Interest Rates Rise Again!

The Feds Raised Interest Rates Again! But the Market is Still Strong!

Remember when the real estate market shifted last year and everyone was saying there was going to be a market crash?!?! Where the hell is it? Let’s be honest! Nobody could have predicted how strong the real estate market has performed this year after the ugly turn it took last year due to the rise of interest rates. Has the market softened up when comparing it to 2020-2022. DUH! That was the hottest time ever for real estate! Why? Because interest rates were at an all time low and there was waaaay more buyers than sellers! And believe it or not, we are still in a seller’s market! Let’s look below at why the market is still strong!

Supply and demand! Even though mortgage rates are double what they were this time last year, people are still in need of housing. And unfortunately theres not enough housing to supply the current pool of buyers. It is still cheaper to buy than it is to rent!

Rents are High: Rents are ridiculously high right now! We own a property in Locust Grove Ga where the average rents were $1500 a month before the pandemic. We just rented out the property for $2,250 a month! Why? Because there is not enough housing, especially in high demand areas, and that is the new average cost of rent for single family homes in the area. With the current interest rates, that type of monthly payment can afford you a $250,000 house with $0 down. If you have money to put down, then obviously that opens up your options. I don’t know about you, but I’d rather own than rent!

Home owners do not want to sell: The only home owners selling right now are people that have to sell due to financial hardship, relocation, or a distressed situation such as inheriting a property they do not want or can’t afford to keep. Very few are selling their homes just to liquidate or to upgrade.

Builders can’t keep up with demand along with still having supply chain issues and labor shortages: Builders are still facing many challenges. Though the cost of material has come down a bit, it is still higher than it was pre-pandemic. Builders are also facing the challenge of finding skilled labor. If you are a sub-contractor or a skilled tradesman, you have MANY options! It’s hard enough just to find good skilled labor for our fix n flips! Higher material & labor cost leads to higher building cost. Higher building cost leads to a higher selling price.

Here is what we are doing to use these tough times as leverage!

No reason to reinvent the wheel or do this alone! Community is everything! Especially during times like these!

Whether you are a wholesaler or investor, you can still find great opportunities in this market. I don’t speak from the perspective as a sideline reporter, I speak from the perspective as a wholesaler and real estate investor who is in the trenches doing this everyday. We are still wholesaling, fix n flipping, and buying houses.

Wholesaling: Let’s face it! Wholesaling is tough right now! Very few companies are thriving and a lot of wholesalers have either quit, changed industries, or got a 9-5 job. From 2020-2022, if you had a pulse and some decent sales skills, it was easy to find good deals and make a lot of money. Fast forward to today, you better have great sales skills, great communication skills, and be able to solve problems.

Right now, the way we find wholesale deals, fix n flips, and creative opportunities is through our direct to seller marketing (Direct Mail and Geo Targeting) and through realtors. We have shut down all text messaging and cold calling due to it not being affective for us. We have put a focus on being a lean business so that way we can continue to be aggressive with our marketing. NEVER stop marketing! That is the bloodline to your business. No leads=No business.

Fix N Flips: As a former contractor, I am very comfortable taking on rehab projects. It is easy for me to identify issues on a house and estimate the cost. If this is something you struggle at, it is best for you to either find someone with that skillset or pay a contractor to walk a property with you. We are very selective on what we buy for fix n flip projects. But what allows us to make competitive offers on these types of properties is having good contractors. Contractors can make or break a project. And if you don’t have one, I highly suggest you stay away from fix n flips.

Now for the most powerful strategy in real estate!

Creative Finance: Whether you are a wholesaler, realtor, or investor, you are doing yourself a disservice by not knowing this strategy. Creative finance goes deep and theres so many ways to use it on deals. Though it has to be for the right type of seller, creative finance will allow you to provide many solutions for home owners! Creative finance is how I purchased my first fix n flip, built a rental portfolio and I have even wholesaled creative deals. And to be honest, it’s the most powerful tool you can have as a wholesaler, realtor or an investor. The beauty of this strategy is that you don’t need cash, credit or credentials to buy properties. You can wholesale creative deals, fix n flip them or scale your rental portfolio without using the banks!

I can beat out any cash offer with a creative offer. And when I say beat it out, I mean crush any cash offer! The seller just has to be willing to take their money over time! The home owner gets their price, and we get our terms!

Imagine finding a homeowner who is in need of selling their home due to their job relocating. They bought their home in 2021 when the real estate market was on fire and they bought at a 3.25% interest rate, but they bought the home at the current retail value at that time. Now they need to sell but they have no equity. They have a great interest rate, great monthly payment, but NO EQUITY! What would you do to solve their problem? Most wholesalers, realtors, and investors would say “Sorry, I can’t help you!” But if you knew creative finance, then you could solve their problem! How? Easy!

Buy the house subject to the existing loan! Otherwise known as SubTo! YES, this is legal! Sellers don’t want to sell their property at a loss and most do not want to be a landlord. If you have the knowledge of how to implement creative financing strategies, you can solve unlimited problems across the nation! And the best part is, you can wholesale the deal to a buyer if you don’t want to keep it in your portfolio!

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Also, check out the podcast I did with Kevin Choe about wholesaling no equity homes!