My investor friends keep asking me.....where are the deals?
They are doing all the same old marketing techniques: probate, bankruptcy divorce, foreclosure, out of area, free & clear, pretty house, ugly house, code violations, juniors, seniors, va's, fha's, hud's, nod's, fsbos, ups, and usp, and FBI.
Nothing seems to be working that well. Why? Why is that? Where are the deals? The market has begun to rebound, but no one is selling. Is it because of the hedge funds buying real estate? Sooooo many investors are afraid of that buzz kill - so let me address it in this month's blog post.
Hedge Funds (HF) have loads of capital; however, they are only interested in deals that can produce a 7-9% CAP rate. Big deal - right? 7-9 % is lame in my book, but the problem or opportunity comes in the way the deal is presented to the hedge fund. Do you think those HF managers know how to structure a deal for double digit returns? Do you think they'll be able to short a 2nd or wipe out a 2nd through a Jr. Lien redemption? Do you think they'll be able to negotiate 0% seller financing to produce the double digit return? How about coupling the deal with a lending model to make close to 35-45% returns? I'm sure those HF managers are not smart enough or nimble enough. They can only look at the plain vanilla deals. Those deals that put us to sleep.
So what? So quit your complaining and get out there and work the models. It's hot market strategies right now. That's right - that means post-it notes in targeted areas. That means better lists and better marketing. Your cost per aqusiion might go up closer to $1650-1800 per deal, but the deals should also be getting a little better. Profits of 50k are becoming the norm (for the 150-200k market), so get out there and get to work. Most of my clients are seeing 20-30k on wholesale flip and that (last time I checked) should only take about 10-15 hours worth of work.
That'll make the Lexus payment this month.
Wednesday, March 13, 2013
Wednesday, February 6, 2013
Is the Housing Downturn Over?
Where have I hidden my crystal ball?
The crystal ball that will tell me exactly what the future holds for the economy and the local Twin Cities Real Estate Housing Market. Is the news good or is the news bad?
Let's review.
Between June 2007 and November 2008, Americans lost more than a quarter of their net worth. By early November 2008, a broad U.S. stock index, the S&P 500, was down 45 percent from its 2007 high. Housing prices had dropped 20% from their 2006 peak, with futures markets signaling a 30–35% potential drop. Total home equity in the United States, which was valued at $13 trillion at its peak in 2006, had dropped to $8.8 trillion by mid-2008 and was still falling in late 2008. Of course the bottom continued to fall out from under wall street as the Lehman Brothers crisis hit in Sept 2008 and approximately $150 billion was withdrawn from the market in one 2-day session, where as an average was $5 billion. Foreclosures hit an all time high, with over 1 million foreclosures in 2011, several million more in the pipeline, and 872,000 previously foreclosed homes in the hands of banks. The crisis had a significant and long-lasting impact on U.S. employment. During the Great Recession, 8.5 million jobs were lost from the peak employment in early 2008 to February 2010.
Back here in Minnesota, prices dropped 35% from their peak in October 2006 of $231k to $150k in January 2012. There were an estimated 192,000 foreclosures in four years (from 2009-2013) and housing starts came to a stand still.
However, now there seems to be talk of a rebound. Right now we have about 13,000 homes on the market in Minneapolis and St. Paul. What happend to those 192,000 foreclosures? Did those homes show up back on the market again to be gobbled up by bargin hunters and landlords? No. And as a result, we're seeing the evidence of a hot market in the real estate community all over the 7-county metro area.
Since there are only 13,000 homes on the market, that represents just 3.0 months of inventory. When the market hits less than 6 months of inventory, a sellers-market is declared and today's sellers are seeing multiple offers and very low days on market.
However, the question still remains, where are the foreclosures? What happend to all the homes that have been taken back by the likes of Bank of America, Wells Fargo, CitiBank and US Bank, the 4 main banks in town? The answer walks you down a road of speculation and conspiracy theory. It's common thought that as this Shadow Inventory grows, someone is doing something with that inventory. The houses are sitting vacant but don't every make it back to the MLS (Multiple Listing Service). Therefore, what is going on?
There are answers to these questions. Some theorize that large hedge funds are buying up packages of houses. For what purpose? To rent them, commoditize the income, and package and sell that commodity to Wall Street. Does that sound plausible Maybe, but we'll see more failure with that strategy than success. There are a list of pitfalls with that plan - and it will certainly pose problems ahead for the housing market. However, I am looking forward to the real bargins that will come out of that downturn as a result.
The crystal ball that will tell me exactly what the future holds for the economy and the local Twin Cities Real Estate Housing Market. Is the news good or is the news bad?
Let's review.
Between June 2007 and November 2008, Americans lost more than a quarter of their net worth. By early November 2008, a broad U.S. stock index, the S&P 500, was down 45 percent from its 2007 high. Housing prices had dropped 20% from their 2006 peak, with futures markets signaling a 30–35% potential drop. Total home equity in the United States, which was valued at $13 trillion at its peak in 2006, had dropped to $8.8 trillion by mid-2008 and was still falling in late 2008. Of course the bottom continued to fall out from under wall street as the Lehman Brothers crisis hit in Sept 2008 and approximately $150 billion was withdrawn from the market in one 2-day session, where as an average was $5 billion. Foreclosures hit an all time high, with over 1 million foreclosures in 2011, several million more in the pipeline, and 872,000 previously foreclosed homes in the hands of banks. The crisis had a significant and long-lasting impact on U.S. employment. During the Great Recession, 8.5 million jobs were lost from the peak employment in early 2008 to February 2010.
Back here in Minnesota, prices dropped 35% from their peak in October 2006 of $231k to $150k in January 2012. There were an estimated 192,000 foreclosures in four years (from 2009-2013) and housing starts came to a stand still.
However, now there seems to be talk of a rebound. Right now we have about 13,000 homes on the market in Minneapolis and St. Paul. What happend to those 192,000 foreclosures? Did those homes show up back on the market again to be gobbled up by bargin hunters and landlords? No. And as a result, we're seeing the evidence of a hot market in the real estate community all over the 7-county metro area.
Since there are only 13,000 homes on the market, that represents just 3.0 months of inventory. When the market hits less than 6 months of inventory, a sellers-market is declared and today's sellers are seeing multiple offers and very low days on market.
However, the question still remains, where are the foreclosures? What happend to all the homes that have been taken back by the likes of Bank of America, Wells Fargo, CitiBank and US Bank, the 4 main banks in town? The answer walks you down a road of speculation and conspiracy theory. It's common thought that as this Shadow Inventory grows, someone is doing something with that inventory. The houses are sitting vacant but don't every make it back to the MLS (Multiple Listing Service). Therefore, what is going on?
There are answers to these questions. Some theorize that large hedge funds are buying up packages of houses. For what purpose? To rent them, commoditize the income, and package and sell that commodity to Wall Street. Does that sound plausible Maybe, but we'll see more failure with that strategy than success. There are a list of pitfalls with that plan - and it will certainly pose problems ahead for the housing market. However, I am looking forward to the real bargins that will come out of that downturn as a result.
Thursday, August 23, 2012
Growing Your Investment Business 10x
My coaching business allows me the opportunity to speak to entrepreneurs every day all across the country and learn and observe the best strategies for making money in the single family house investment environment.
A few of my peers are investing in apartment buildings. One friend has over 1400 units that he is managing all across the country. Another friend has just over 100 units that he has bought himself and is managing in his local market. There is an interesting paradox between the friend who has 100 units and the friend who is managing over 1400, and it has to do with the time spent on the business vs. the time spent in the business.
Although it doesn't sound intuitive, it's much easier to take your business 10x than it is to even just double your business. You see thinking in terms of 10x growth drops the reins. It forces you to think outside the box, outside what is just possible by becoming more efficient and reducing expenses---maybe making a few more deals per year. Thinking of your 10x business forces you to strike strategic alliances thinking in terms of whether this relationship is a 10x relationship. One of my coaches Dan Sullivan taught me that, and also said that when you can get your market to become the marketer, you'll be on your way to 10x growth.
Do you want to know which one works harder? The real truth behind my 2 friends is one of them works 50 hours a week and the other one works just 20 hours a week. Which one do you think works longer hours and why?
My coaching business allows me the opportunity to speak to entrepreneurs every day all across the country and learn and observe the best strategies for making money in the single family house investment environment.
A few of my peers are investing in apartment buildings. One friend has over 1400 units that he is managing all across the country. Another friend has just over 100 units that he has bought himself and is managing in his local market. There is an interesting paradox between the friend who has 100 units and the friend who is managing over 1400, and it has to do with the time spent on the business vs. the time spent in the business.
Although it doesn't sound intuitive, it's much easier to take your business 10x than it is to even just double your business. You see thinking in terms of 10x growth drops the reins. It forces you to think outside the box, outside what is just possible by becoming more efficient and reducing expenses---maybe making a few more deals per year. Thinking of your 10x business forces you to strike strategic alliances thinking in terms of whether this relationship is a 10x relationship. One of my coaches Dan Sullivan taught me that, and also said that when you can get your market to become the marketer, you'll be on your way to 10x growth.
Do you want to know which one works harder? The real truth behind my 2 friends is one of them works 50 hours a week and the other one works just 20 hours a week. Which one do you think works longer hours and why?
Friday, August 17, 2012
Will Foreclosures Continue Now That The Market Looks Better
The question that's on every Real Estate Investor's mind. However, an overshadowing question needs to also be answered, and that is --- are we really at the bottom? Will the market continue to stabilize or are we headed for another sink-time as the winter approaches.
Time Will Tell. Reading blogs like yahoo-finance or cnn-money, the left feels as though our administration will lead us to the promised land. However, I believe the administration would rather sink us entrepreneurs and move our democracy away from the free enterprise.
What are your thoughts?
The question that's on every Real Estate Investor's mind. However, an overshadowing question needs to also be answered, and that is --- are we really at the bottom? Will the market continue to stabilize or are we headed for another sink-time as the winter approaches.
Time Will Tell. Reading blogs like yahoo-finance or cnn-money, the left feels as though our administration will lead us to the promised land. However, I believe the administration would rather sink us entrepreneurs and move our democracy away from the free enterprise.
What are your thoughts?
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