is tied up in another deal, right? Don’t let that stop you. Best Transaction Funding offers up to 100% financing, including closing costs. This means you can keep marketing, churning out those deals, and bring in the profits.

No Limit Lending

Too many other lenders still have antiquated limits on the number of loans or dollars you can have out there on credit. At Best Transaction Funding it doesn’t matter. The more deals you’ve got the better.

 

Authored by Best Transaction Funding - the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

How can real estate pros and businesses get better results from their direct mail marketing campaigns?

Direct mail continues to be one of the core real estate marketing strategies for investors, agents, lenders, and others. Direct mail can be very affordable and has the potential to deliver great results and ROI. Of course it can also be a big let down too. Not every campaign is a hit, and every month more and more competitors seem to be targeting the same mailboxes you are. So how can you get better results from your mail marketing?

One: Optimize Your Mailing Lists

Your results are only going to be as good as your mailing lists. If you’ve been in the business for a while it may be time to clean up those lists. Get rid of the bad addresses and update your databases. Many may need to put more focus on building new lists. You may have a large database but if you are just hammering the same prospects again and again you are going to find fewer and fewer on those lists that are viable prospects. Buy, rent, or build new lists by requesting addresses when you are marketing online. Honing in on better qualified prospects with quality lists can help increase conversion rates and ROI. However, if you have been going too tight it may be worth expanding your criteria, or branching out into new areas.

Two: Send Better Mail Pieces

If you aren’t getting the results you want from your mail campaigns maybe it is a question of improving your mail pieces. That could mean being bolder and more creative in your packaging design. It may be investing in better quality mail. Or it could be hiring a professional copywriter to spruce up your message.

Three: Be Consistent

Not every prospect is going to need your services or want them at the moment they receive that first piece. Some hope that prospects will file those mailers and pick them up later when they are motivated. Not everyone does that, and it also means playing the odds of being picked amongst all the other mail if they do. However, some will just expect to receive more from you and may even be looking forward to a fresh piece with your contact information. Just keep mailing.

Four: Know Your Competition

Chances are that there are at least a handful if not dozens of other competitors mailing at the same time you are. It’s hard to beat them or stand out unless you know what you are up against. Consider collecting those pieces and how you can get on their lists to see when they change it up.

Five: Optimize Your Lead Handling

Generating the leads is only half of the battle. Managing and closing them is equally important. Optimize your lead handling so that you spend time with, and give great service to the best leads and get best ROI. That may mean getting assistance in answering the phone or screening calls, using the web to channel leads, and automating follow up.

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.