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

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

America Is Going Bankrupt

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

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

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

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

Millions Of Motivated Sellers

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

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

Massive Housing Needs

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

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

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

People Need To Make Money

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

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

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

The Federal Reserve just raised rates again. What does it mean for real estate investors?

The Fed continued their rapid interest rate hike spree in December. Although this smaller half point hike was not as severe as the last one, it continues the trend, without having allowed time for the data to be published on how well previous hikes have achieved their stated objective.

Inflation

According to the Fed, the purpose of these rate hikes is focused on bringing down inflation. While it could tame some spending, higher rates typically also drive up the true cost paid for things. Which may be actually fueling inflation, rather than ending it.

Unemployment

Among the commentary on this latest rate hike is a fear that the Fed is committing to a period of high unemployment as they force employers to cut jobs.

This could be a very bad time for millions to lose their jobs. Especially with record amounts of credit card debt, and other debt which is subject to seeing repayments rise as rates go up.

If we do start seeing unemployment rise, then there will certainly be a rise in distress, and quite likely more mortgage defaults. At a minimum it should mean more motivated sellers eager to unload their homes at any number and terms possible.

Stocks Plummet

In response to the most recent rate hike 96% of the S&P 500 stocks fell immediately after the news.

That suggests investors in public stocks, including fund managers do not believe that the Fed’s monetary policy is sound, or taking the economy in the right direction.

On the bright side, when the stock market fails, many investors shift their capital to real estate. Which supports more competition and higher values. Given this comes in tandem with the crypto crash, we may see even more flight capital headed into real estate this year. Providing great exits to investors who are also capitalizing on distress caused by rate hikes.

The Stimulus Wild Card

If the economy does suffer from these rate hikes as some suspect, then there will certainly be calls for more stimulus money and bailouts to get us out of that hole.

This would in turn fuel even more inflation. Which would also be good for landlords and their rents.

Summary

While we may face an uncertain year ahead, there are plenty of side effects of rate hikes and follow up policy which could help real estate investors.

This is especially true for real estate wholesalers who have limited exposure to interest rate costs, and are not exposed to price volatility.

For the past couple of years we’ve been told that housing prices are so high, and bidding wars are so competitive because there is an incredible shortage of inventory. Yet, the data shows that there are actually millions of vacant properties across the US. Could these not only be the answer to retaining some affordable housing, but also fueling your deals as a real estate investor?

America Has 16M Empty Homes

According to a new report from Florida Trend in May 2022, the US has 16M vacant homes. Most of those are in Florida. Which has 1.7M, despite being one of the hottest states for buying activity.

This doesn’t count all of the vacant land and building lots out there which can also be used for housing. Nor, the enormous amount of no longer needed office buildings, and other commercial properties which are ripe for being converted to housing.

Affordable Housing

One of the big observations with all of these vacant houses, is that they far outnumber the amount of homeless in the country.

Official counts only put the number of homeless in the whole country at 500,000. Each could be given almost four houses each in Florida. Still, leaving over 14M empty homes across the nation.

More can be carved out either by government, private investors, or combinations of both in partnerships to retain a pool of truly affordable housing. That’s certainly better than spending over $500K a unit to develop new housing for the homeless as some governments are doing.

Of course, plenty more of this pool of properties can be sold wholesale to rehabbers and landlords to operate at market rates.

Finding The Deals

The discrepancy between the retail market and all of these vacant properties, is that they are not being publicly advertised for sale online. That doesn’t mean that they can’t be bought.

The key to unlocking all of this deal flow and profits is direct marketing to true off market sellers.

This can be done by mail, email, cold calling, and search engine marketing.

This is a great service to provide. You can help these owners liquidate all of these properties which are costing them money to hold every month, and turn them into cash.

On the flip side, you are providing much needed inventory to retail, rehabber, and landlord buyers. Like mining for diamonds or gold and bringing it to market.

 

The overwhelming majority of US households now say they believe it is not a good time to buy a home. What does that mean for real estate investors?

According to the latest data from the Fannie Mae National Housing Survey more than 70% of respondents said they thought it was either not a good time, or it was a bad time to buy a home.

The percentage of those who thought it was a good time to buy has reportedly dropped to an all time low.

Those surveyed still said they would prefer to own a home instead of renting if they were to move, but they appear to have become worn out by bidding wars and see prices as just being far too high. So, if you’ve been frustrated in trying to find deals, you are certainly not alone.

Pending home sales also began sliding in early 2021. A leading indicator that closed homes sales and home prices may follow that trend in the coming months.

Talk of interest rate hikes could also accelerate this trend, making current prices unaffordable for millions more, and disqualifying many for mortgage loans. As we know, it was the timing of rate hikes which really pierced the real estate bubble of 2008.

For real estate investors, it is probably past peak time to list and sell properties on hand. Now is the time to get that done before there is any further cooling in home buyer appetite.

Investors who plan to keep using real estate as a source of income are also going to have to put in a little more effort to finding deals. There may still be a short window of opportunity in which even retail priced properties can be quickly flipped for profits in white hot markets.

Yet, those looking for better value deals and built in profit margins should be ramping up networking, marketing direct to owners, and building investor buyers lists, who will keep buying and rent units out if the retail market vaporizes.

There are still plenty of profits to be made in wholesaling houses. It is all about finding real deals at the right prices, and having qualified buyers lined up to take them right away.

 

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.

 

40 million renter households in the US could be headed for eviction in the next 40 days. While epically tragic, it also brings great opportunity.

According to the latest data from the Aspen Institute this many tenants could be in the street by the end of September 2020. According to the Census Bureau, 34% of American renters didn’t have any confidence they could make rent in August.

Tip of the Iceberg

The truth is that there is probably a lot more distress coming. We are currently at a stage when most of the help seems to be over or at least frozen. Yet, especially renters have now burned through all of their savings and credit card balances waiting the virus out. Even those still employed are mostly probably seeing lower incomes, while expenses are up between hand sanitizer, masks, toilet paper and stocking up on groceries at inflated prices.

Unless there is a major historic change in these dynamics quickly, then it seems a tsunami of evictions is inevitable. It could end up being a whole lot more than 40M. Just think about the impact of 1 out of every 2 or 3 American households facing eviction.

Where’s The Help?

There have been promises of help and a new executive order from the president. In reality that help isn’t being spread out equally and many aren’t getting it. Many landlords and lenders aren’t willing to help, or they are no longer financially able to.

There have been new promises of eviction and foreclosure moratoriums. Not all are obligated to them. There is a lot of confusion between federal, state and municipal levels.

To compound the problem with evictions is where they will go. Affordable housing was already at crisis point before this. Many landlords won’t see the sense in re-leasing to someone else right now. For most it may just make the most sense to cash out.

Much the same is true for homeowners and foreclosures. There will likely be a sizable wave of distress sales in play.

The Flip Side

The flip side is that demand for purchasing properties is massive and urgent. End home prices are up, interest rates are low. Millions are moving for a variety of reasons.

Then there are also rehabbers and institutional landlords to sell to.

While it is tragic for many households. It is a huge opportunity to help many others. It is the perfect opportunity to help and boost your income too. That’s true whether replacing other income from a lost job, or scaling an existing real estate business. No one is ready to buy that many deals, and there are plenty to go around if investors move quickly.

Check out our VOD service to make more offers and land more deals fast.

 

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.