Epic Real Estate Investing - Coronavirus: Matt's Market Prediction | 978

Episode Date: April 5, 2020

In today’s episode, Matt reveals his economic prediction for this year and explains how it will reflect on the real estate market. Furthermore, he shares his Breakthrough Action Plan that will win regardless of whether his prediction is correct or not! Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, it's creative acquisition April. I'm breaking out the crystal ball today. I've got a prediction. And on good authority that I am correct, I'll put it on record today, and then we can look back six months from now to see how I did. And I'm going to give you a breakthrough action planned also today. That's going to win regardless of whether I'm correct or not.

This is Terio Media. Success in real estate has nothing to do with shiny eyes. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit r-e-I-Ase.com.

Here's Matt. Hey, Epic Investor, it's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate with an emphasis. on retiring early. This is the epic real estate investing show. And if this is your first time here, really glad that you found us. If you like what you hear,

make sure that you hit the subscribe button before you go. If this is not your first time here, welcome back. And thank you for sharing this with your friends and family. Wouldn't be here without you doing that. So thank you. We had a little bit of a glitch over the weekend and the episodes weren't released all on time.

You may have missed one or two. And this is the month, though. You don't want to miss a single episode. It's Creative Acquisition April. And today I've got a coronavirus prediction and how your creative acquisitions all play into that. And before I get to it, though, as promised, I did post the 21 creative financing terms and templates. Every investor needs for a shifting market. You can now get them at epic breakthrough.com.

If you try it over the weekend and had some issues, I understand. But it's all been fixed already. So try again. Sorry for the inconvenience. Epicbreakthrough. com. All righty. So one of the benefits of the quarantine that we're in right now is we've all got a lot of free time, free time to read and improve yourself. And so I have been. I've been practicing what I preach and really take an advantage of this time to, you know, enlighten myself with a little bit more than just real estate. And I've been doing a lot of research and doing so on the coronavirus, but not as much as I have been just on overall economics. The economy itself, because real estate is a big part of the economy, but I've never really understood the economy

the way that I would have liked to and the way that I think would actually serve me. So I've been doing a little bit more. I've been digging in and I'm looking at a historical view of the economy and seeing all the different stuff that was in place that creates a thriving economy. and that particularly that thriving economy that we were just in prior to our health crisis, of which historically speaking, would this health crisis, based on economic stuff that I've read, considered a black swan. And I know what a black swan is. I've heard of it before.

And this is definitely one. It's an unpredictable event that is beyond what is normally expected, expected of a situation as potentially severe consequences. These black swan events is based on, you know, all swans are white, and everyone said that black swans didn't exist until they were actually discovered. They're extremely rare. And so that's the metaphor. But, and with regard to what we're experiencing, extremely rare. But these black swans, they land with severe impact.

These events, they play vastly larger roles than regular occurrences. In history, I mean, they stand out, right? There are dominant roles right now in the development of what's going to happen next. And then we all look back on this at some point and recognize where the opportunities were. It'll all be clear as day when we look back. Very similar to looking back on 2008, right? We didn't even know what was going on. We just knew something was happening.

And then, you know, after a couple years, the world kind of got educated on what the secondary market is and how that works and how it impacts real estate and the lending process and how the lending process drives. property sales and property values and, you know, that's kind of household knowledge. Now, they made so many movies about it, so everybody kind of gets it. It's clear as day. And we look back and like, wow, if we would have just known where to seize those opportunities, look at all the magic we could have created way back then. But because it wasn't as clear when it was going on, most failed to act on those opportunities.

But those that did made fortunes. So let's learn from that. And let's see to it that we don't look back at this time. that we're going through right now with any sort of regret. Let's look back and recognize our brilliance for taking action, the right action. So when we pull out of this, you know, it's very uncertain at this moment as to when that's going to happen. But based on the doctor models, the projections, which have already kind of proved to be

inaccurate based on what they were projecting, you know, just a month ago, which is good news, right, because we weren't anticipating the country pulling together like they have been and mitigating and kind of altering those projections and flattening the curve, as they say. And so, but just based on the doctor's models, the most aggressively hit areas of the U.S. should hit their mortality peaks this week. And then we should start to see ourselves on the back end of things. The big risk, though, is us. That's the big variable, right?

people. Actually, I say that in the real estate thing all the time. The real estate is safe. It's the people that make it risky, right? And this virus isn't that dangerous. It's the people that are making it risky. So, and how long we deal with this is going to be based on the people as well. Just, you know, not taking the social distancing measures seriously or trying to get back to normal too fast and causing a potential relapse in the crisis. That's actually the bigger uncertainty is how society is going to act once we're given the okay to return to our lives. So, That's all I know. I'm not going to pretend to be an expert on that because I'm certainly not. I've read as much as I could find trying to dive and dig in between the various and oftentimes political slants that show up in all the various sources.

And if you get past all that, if you can actually read through it, there's actually not that much to learn. It's all pretty simple. The mitigation measures that we're all taking will work. And if we take them seriously and practice them for the next few weeks, all that to say, this will end. But what will our society and economy look like once it does? So there are three most probable outcomes. There's three outcomes that we could most likely deal with.

And so I'm going to go through three of those and what it means for us in real estate. Okay, so the least likely is what economists call the L shape. So if you were to look at a graph, you'd see an almost vertical dip in the economy, a really steep one. And you'll see it on the Dow Jones, for example, a few weeks ago. I mean, everything just kind of plummeted. And it bounced back a bit from the low. And it seems like it's staying pretty flat for now, but forming an L shape on the graph.

So what does that look like when America returns to work? Well, if companies and cities and people, if they take on a bunch of days, debt to survive and the type of debt that all needs to be paid back and it gets harder to pay back, that could be an issue. If they can't access liquidity or they don't have the ability to create it or earn it, the society can get trapped by their credit. And if the global economies are all struggling to recover and the government policy is essentially ineffective at boosting growth like they're trying to do. And, you know, just like all this stimulus packages, the influx of cash into the system,

if all that's unsuccessful at incentivizing people to spend, that could lead us into depression type levels. Okay? So if that were to happen, we'd look back in and we'd see a very clear L shape, a steep decline and then a long bottom. It's the most unlikely outcome, but it's certainly not out of the realm of possibility. It's definitely possible. Okay, so that's the first potential outcome.

The second potential outcome would look like a U, like the letter U, be a U shape. And it is more likely. This is where we experience our economical decline. We sit there for a while, and then we eventually rise back up and come back strong. If we were unable to control the coronavirus in the short term over the next couple of months, it just means more problems of this are going to emerge and create this as the potential outcome. If people come back and they're slow to pay their debts, if fear has planted itself in our psyche, if our mindsets have changed, if it's changed our behavior to be much more in defensive mode,

in scarcity mode, I mean, there's going to be some, definitely some mental scars left on society after this. I mean, I can already just feel a little bit of shift in my own mentality with regard to, I think depression is too big of a word, but, you know, it's kind of sad going outside on sunny spring days right now and see people wearing masks. I just went to the supermarket yesterday and, you know, people are clearly not being themselves. Some are a little bit more animated about it than others. but just people are, I think they're kind of losing their minds a little bit, but it's understandable because I think of myself as a logical, level-headed person. And I can feel it impacting my psyche. It impacts my mood for sure.

I mean, you can just kind of feel this cloud over all of our heads. And the debt that people will be taking on, and I mean, it could be coupled by paralysis after we pull through this, playing defense, a lot of defense, and it can create qualification issues for housing, of which could hold back boosting the economy. And if we see this across all countries, of which is very possible, as we're all human beings with human being wiring,

and if there's a good number of small businesses that don't survive through this, I mean, many of the jobs that have been lost already won't be there when we do return to normal. So things are going to be slow for a while. But at some point, the government policies and the stimulus stuff, that all that will start to work, it'll start to kick in and we'll pull out and we'll get back to, you know, strong forward prosperity and progress of America

of what we were experiencing before this happened. So there's a strong possibility for this U-shape. But again, the people of how we act, we are the big variable here. So we have to just keep that in mind. But a little stronger possibility for the U-shaped than the L. I think that's definitely more likely. And so there's the third potential outcome. And this is the possibility of which I am rooting for.

And it's the one that I am predicting, only because I can see how the country is starting to respond. It's just, I'm just grateful to be an American and around such awesome people because America is, from my perspective here in Las Vegas, Nevada, going outside of my own community and watching the news as much as I do, I try to hold myself back, especially when it just gets into all the stories and then all the what-ifs and the hypothetical conversations. Then I pull it off, or turn it off. But I do try to watch.

And I just want to stay informed. But I am protecting my mind because the sensational media, both the left and the right are pretty, you know, they're really striving for viewership. And they know that that type of stuff, it pulls in the viewers. So when I feel like I'm being pulled in inauthentically is when I pull back. Anyway, what I'm noticing is America is really taking this seriously as a people. And, you know, it took some of us a little longer to realize that. I have to admit, I was kind of laughing at it myself for a month or so.

But, you know, three weeks ago when the president asked us to stay inside, I think that was one on March 15th or 16th, I was like, all right, okay, it's serious. I'll go ahead and I'll play along and do my part. And so I think our mitigation is going to play out favorably for us. hopefully capital hopefully by the end of April that's what I hope for and I'm optimistically holding on to that just like the president was holding on or he was optimistically hoping for Easter which I think was a nice gesture and he got a lot of a lot of slack for that for spreading false hope like he wasn't doomsday enough and I just thought that was kind of unfair

There's nothing wrong with having hope. And we certainly don't want to kill that in our people. And we don't want to, as a leader, you have to be truthful and honest, but, you know, let people see the light at the end of the tunnel. So anyway, that's just me. I'm optimistically holding on to the end of April. It's hope. Okay?

I'm not counting on it. I'm not expecting it. I'm not banking on it. I mean, I wouldn't be even the slightest bit surprised if all this carries through May. which would be awful, but not the end of the world either. So it's just my hope. It's an aspirational prediction. Interesting of all the new phrases that come out in moments and circumstances like this.

So whether it's the end of April or the end of May or end of June even, the strongest possibility based on my hope, but based on the financial powers that be as well, like J.P. Morgan, UBS and Goldman. sacks, all of which know, they all know a lot more about this than I do, but I've been able to absorb a lot of their information and their knowledge and their data through my research since being in quarantine. And they've got access to a lot of great information. They know how to interpret it. And they've based this prediction on it being that we experience more of a V shape. So we got the L shape, which is a decline in a long plateau in the bottom. We have a use shape where we have a steep decline and sit there at the bottom and then eventually rise up. And then there's the V shape where we hit the bottom and bounce right back up, right?

Where we fall, hit a bottom and bounce back up quickly. So if you just imagine the shape of a V. And the longer the health crisis goes on, however, the less likely this is the case. But it is the predominant prediction at this point in time by the economists. and it's probably why the stock market hasn't totally bottomed out. Because at this moment in time, right now as I'm recording this, might be very different depending on when you are listening to this. But at this moment in time, that's what's expected.

So if the stimulus checks get out to the people, the unemployment benefits and the unemployment insurance, all that stuff kicks in, the tax credits are issued, most bills are going to get paid on time with the small business stimulus that's going, companies are able to maintain their staff if they do that and maintain the payroll. You know, the economy is going to come out bruised a little bit for sure. Maybe there will be a few deeper wounds to lick here and there, but nothing unsurmountable.

We all bounce back. And this is the most likely outcome as long as we get this virus thing under control sooner rather than later. And that's all dependent on the people. Okay. Dr. Fauci just yesterday said mitigation works. The virus can't live without a host. And if you stop passing it around from host to host to host, the thing is going to die. Okay, so that's where the mitigation comes from.

So J.P. Morgan's actual prediction, I'll go through all three of them because they're all very interesting. But J.P. Morgan's actual prediction, they've totally written off the second quarter. Yep, it's lost, as we all really have, right? We know that we're in the second quarter. We're not going to be very productive as a people or as individuals. We're going to take big losses here in the second quarter, and we're going to hit the bottom at some point in Q2, the second quarter. But expecting to get more than half of it back in Q3, J.P. Morgan's prediction.

So to make at least a 50% recovery of the economy in the third quarter, and make an almost full recovery in the fourth quarter. So J.P. Morgan, by the end of the year, is predicting everything to be right back to normal. UBS. Very similar prediction as J.P. Morgan, writing off Q2 as well. But they don't think Q2 is going to be nearly as bad as J.P. Morgan thinks it's going to be. But they also don't think the third quarter and the fourth quarter are going to be nearly as big as J.P. Morgan. But the net effect of their prediction is almost a full recovery by the end of the year as well.

And then Goldman Sachs. predicting a bigger loss in Q2. They're kind of the most pessimistic as far as how the losses are going to look this quarter. Actually, their prediction, it's a bigger loss than both JP and UBS combined, what they're predicting for the second quarter. But they also predict a much bigger, stronger bounce back as well than both of those combined. So there's some discrepancy in how we get there. But the consensus is that Q2 is going to be a struggle.

and Q3 and Q4 is going to get us back to normal. And we're going to look on our rearview mirror, seeing a nice V shape and how the economy performed. That's the predominant prediction. All right, so that's the economy. What does that mean for real estate? What does that mean for you and I, right? What does that mean for us real estate investors?

Well, here's what I see. Regardless of what we do get, whether we get the V shape we all hope for, or the U shape, which would be, be so bad, or the dreaded L shape, but not so dreaded if you know what you're doing. Regardless, what shape we get, there will be significant opportunity on the other side of this. It's already showing up right now. I mean, America is demonstrating how fragile they actually are, how they live paycheck to paycheck. And a lot of those people live in paycheck to paycheck

are property owners, and they're looking for relief already. It's already showing up. So the real question is, though, how long will that window, opportunity be open for for us. I mean, per the powers that I mentioned, it's going to be a short window, right? Four to six months, if we bounce back in the V shape, if it's longer, that's fine. But if it's short, you don't want to miss out on it. That's the prediction, the common, most popular prediction. And that being the case, if they are right, you don't want to miss out on it.

May sound harsh here. I get it. but on the other side of this thing, some people are going to the poor house. It's just going to happen. And some people are going to the bank. Both of those scenarios are inevitable. Many more are going to come out of this

poorer than they were when they went in. And some are going to come out very, very wealthy out of it. The question is, which one do you want to be? It's inevitable. It's going to happen. So that's the decision you get to make. You don't have control over it happening. you only have control over which side of that you want to be on.

So here's the game that you play to see to it that you come out of this thing better off than you were when you went in. The name of the game is control. To get control of as much real estate as you can. And if you don't have a ton of money to do it, and I wouldn't recommend using all of your money to do it anyway, And so the strategy to win this game is using creative acquisition strategies. And when I say creative, what that means is putting ideas in place of actual money to create this control for yourself. I mean, this is really where the breakthrough for you is going to come. And I have all of that posted for you right now, by the way.

The 21 creative financing terms and templates every investor needs for a shifting, market. And if you'd like to grab your creative financing terms and template, if you got those cheat sheets that I created for you, you can at epic breakthrough.com. You've got to get familiar with these if you're going to win this game, this game of control. And when you come out on the other end of this, controlling a bunch of assets, you'll be able to manage those assets in a way to where just with buying and selling and trading and refinancing and moving equity around, all these different creative things that options that you have when you have control of a bunch of assets that you don't have control of or you don't have the options you don't have when

you don't have control of all those assets. You want the options. Option creates freedom. Options, that's freedom and options are synonymous. So you want to get control of as much as you possibly can. because you can, this is where you can, you can almost, you can set yourself free in the next six months. I mean, you can create that residual income that you've been striving for that would replace your day jobs income. You can do it. That's the opportunity that's before you. Okay.

So you got to get familiar with these creative structures, these creative terms to win this game. And here are the benefits of incorporating these into your investing strategy. One deal volume. You're going to do more deals. You're going to do a lot more deals. You're going to get control of a lot more real estate than you have in the last, probably since you've been starting doing this. That's the opportunity for you. But you have to shift. You can't play this wholesale game through here.

You can certainly wholesale properties. But if that's all you're going to do, if you're going to play the same old game on this, you might make a good chunk of money, but you're going to miss the real opportunity here. Okay. But you're going to do a lot more deal. So you're going to have a lot more opportunity to buy. and hold and and flip. Okay, so that's number one, do a lot more deals. Number two, you can have the ability to create massive amounts of cash flow.

Massive amounts of cash flow, massive amounts of debt paydown. Okay. So that's the opportunity. The second big benefit of using these creative strategies in this type of market. The third one is risk control. Because if you're using ideas in place of actual currency, that's where the creativity comes from the ideas. You're really controlling your risk. You're really managing that because you're putting less money down,

which is protecting you from overpaying for the property. Okay? So huge risk control and using the creative structures. Number four, it's a huge hedge against inflation if you're controlling all of this property. There's already been more of the quantitative easing already in our stimulus package than was done entire 2008. And it gives us an immediate impact. It gives us an immediate boost.

It gives the economy an immediate shot in the arm, which is what it's there for, and that's its purpose. But the long-term effect is it devalues the dollar. Your money is going to become worth less. Okay? But the real estate is a hedge against that. The real estate is going to have the value.

It's going to maintain the value. It's going to maintain the value. It's going to fly right with inflation and maintain the value of your dollar if you're controlling the real estate. If you're just flipping properties and you're making money, that money is going to be worth less and less and less.

So it's a huge hedge against the inflation. The other benefit of that when you're buying on terms now is not to execute the strategy of selling with seller financing. You want to buy with seller financing because as it devalues the dollar, it also devalues your debt.

The debt gets smaller and less powerful as well. So if you are buying with debt, then that debt liability becomes smaller and smaller and smaller per the deflation of the dollar. And if we go into super deflation, it's going to be like you're the only people that survive are those that are controlling tangible assets like real estate. So it's a huge play right here.

You've got to control. If you're just flipping properties because it seems like it's a free-for-all, you're really missing the big opportunity. Okay? So huge play. And what that does is by using debt to acquire an asset when inflation keeps chipping away at the debt, it puts you on the same trajectory

and playing the same game as the wealthiest people in our society do. It's the same game that the banks play. okay it's the same game as that the mega wealthy play and it puts you on the right side of that economy and you you win with it okay that's why the rich get richer and this is one of the ways they do it they use debt depreciating debt to acquire appreciating assets all right number five it creates options talked about that a little bit already the more property you control after all of this the more options you will have to establish and bolster your financial position. And if done correctly, you will never have to work again. Never have to work again

if you do this correctly. If you really seize this window, that's what I'm saying is next, if we bounce back with this V shape like everyone's predicting, you got four to six months to just absolutely crush, to position yourself to never have to work again. The options that you'll have by controlling a lot of property, that's what's going to create your freedom. This is the play creative acquisitions and financing in the shifting market. It will win regardless if we have the L-shaped outcome, the U-shaped outcome, or the most predicted V-shaped outcome. The only difference is the speed of what you have to operate, how long that window is going

to stay open for you. So it means your breakthrough opportunity, it likely is going to have a very narrow window based on the predictions of the people that are much smarter about the economy than myself. So you want to get ready right now. You don't want to sit around and wait. So if you've been thinking about getting into the game, now is the time. And if you've been a little frustrated with your real estate lately, this is not the time to slow down. It's time to pick it up.

So you want to get ready right now. And so I'll see you tomorrow as we'll get more clear on the action plan. I'll give you a five-step action plan. And then we'll start breaking down the creative financing terms and deal structure. that you have at your disposal. Just need to get them in your toolbox. That's all, right? So if you don't want to wait until tomorrow

and you want to get started right away, get your cheat sheets for the shifting market, the 21 creative financing terms and templates, every investor needs for a shifting market. You can get it at epicbraythru.com. Grab them at epicbraythru.com. Swipe them, use them, steal them, make them yours. You have my permission.

They are all yours. I created them just for you. I think there's going to be your biggest competitive advantage over all the other speculative real estate investors, the wholesalers, the wheelers and dealers. We're going to turn you into a real investor where your money and your ideas work harder for you than you did for it, all right? So go grab those terms and those deal structures, those templates there, just copy and paste

templates you can put into your offers and get that at epic breakthrough.com. All righty. So if you found this episode valuable, there's a good chance that you. You know someone else who would. If it makes sense, if you got the time, if you think about it, share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. All righty, so that's it for today. God loves you and so do I. Peace and blessings and success and abundance and good health to you.

I'm Matt Terrio. Live in the dream. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us. We got the cash flow. This podcast is a part of the CISLO. suite radio network. For more top business podcasts, visit c-sweetradio.com.