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.

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.

 

The data shows that real estate investors still can’t rely on traditional mortgage lenders and banks for their financing. The good news is that there are alternatives.

The latest mortgage lending statistics from Ellie Mae and National Mortgage News show it hasn’t gotten much better for real estate investors over the past year. These are just some of the challenges that demand investors use alternative financing sources for their house flip and wholesale deals.

Time

The time it took to close a purchase loan grew by almost 10 days last year, to nearly 50 days on average. When more sellers and agents don’t want to sign a contract for more than 30 or 45 days, this type of financing just doesn’t cut it.

Credit Scores

If you do use your own credit as a real estate investor, you know that the system is notoriously rigged to penalize you the more you do. Instead of getting extra credit for experience they punish you for having taken out more mortgages. 58% of completed loans still have credit scores of 700 to 799. 71% have credit scores above 700. Taking out one loan on your personal credit can knock you off of that tier and derail your plans to scale.

Loan Costs

Conventional loan costs are still high. Even despite all the technology which is making it easier to obtain and process loans. A lot of it is made up of miscellaneous third party fees and mandatory purchases to get the loan.

No Common Sense

There doesn’t seem to be any more common sense in underwriting mortgage loans. It’s one of the downsides of artificial intelligence and going too big too fast. Just between Google and Facebook lenders should have all the data they need to approve more loans. They can even tell if you made it to work today or called in sick with a hangover.

Completion Rates

Far fewer mortgage loan applications may make it to closing than you think. Last year barely 65% of VA home loans, and 70% of all mortgage loan applications actually made it to closing. Those are not good odds to build a business on, have your income rely on, or to gamble deposits on. If you put down a $2,500 deposit on average, you’re already losing $7,500 to over $10,000 for every 10 properties you put under contract. That has to be deducted from any profits you do make on other deals.

A Better Way To Fund Your Mortgage Deals

Hard money is an alternative. Though still often an expensive one which is far more like dealing with a traditional bank than it used to be. Private lenders can be an option, but can be a huge distraction from just making money on real estate deals.

Transactional funding is different. No credit score requirements, no losing the deal over an appraisal and funding available in hours. Try it out on your next deal.

 

Use this free ebook on your website as an opt-in download to get more motivated sellers to get on your list and lead them to selling their homes to you, so you can wholesale and flip them.

Look out for Part 2 next week...

The Top 10 Fails To Avoid When Selling Your Home

Plus, How to Beat the System & Get More Money, Faster, Without the Stress

Selling your home doesn’t have to be that complicated. You can save a lot, and sell a lot faster, with less drama if you can avoid these ten common pitfalls.

Whether you are in a financial bind, just inherited a home, have to relocate and don’t want to juggle two mortgages, flopped on your first house flip, can’t get those trouble tenants out, or it’s just time to move on, selling your home should be simpler.

Don’t fall for these common mistakes, and you could be financially better off in days, and be enjoying a lot more peace of mind again.

1. Not Pricing it Right the First Time

By far the most common mistake home sellers make is failing to price their homes right from the beginning.

Here’s what happens…

What’s the harm in asking for a little more or pricing a bit more than the neighbors?  Many sellers do. Then it becomes a ‘boomerang home’. It’s what real estate agents call a home they use to show their buyers in order to make their other listings that pay them more look like a better deal. You might get showings, but they aren’t from buyers who will actually buy your home. It’s a lot of wasted time and stress for nothing.

Even more likely, potential buyers will think you or your agent just aren’t being realistic or serious about selling. They don’t have the time to try and convince you otherwise, and don’t want to waste time placing bids when they could just make an offer on a more accurately priced property with less hassle.

So, that fresh listing which gets the most eyes and attention in the first few hours starts getting stale. Few buyers see it, because they and their agents are only focusing on brand new listings popping online by the hour. Then it’s an old listing. If no one else wanted it, the assumption is there is something wrong with it, and they don’t want it either. Way down the road, you might get some low ball offers from the vultures.

Some sellers then try to slash their asking prices. By then the market may be down even further, creating a downward spiral, without ever catching up. All while you’ve incurred a lot more expenses, and if you do sell, pocket way less money.

If you do decide to list with an agent, then there is real science and strategy to pricing. You need to be within certain parameters to fall within the right searches. Or you’ll really be invisible to the right buyers.

Right priced properties can sell in any market conditions. Unfortunately, overpricing is often accepted and even encouraged by hungry new agents who just want to sign listing agreements to get their office numbers up, and hope you’ll lower the price later.

2. Investing in the Wrong Repairs & Improvements

All too often home sellers are told they need to be making repairs, upgrades and even staging their homes in order to sell. Of course every agent wants that. It makes their job a whole lot easier, gives them the hope of a bigger commission, and may put you in a tighter financial position with fewer options.

At best, spending on these things is usually a risk. If you are already struggling financially, this can be what finally sinks you.

Here’s the truth. Home makeovers are typically not the big money makers you see on TV at all.

According to the Cost vs. Value Report, all of the most common home remodeling projects are financial losers.

By far the best financial investment of all of them is an upscale garage door replacement, returning 97.5% of your money. Unfortunately, a master suite addition or upscale major bathroom remodel will only return about half of your money. Meaning you are immediately throwing half of it away, just like driving a new car off the lot.

These things might help sell your home. They may get more buyers to look at it. However, if you aren’t adding a dollar to the real appraised value, you are just going to wind up having less money.

3. Not Calculating Your Net Proceeds

The top line price of a home can really be irrelevant. It’s firstly what selling the home does for you, and secondly how much you actually net.

If this home is a financial burden right now, simply getting it off your hands is going to save you a lot of money and stress. Each day you own and hold it, you are spending money. Investors say every day you aren’t selling it, you’re buying it.

Really total it up. Mortgages, insurances, association dues, property taxes, utilities, internet, etc. That isn’t even calculating the risk of damage and devaluation of the property over time.

So, every day it takes to sell it, you have to deduct those costs. For example; even at $200 a day, if you list with a Realtor and it takes 100 days to get a buyer, and another 60 to close, you’ve lost $32,000. Money that would have gone in your pocket if you sold faster. Living in Southern California, your daily rate of loss may easily be 10x that.

So, number one, get rid of the bleed. Two, calculate your net from different scenarios. If you are working with a Realtor, title insurance company or real estate attorney, they should help provide a ‘Net Sheet’ showing your potential net proceeds. Make sure you are comparing apples to apples and all the costs are added in when evaluating your options.

For example; if you list with an agent, you may end up with a host of costs coming out of the sales prices, including 6% of the sales price going to Realtor commissions, taxes based on that higher amount, paying off liens, recording and wire fees, escrows, etc. Depending on the price of your home, that can easily run $100,000.

Compare that to selling direct to a buyer who will pay your closing costs, with no Realtor involved. Even if they offered you 10% less for your home, you might actually pocket a little more money. If the offer was the same price, you’d pocket way more in this second scenario.

 

Remember to deduct the cost of all the days you expect it to take to get to a closing, and any money you chose to put into repairs or improvements and staging.

 

What are the best Father’s Day gifts real estate investors can give this year?

Father’s Day 2019 falls on Sunday, June 16th. Hopefully we all got to do a lot for moms this year already. This is the chance to celebrate and give something great to all the dads out there. Real estate investors are uniquely positioned to have a great impact. That applies whether you are a mom in the business, a son, daughter, or a father yourself. It’s true whether you are a veteran with your own real estate empire already, or are just starting out in real estate wholesaling.

Quality Time

Fathers typically don’t cut themselves enough slack. They work a lot and rarely take the time they need to avoid burning out. So, one of the best Father’s Day gifts this year, is to give that to them.

If you run a real estate investment business and have fathers working for you, give them the day off. Even better, give them a long weekend to do something special. For the fathers in your life, take time out with them and make new memories, a new tradition and really focus on that quality time.

Share Your Knowledge

Whether all of your money is locked up in transactions or you are flush, you can share your knowledge. That can be one of the most valuable gifts of all. One that no one can take from them, won’t get stuck in a closet or lost in the mail. However little you think you know about real estate investing, it’s probably a lot more than most. Teach your dad, your son, or host a local Father’s Day brunch and train a dozen fathers on how they can make more money and enjoy more free time all year round.

House Deals

You’ve got house deals, give some of those. If there is a father in your life that really needs to conquer their housing situation, maybe you can even gift a cheap home and let them work on it. Or maybe offer a special deal for the weekend.

Bail Outs

You can bet there are a lot of fathers out there who won’t sleep tonight, thinking about how they are going to catch up on their mortgage payments and property taxes. Or where they’ll move their family to when that foreclosure gets finalized. Help them out. Maybe this is a good time to go back to all those leads who weren’t motivated before, and offer them a small bump up in your offer and some relocation help.

Money

One thing no one ever seems to have too much of is the money. That’s especially true for those struggling to make ends meet in a regular job, as well as those wanting to get started in real estate wholesaling, or to up their game. Maybe you can back them on a deal. Or if you don’t have much to spare, turn them onto Best Transaction Funding for financing their first or next wholesale deal. We even offer a referral program so you can get paid too. Or if they have the money, maybe what they need most is the opportunity to invest with you.

What will you give?

 

There are a lot of misconceptions about home flipping. Here is a snapshot of the latest data, where to find more profitable deals, where other investors are dropping the ball, and how to make more money in real estate.

How Many Homes are Being Flipped?

ATTOM Data defines a home flip as one which is bought and resold within 12 months. According to these stats 207,957 condos and single families were flipped last year.

With this long timeline, some of these properties may have not been bought as flips. Though there could be others that were intended to be flips, but took longer than a year to complete.

Then there is a big gap where there may be more contract assignments, options, lease options, owner financing and wholesale deals, which could add far more turns to the data.

How Much Money are House Flippers Making?

2018 data shows house flippers making an average gross profit of $65,000 per unit. That’s down slightly from 2017, though is still a substantial number. At least if you are doing 10 plus flips per year. Some are doing 10 plus per month.

Just make sure you are differentiating your net profit, including holding, taxes and marketing costs from the gross spread between the purchase and sales price.

Where the Best Profits are

Where you flip can make a big difference in both profit margins and dollars.

Think you can’t find profitable deals to flip in hot markets, check out these top zip codes by gross profit.

• 90291 - $906,000

• 94303 - $769,000

• 90046 - $755,000

• 98004 - $720,000

• 91403 - $676,500

• 94087 - $670,000

• 20016 - $624,000

• 37215 - $595,000

• 95050 - $519,500

Where the Most Deals are

Memphis, TN topped the list with 29.5% of all home sales being flips. That doesn’t count all the other types of investment transactions.

Other top flipping markets included:

• Donna, TX

• Miami, FL

• Washington, DC

• Jamaica, NY

• Baton Rouge, LA

• Compton, CA

• Phoenix, AZ

Time to Flip a House

ATTOM reports the average time to flip a house is now at 180 days. That’s an insanely long six months. Not what most would consider a quick flip. Extended hold times like this bring a lot of extra risk and costs. Not to mention derailing overall investor returns.

Be careful to do the math on your timeline and identify the perks of flipping faster. What if you could get that down to just 45 days or under 30 days? That money could be flipped many more times each year.

Then you have wholesalers using Best Transaction Funding who are turning deals in just 3 days.

 

Real estate investors can flip and wholesale a lot more than just single family homes. With competition fierce, and it becoming harder to make the numbers work on regular house flips and rentals, many may find a new sweet spot in flipping land deals.

Here are five ways to do it…

Flip Lots to Complete Larger Parcels

Developers can lose a lot of time, money, and energy trying to piece together large enough parcels to build their visions on. Many owners can be reluctant and very resistant to directly selling to these big developers, or at least demand wild prices. If you can get in an secure prime lots and then wholesale them to these developers you can add a lot of value, and get paid well. This can work anywhere, those may be especially profitable if you can get ahead of new developments in prime markets around new tech companies.

Solar Land Deals

John and Kyle of Land Mentors say that solar is one of the fastest growing niches in real estate. While some housing metrics are already falling, this sector is growing by over 50%. They’ve proven there is a lot of money in securing viable lots for solar farms, and then flipping them to developers or inking leases and adding a lot of cash flow and high yields to them.

Flipping Vacant Lots to Neighbors

With increased building many homeowners are finding their views being blocked, or their privacy and peace increasingly depleted. These owners typically aren’t good at chasing down owners and negotiating deals. You can inject yourself here and serve up neighboring lots on a silver platter. This can range from very inexpensive lots, to prime parcels that celebrities and executives like Mark Zuckerberg are willing to pay millions for.

Add & Extract Value by Clearing Lots

Simply clearing lots for new homes can cost money. It can also be difficult for potential buyers to see the full potential when lots are overgrown. Snapping up these lots, cashing in on their timber rights, and clearing the land can create more cash upfront, and increase resale price potential.

Subdivide Larger Parcels for Homesites

Another easy way to add value and speed up the sale of land is to subdivide larger parcels into individual homesites. There are probably fewer buyers for 100 acre parcels, than for 10 acre lots. Yet, many are willing to pay a lot more per acre for these smaller plots of land. You may even be able to retain several lots for your own portfolio for free in the process. You can hold them long term, build a home on them, or generate cash flow with your own solar lease deal and provide energy to owners who buy the other lots.

Remember, with Best Transaction Funding you can get up to 100% financing for your wholesale real estate deals, including closing costs.

Are real estate agents really helping or hurting investors’ efforts to sell homes?

Many property investors and regular homeowners simply aren’t aware of how beneficial or harmful Realtors can be in the mission to sell their properties. How do you know if yours is doing their job? How do you spot the good among the terrible?

The Issues

Just as with investors, not all Realtors are perfect. But, there are great ones out there. They can offer a lot of value to those flipping houses, restructuring rental property portfolios, and searching more homes to buy and wholesale. Those that fail to operate ethically, don’t have the hustle, or simply are not tuned into current trends can really hurt the sellers they represent, and be a major roadblock for buyers.

Unfortunately, some agents still hold out on presenting offers; either to wait for the one which offers them double commission, or because they don’t understand them. Some are just slack at returning inquiries and following up. Others don’t have the motivation and hustle to try and make deals work and make the most out of every lead.

This doesn’t serve anyone well. It can result in properties rotting on the market, owners losing homes or failing to get the most money in a timely manner, and it can choke the pace of the market too.

What to Look for in an Agent

To beat the above issues real estate investors need to select the agents they work with carefully. Don’t just hit Google or go based on who has a lot of yard signs out. Don’t base the choice on years in business either.

Instead, look those you can build a relationship with. Those that put values and service first, those that are hungry and active, and those that can answer questions about quirks in the market or can find out fast.

Test them. Do they answer calls on their properties fast? Do they take offers and try to make them work? Do they know the requirements of local associations, building codes, and mortgage lenders?

Always do a little mystery shopping before selecting an agent to help you. Then if you list with them, do it again. See how well they are serving potential buyers for your property. If they aren’t presenting you offers, responding, or being courteous, you may have a case to fire them and find someone better.

What have you found is most and least important in choosing an agent? Let us know your favorite investor friendly agents around the country on our Facebook page…

 

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