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.

 

2020 has been eventful. It’s certainly not over yet. As the world we live in evolves and changes, how should things be redesigned when it comes to real estate? What might it mean for investors?

ATTOM Data has reported a new rise in zombie foreclosures. In Jacksonville, FL, new foreclosure filings just 24% year over year in August 2020. Miami was the fifth hardest hit in the country. While the knee jerk reaction for many real estate investors may be “buy, buy, buy,” is it worth thinking about the bigger picture. Especially as so much is changing, and so fast.

It is certainly a great time to wholesale real estate. There is lots of opportunity to get in, out and paid fast. Though looking for a sustainable game plan and longer term strategy and market and niche, it is worth thinking about how things may be remolded on a macro level too. Rehabbers and landlords need to be even more alert since even minor fluctuations can throw off their plans. Ultimately, their business models need to be met by wholesalers too. For example, consider the fact that 50% of affluent New Yorkers say they are thinking about leaving. They are going somewhere. It’s all about staying ahead of the curve.

Then we are poised for one of the most notable redesigns of our real estate, landscapes and cities too. If we even see industrial era cities as an intelligent thing to have any more.

What might some of these changes be given the events of this year?

The New Normal

Some businesses like coworking space Venture X are trying to stay alive by bringing in touchless systems. Some may try encapsulated work spaces. These may help prevent the spread of future viruses. Other efforts may do little to nothing, like partial plastic shields and fogging elementary school classrooms.

Out With The Old

Many types of buildings may have become extinct. If viruses spread between floors in high rise buildings as the news has stated, then who will want to live in condos, stay in big hotels or work in big office buildings. Big schools and big hospitals may also have gone the way of the dinosaurs. What about indoor malls? Student housing for colleges? Retirement and nursing homes? More boutique sized commercial buildings with less people may seem much healthier and safer, and soon become in far more demand.

City Planning 2.0

Will self-driving cars have to replace uber drivers? Will we see the end of mass public transport? How about new layouts that discourage and are less likely to attract riots and civil unrest.

With some cities still not offering widespread indoor dining, and new delivery services emerging, then where the jobs are will change and where we choose to live for convenience can change.

Re-imagining The Home

The most obvious shift in residential real estate is to new locations. Specifically, away from dense urban areas and to homes with more outdoor and garden space. Between viruses and record numbers of wildfires and hurricanes, will the new standard call for stronger, safer, more self-sufficient homes that sanitize themselves? Will people demand multigenerational homes with quarantine suites.

Pricing

Will an absence in conventional mortgage lending shift demand to more affordable housing and government subsidized housing? Will gaps in wealth create more demand for ultra-luxury compounds and gated communities?

Will these changes alter the best properties to buy or sell, raise money for, what makes a good location?

 

The coronavirus pandemic has unexpectedly affected every aspect of our lives, delaying tasks and cancelling plans. If you are a wholesaler, house flipper or investor, you know the real estate market was not left unaffected. The initial market projections for 2020 have drastically changed.

But real estate is not dead. As the economy bounces back, so will the housing market. Realtor.com Chief Economist Danielle Hale recommends taking advantage of the online resources available. Interested investors can pursue listings online, communicate with the owner or seller by phone or email or text and complete transactions all in the comfort of their home, virtually.

There are a couple of challenges. Some owners, sellers and Realtors are being unrealistic. They are asking for far too much, or far too much down. Others think they don’t need to sell yet as foreclosure and eviction moratoriums drag on. This will bite many owners and investors over the coming months as they lose properties or have to sell at far steeper discounts.

So, as you wait for things to sort themselves out, what is the best way to make so COVID-safe additional money?

Stick to your numbers and find deals that you are confident will work. To keep up your income in the meantime, look for new ways to generate revenues and cash flow.

Best Transaction Funding has a deal to help you with this. Join our affiliate program and get a 10% fee on your referral’s transaction. If others are beating you to the deals, at least you can make money on all of those deals, without even having to do the work.

How does it work? Simply introduce a friend, family member, peer, client or other investor to the lending services of Besttransactionfunding.com.

The easiest and most convenient way is to automate this process with your own custom referral link. Send it directly to them, or post it online and let it work while you are sleeping and looking for other deals.

Otherwise, the introduction can be active, by promoting BTF’s 100% financing for real estate wholesalers on your social media and in online forums, texting and emailing your network, and recommending them when out there networking.

You can also email us to introduce your referral. You can also tell the referral to mention your name when they contact us, or for them to enter your name under “Referred by” and “Please specify” as they finish their funding request form.

 

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 common mistakes many real estate investors are making now and determine to excel.

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

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

Marketing

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

Market Changes

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

Personal & Business Brands

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

Hiring Remote Workers & Experts

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

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

Taking Advantage of the Market

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

 

Have wholesale real estate deals you are still trying to move? Why aren’t the buyers biting?

Finding deals is only half the equation in real estate. You’ve got to be able to resell in order to really turn those opportunities into cash. While wholesaling has grown in popularity, many are struggling to move properties for longer periods. That can mean losing contracts, being stuck with deadweight that ties up vital capital and killing your income. What can investors do about it?

Here are five common reasons people aren’t buying wholesale properties now, and how investors can change that…

Unknown Repair Factors

There is still a lot of inventory out there, and investors are crushed on time to evaluate all of their options. If your property is just a big question mark in terms of repair costs and issues, it can be easier just to skip onto the next deal. Most of the time they are thinking worst case scenario. So, don’t be afraid of scaring them off with the details. They just need to know so they can make an offer. Cosmetics are one thing, but how are is the plumbing, electrical and roof? How urgent are any code violations against the property?

It’s Too Expensive

Are you really offering wholesale pricing? It is important to look at this in terms of percentages and dollars. It should be competitive versus the ARV so that investors can line up appropriate loans. So know your lending market. It should also leave enough dollars to be attractive. A 30% discount on a $50,000 property is really nothing once your end buyer pays closing costs and even does basic cosmetic improvements like flooring.

It’s Too Cheap

Savvy real estate investors know that there are still houses trading out there for under $10,000. Others are going to be very suspicious of anything inder $100,000. That doesn’t mean you need to bump up the price, but justify it. Show them why the deal is so good. Maybe you just need to flip fast, that’s the going rate for local REOs and the neighborhood, or you have built in room for a new roof replacement.

No Trusted Relationship

Simply trying to blast out your wholesale house ads on Craigslist to strangers can soak up a lot of time. It means always trying to connect with new people, build a new relationship, and develop that. Ideally wholesalers will make these connections once, and then just be able to present great fitting inventory to their list who trusts them and who just buy. Focus more on nurturing the list than just flashing your inventory to strangers.

They Know How Much You Paid

One of the biggest hurdles today is that buyers can instantly see what properties sold for online. If you bought it for $40,000 less 60 days ago, they are probably going to think you should get half that (or less). Use double closings with transactional funding instead of buying and then going to market the deal, and avoid this challenge.

What tweaks might real estate investors want to make as the Trump administration gets to work on changing the fabric of our lending landscape?

Last week we discussed the acquisition side of wholesaling real estate in the wake of the Trump win. Despite the claims of many celebrities and other residents that they would be selling and looking for homes in countries, and foreign immigration departments reporting up to a 2,300% surge Americans searching for immigration help abroad, not everyone believes we’ll see that many new motivated sellers hit the market. However, being non-political and remaining objective, everyone in real estate ought to be analyzing the new landscape and making appropriate adjustments to position themselves to benefit. One of the other big media stories to come out of the election is how Trump plans to shake up the finance and lending business. So what might that mean for you?

For know all we can go based on is what Trump says he will do. We know what he says, but also we know there will be challenges to that, and any tangible changes may take time. Still, highly respected financial mind, and hedge fund chairman Ray Dalio says it is prudent to keep an eye out for changes. Specifically via LinkedIn he says he expects to see; aggressively stimulative fiscal policy, high inflation, and increased US growth.

Per Trump’s transition website the president elect lays out plans for blocking new regulations, undoing the Dodd-Frank Act, investing hundreds of billions in infrastructure, and lowering taxes. Much of these plan and the role of the new finance team is to spur funding for small businesses and mortgage borrowers.

So while transactional funding may still be the best finance tool for flipping and wholesaling houses fast, with little risk, investors may want to get ahead of the curve with their exit strategies. A period of higher interest rates may entice some previous cash buyers into parking their money in high yielding accounts, with less work than real estate. At the same time expanded access to more money and credit for investing and buying homes, and the retirement of the Dodd-Frank Act could create a new generation or type of end buyer for investors. New home buyers, millennial investors, and investors who may turn around and seller finance their purchases instead of renting them. It’s worth keeping this in mind as investors begin to roll out their real estate marketing efforts for 2017.

Ultimately; anything can happen. Yet, savvy investors will equip themselves with the data and market intel available and work to get ahead of their competition in marketing to the best prospects before anyone else.

Love or hate the new direction the country is headed in, we’d love to hear your feedback and predictions on what’s next for the real estate and lending landscape. Just shoot us an email or let us know on Facebook...

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.