Epic Real Estate Investing - The Market is Shifting. Are You Shifting with It? | Episode 113

Episode Date: July 7, 2014

There are no "good" or "bad" real estate markets, there are merely "up" and "down" markets. The game is real estate, always. It's just that the rules shift every once in a while. Well... the rules are shifting. Is your business model or investment strategy prepared to shift with it? Listen in to how Matt is shifting his strategy to capitalize on the new emerging real estate market, and listen in to how you can, too. ------------------------- Download Matt's free real estate investing course "How to Do Deals | No Money Required" at FreeRealEstateInvestingCourse.com or text FreeCourse to 55678 "Click" what interests you most:  Education Properties Income    Coaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome. Welcome to another episode of Epic Real Estate Investing. This is the show that will show you how to escape the rat race once and for all so you can do what you want to do it with whom you want to do it with. That's what we call financial freedom. Freedom to do what you want to do, when you want to do it with whom you want to do it without regard to finances. And anyone can do that, can achieve financial freedom in a relatively short period of time if they do just one thing. And if they do that one thing, just one time. And that one thing is to shift their focus from making piles of money to making streams of money. And in the world of real estate, we call that cash flow.

We call it a cash flow focus. You know, and as I've mentioned in the past, it's very easy to get. get sidetracked by that pile of cash mentality. I mean, there's quite a bit of money that can be made in real estate, while many of us got involved in the first place. And that money can be very seductive. I mean, it seduces me almost on a daily basis. So I'm constantly having to ask myself what I really want out of my real estate investing.

I mean, why did I start investing in real estate in the first place? So I ask myself, Matt, do you want a big bank account? but still have to go to work every day to maintain that big bank balance? Or do you want to do what you want when you want with whom you want every day? Knowing that regardless of what you do, your bank account will be replenished every single month. What do I want? Well, that's actually when I phrase it that way. And it becomes a very easy question for me to answer.

The latter, of course. I want a monthly replenishing bank account. That's far more preferable. But if it's such an easy question for me to answer, why do I have to ask myself it so frequently? Well, the reason is that the actions that I take on a daily basis, the big decisions I make in deciding which deals to do and what not to do, but the deals that I do do what to do with those deals once I've actually acquired them, those actions and decisions can be and often are significantly influenced by the pursuit of a big bank balance.

So I've got to stay focused. And what I mean by that is, you know, when you're faced with putting $30,000 in your pocket by flipping a property or $300 a month of cash flow by holding that same property, you know, to me that that $30,000 flip on the surface is always my initial instinct. It's like where my gut wants to go. I mean, that's a lot of money. And it's my instinct because I've got a lifetime's worth of conditioning. like most people do, that the definition of wealth and financial independence or freedom means

having a lot of money in the bank, a big bank account, a pile of money. Now, there's nothing wrong with the big bank balance. There's nothing wrong with it. I mean, you'll get no ill judgment from me if you have a lot of money in the bank. Congrats. You're crushing it. If that's your goal, then by all means, keep doing what you're doing. However, if your goal is financial freedom, by pursuing that big bank balance, by having that your goal, but you want the financial freedom as well, by continuing to build that bank balance, you are extending your journey to actually get to the freedom part.

And that's really tough for a lot of people to get a grasp of. It was for me for a very long time, and it still is every once in a while. but you see by taking that big cash payout from your real estate deals, you are actually extending your time to exiting the rat race. I mean, you feel like you're progressing, but you're extending your time to actually reach the freedom part. It's counterintuitive, isn't it? I mean, it doesn't seem right, does it?

No, it doesn't. And that's why I have to keep asking myself about what my goal is, having lots of money in the bank or having my bank account replenished regardless of what I choose to do with my days. the big bank account doesn't mean anything it doesn't mean anything except what you make it mean but doing what you want with your days without the worry of money that's what i'm talking about that's what i want and you know you might be uh i don't know here shortly coming up kind of faced with the uh you know it might not be a choice anymore you might have to pursue that the the financial

side of things. And, you know, what I'm getting at is, I don't know if you've noticed or not, but I sure have. The market nationally, it's showing signs of movement. And it's movement. It's multidimensional. The market, it's shifting. And, you know, it just might not be as easy to flip those properties for quick profits like it has been the last several years, certainly not in the quantity that we have been doing it. You know, to succeed in this new market that's starting to rear its head, you're going to have to shift with it. The market is shifting and if you want to survive, you're going to have to shift with it. You know, I've said this in the past.

There's no such thing as a good or bad real estate market. No such thing. There are only up and down markets. The game is real estate. It's always real estate. But as the market changes, so do the rules of the game. I mean, you can always play the game of real estate and create massive profits and or wealth for yourself, always.

But in order to consistently win this game, you've got to shift your business model or your investing strategy to play by the shifting rules. And the rules, they are shifting. And if you're not paying attention or you're not prepared to shift, this new market could leave you behind. Maybe not that drastic, but maybe, but maybe not. But you could certainly leave a good amount of money on the table, money that could have been yours if you're only out in front of the wave a little bit more.

if you just acted a little bit quicker when the shift started to happen. So how is it shifting? Okay. How is it shifting? There's some good news and there's some bad news in this shift. But depending on your perspective, it could be all good news. I mean, it is to me. And since you're here, it should be all good to you as well.

So let's dive into the market a bit and analyze what's actually going on right now. First, it has shifted with regard to how investors. find their deals. Second, it has shifted with regard to what investors are doing with their deals. And there's a third part of this shift that's happening, and I'm going to get to that a little bit later. But currently, we are indeed coming out of an analytical and sterile environment of which all one really had needed to do to go find a good deal was, you know, just kind of belly

up to the MLS or go to the courthouse steps or any number of online distressed property aggregators, analyze a number of properties from a large pool of properties, cherry pick the best ones, and submit offers. Submit a lot of offers. I mean, certainly everyone did not get every deal that they went after, but those that took their business seriously, they got plenty. Properties were purchased efficiently, and within minutes, they were resold efficiently and quickly for hefty profits.

Now, on this podcast, this show. here, we haven't talked much about this type of deal acquisition. And with good reason, but that's a way or what I just kind of share with you, the multiple listing service, the courthouse steps, the all the online auction services, the property aggregators. You know, there's been some big, giant heavy hitters in this business over the last few years that that's how they've been operating and running their business and they've been just making a killing.

But we haven't talked about that much here. and with good reason. I'm going to get to that in just a second. You know, personally, I've been purchasing properties. This is how I know about it. I don't teach it, but I certainly know about it. Because I've been purchasing properties the last few years from wholesalers who have simply been finding deals on the multiple listing service.

They've had a system in place where they just put out hundreds and hundreds and hundreds of offers a month and they wholesaled those to me. And I've been purchasing properties the last few years from realtors who have simply just been plucking properties off of HUDHomeStore.com. and that's where the HUD Department Housing of Urban Development sells their properties. And any number of online auction services that my realtors have been pulling properties off of. And I've seen from behind the scenes on the assignment agreements, I've seen the profits that they've made. And in most cases, I don't know about most, but certainly enough, probably half at least.

My wholesalers have made significantly more money than I have on the deals that they have assigned and sold to me. And as I've always said, I don't care how much money you make as long as I get what I need to meet my own minimum deal standards. I have no problem with the people that wholesale me money making a killing. I just need to hit my numbers. And by the way, that's actually a pet peeve of mine. I hate it when a client, and it doesn't happen very often, but when it does, it really irks me. I hate it when a client is more concerned about what I'm making off of the deal than what they're making off of that same deal. And that's just, that's a terrible poverty type mindset.

And it doesn't work well with me. And I don't like working with people that have that mindset. So, I mean, just in a nutshell, stay out of my pocket and focus on your own. All right. Anyway, like I said, it's a pet peeve. We all have them. So anyway, my wholesalers, and many of them have come through epic wholesalers. They've all been making a killing.

I mean, not since the Great Depression have investors been, you know, blessed with so much opportunity. One's skills could virtually be abandoned, meaning it didn't take skill to create massive profits from flipping houses. And on the acquisition side to find the deals, it was a numbers game. And on the disposition side, it was a numbers game over there as well. I mean, just no skill was required. You just had to work and play the numbers.

and that's what made the market analytical. It was sterile because the sellers of properties were typically, you know, faceless entities, most often a bank. So now, playing the numbers and dealing with these large financial institutions will always have its place inside of real estate investing. That's not going to go away. But continuing to rely on analytics and foreclosures as a business model could be a recipe for disaster moving into these coming years.

So what is there to do? Okay, so what can you do? Well, the first thing there is to do to survive this evolving market is to get back to the basics. You got to get back to the basics. In other words, investors need to become investors again. They'll need to regroup and shift their focus back to driving a marketing and sales-based organization, an organization that not only analyzes leads like they've been doing, but they've got to learn how to create those leads

and they've got to learn how to convert those leads as well. They've got to get back to the basics. And the first adopters, and this would be you I'm speaking to, because this is pretty much the only thing that I've ever taught here are the basics. The first adopters that really embrace that and get back to the basics, they should come out on the other side

potentially even more prosperous than before while the more stubborn and or slow-moving investors they're going to find themselves adequately prepared to operate in an environment that no longer exists. That's why I never focused on buying from banks. I never focused on buying from HUD. I never focused on sites like auction.com and all the other thousands of those sites that are out there. Because I knew this day was coming. I knew it wasn't a sustainable strategy.

I knew it wouldn't last. And it didn't. So hone up on your marketing, your people, and your sales skills, and I'll tell you, you are halfway there to capitalizing on another real potential boom. So did you get that? I mean, we've just come out of a huge boom. And a lot of people are going to be singing the blues because they're going to notice this market is shifting. But if you hone up on your marketing, your people, and your sales skills, you're going to be like, what's wrong with the market? I'm killing it. Why aren't you? You get that? Not only have I been teaching you an approach that works in any market, but I've been teaching you an approach that will work especially well in this coming market. I mean, you are so prepared. If you've been here for any length of time, you are so prepared. You are so ahead of your competition. And most of you probably don't even realize it. I can hear it in some of your minds right now. You're like, I didn't even know this other thing was going on out there.

Well, it has been, and it's been unprecedented, but it's gone, so don't worry about it. If you missed it, don't worry about it because you're prepared for what's coming next. You know, the trends, they come and go, and that's why they call them trends, essentially, but the basics, they always apply. In other words, if you've been applying what's been discussed here since day one, if you're a free real estate investing course subscriber, if you're an Epic Pro Academy member, And if you've been applying what you've learned, get ready. You know, it might be a little tougher as the market shifts.

Maybe, maybe not. But for those that have been winning the MLS game or the auction game or the online aggregators game, you're going to watch them exit the business while you're still here. You'll be watching them leave the business. Because you'll be here because you're prepared. And if you hang in there, you're going to find yourself very soon with significantly less competition for your deals. So that's great news.

So keep doing what we do here. Send your direct mail. Send your yellow letters, send your postcards, anything. Place your bandit signs. Keep that up. Keep posting to online classified sites. Keep dialing for dollars. Keep sorting the prospects from the suspects with the three basic questions that I share

with you. Keep setting appointments. Keep implementing your seller information questionnaires. Keep writing offers. keep doing that, just keep doing it. And all of you are going to find yourself reaping the huge harvest you've all been sewing. I mean, you are so far ahead of those that haven't been doing what you've been doing. So just keep doing what you're doing.

And like I said, I mean, you're halfway there. So you're good. Now, let's talk about the rest of it, the other half. The second thing to do to survive this shift is to reconsider your exit strategy. you know specifically as the the quick flipping type transactions as they'll slow down many investors are now looking to deploy the the money that they have made during this past foreclosure boom into cash flow properties i mean they're already moving and they're moving fast too and why the speed why are they moving fast well to beat the dropping cap rates of course

so so where are they moving so quickly too you see once i noticed the big shift in exit strategy of my more prominent and successful peers, that's what I wanted to know. Where are they taking their money to invest? Where are they going? I want to know. You know, and since, you know, actually this type of information could almost be considered behind the scenes or insider information, quote unquote, and thank goodness that in real estate it isn't illegal here. It's not like it is on Wall Street. We're allowed to share insider information. But I knew that type of information was, since I just was catching. it right away. I noticed it right away.

I knew a Google search probably wouldn't produce the type of accurate and unbiased results that I was really looking for, the type that would make a difference for my business. So what I did is I assembled my team and we started to research through the multiple listing service statistics. We started pulling title records of various areas and we did a lot of inquiring within our network via phone calls, countless phone calls. And, you know, and kind of once we completed beating the bushes to our satisfaction, we were able to identify the top 10 markets where many of the nation's most prominent real estate investors

were taking their cash to convert to cash flow. Sound familiar? The experienced investors, the most successful ones, those that have been around the block a few times, those that have been wholesaling and flipping madmen these last several years, they're now scrambling to hold for cash flow. Anyway, once we're, we completed beating the bushes to our satisfaction, we were able to identify the top 10 markets

where many of the nation's most prominent real estate investors were taking that cash into and converting it to cash flow. And as a result, we made some shifts within our business model to match that of the shifting market. And we did that by bolstering and establishing our company's presence in these top 10 markets. And by the way, you can download that report. You can get the top 10 markets for free at cashflow savvy.com right there on the home page. We've added those top 10 markets to our investor package. I don't want to go over them all on this episode, but you can go get that there at cashflow savvy.com.

So what I'm doing is I'm sharing with you a portion of what we have done to prepare for a new market. And I shared that with you just to give you an example of what there might be for you to do with your business model. You know, if you're not in a position to hold yourself, you might. might want to shift your focus to wholesaling to those that are. I mean, it's apparent from our perspective that that's where investor focus is going to hold property, meaning that's where much of your wholesale customer's attention is going.

And you probably want to get into position to hold as soon as you can as well. But you can still wholesale. You just kind of have to where a lot of the investor money is going is to hold properties and not necessarily to flip them themselves anymore. because they've seen what's going on and they've made a bunch of money. And so they want to preserve that. And that's how you preserve that as you invest it into cash flow. So in a nutshell, to prosper in this shifting and emerging market,

you're going to need to make some adjustments and put in some work. You're going to have to work hard, actually. I mean, you're going to have to dust off, polish up on, and implement your marketing and sales skills too. And there is indeed work to be done. That's the bad news. But I don't know. You've got to work hard regardless anyway of market conditions.

So that's not really bad news. That's just reality. So no news there, I guess. But here's the good news. This is what I love about this. The media hasn't picked up on this shift yet, nor will they for a while. I doubt it. Not for a while, I suspect.

The media doesn't have a clue yet. And because they don't, it's very fair to say that the general public hasn't a clue either. So you've got some time, right? So don't panic. because you do have some time. Not a lot of time, but you've got some. Don't hesitate, though. Just because you have some time, don't hesitate.

And here's why. Competition. You can count on a lot of competition leaving the market because they aren't or won't be prepared. But competition for sure, it's not going to be eliminated. And here's what I'm referring to. You see, the third dimension of this shifting market has to do with the type of competition you may encounter while conducting your real estate investing business. And you may have noticed over the last few years in many markets across the country that the big

routinely has been beating up on the small, right? I mean, it's been tough on the little guy to say the least. A lot of us little guys have been pushed out of the multiple listing service game. You've been pushed out of the auction game because of the big guys. The bigger investor, the institutional investor, has had a real unfair advantage for the last several years. But, you know, as they say, what goes around comes around. And to expound on the good news, you're going to want to know this market shift, this is the third dimensional shift that I referenced earlier. We are moving into a market where the fast will now beat the slow, regardless of the

investor's size. See, the big has been beating up on the small, but now the fast is going to beat up on the slow and it doesn't matter how big that investor is. Because the little guy, since he's got the ability to move fast, much faster than the big guy, the little guys now have a chance, a really good chance. And if the little guy moves fast enough, he's not only got a chance, he's now the one with the unfair advantage. You know, the faster he moves, the greater his advantage becomes. That's just one place where the big guys will always be at a disqualification.

advantage. In their speed, their speed in which they can respond to change, the little guy got a shot, got a shot in this new market, one that they have not had in a while. You see, and if you're not putting it together, this is what I mean. You see, these big institutions, they can't compete in the realm of marketing to and dealing with private, motivated sellers, just, you know, one property at a time. They're not quick and nimble enough. And they probably won't ever. be but but you are but here's where you will have to to um uh i guess be mindful of competition is that not all of the big dogs out there that have been winning this game with the auctions and the multiple listing service and the online sites and stuff not all of them are big institutions some of them

are just big investors and some of them are or do have the ability to adapt and some of them will be coming into your game but they're not going to come totally in there until they've realized that what they're doing isn't working anymore. They've put a lot of time, a lot of effort, a lot of planning in place to work the business that they have been the last several years. And so, you know, I'm not sure how soon they're going to start if they're going to come into this market, but they will, but they will. Okay. So, but you, you've got the opportunity right now. You are quick and nimble enough right now. You're already doing the right activities. If you've been listening to this show for any length of time, just understand that, you know, your time is

coming. Don't let this opportunity go to waste. Seize it. Sees it now. All righty. So in summary, the market is shifting and it always shifts. And here comes another one. And this is one that I have seen and witnessed from behind the scenes. This didn't come from a blog. This did not come from a newscast. It didn't come from anywhere media driven. It came from my own personal experience and the experience of my peers and what I've witnessed my peers doing. So the market is indeed shifting. Now you can continue to do what you've been doing and hope for the best, or you can shift your focus and join the best,

because that's what the best is doing. They're shifting their focus. A lot of them will be leaving the market altogether because it's just not going to make financial sense for them anymore. And then the others will be actually shifting their focus. So if you want to join them, you can, and you've probably got a little bit of a head start because no one's talking about this right now. Mark my words, six months to 12 months, you're going to start hearing this much more frequently.

Okay, so to give you some ideas on how to shift your focus, I'm going to share with you what my team and I are doing. Okay? You don't have to do what we're doing, but maybe there's an idea in there of how you can modify your own business. So first thing that we're doing is we're scaling up our lead generation efforts. So we're significantly kicking up our in-house marketing and relying less on third-party sources for deals. We're not relying on the multiple listing service anymore. We're not relying on wholesalers anymore. We'll still use them as long as we get deals from them, but we are not relying on them anymore.

We're not looking for realtors anymore, like the wholesalers. Those third-party sources, they're drying up. It's getting slower and slower with those deals. And so we're going back straight to the well and dealing with the motivated sellers directly, one-on-one. exactly what I've been teaching here. I haven't had to do that for a little while. We've been doing it, but I haven't had to do it. But now I understand upcoming, we're going to have to if we want to stay in business,

if we want to keep finding deals. Okay? So that's number one, is we're scaling up our lead generation efforts. Number two is we're augmenting our systems to improve lead conversions. Okay, we have to convert a higher percentage of our leads. We can't just, you know, throw things against the wall and to see what sticks and just, you know, kind of pick up. whatever's left over. That's not going to work anymore. There's not going to be enough stuff

to throw against the wall. And there's not going to be enough stuff that actually stick. So since we're ramping up our marketing, our marketing expenses, those are going to go up with that accordingly, right? So we can offset that expense, that increased marketing expense by getting better at converting the leads that we do generate. I mean, now more than ever, you've got to get your sales skills in check. You've got to practice. You got to drill. You got to rehearse. I mean, sales it's a skill and the the only way a skill is created and developed and actually becomes a skill skill is through massive repetition okay so you got to practice you got a drill you got to rehearse get your sales skills down all right number three we're preparing to hold more than we flip

now it might not sound like a lot of news coming from me i mean this has always been my intention but but as i mentioned at the opening of this episode i too am here human and those big paydays are tempting and I've seducing in fact and I've taken my share. I've taken some big paydays, a lot of them over the last few years. And, you know, I'm preparing myself now though for the fact that those deals are going to become fewer and far between. And so I'm adjusting my budgets accordingly so I'm not dependent on those big paydays. I'll still take some, but I'm not going to be dependent on it.

It's not going to be a major part of my business model. I'll do it when it makes sense, but I'm not going to rely on. on them. So I'm preparing to hold more than we flip. Number four is we are implementing quickly. We're moving fast. And this is key here. You've got to move fast. This new market is one where the fast beats the slow, right? So if you're on the fence about anything in your business right now, whether it's doing more mail, whether it's buying a property from cash flow savvy, whether it's putting up more bandit signs or joining the Epic Pro Academy or or talking to the private investors in your network or writing more offers, whatever it may be at the back of your mind, that thing

that you've been thinking about for a while, now is the time to take action and take action fast. This market, it will belong to the quick moving. The fast are going to dominate. And don't worry so much about making the wrong decision. You can get further or you can progress further much faster by just making a decision. And if it's the wrong decision, you can discover that relatively quickly and then you can correct the course. But the indecision thing,

that's what's going to kill you in this market. You've got to move fast. The fast are going to dominate this market. The big, no longer is going to beat up the small, telling you, the fast are going to beat up the slow. So you've got to move fast. And with that said, I want to make sure that you are prepared adequately

and wonderful. prepared for this shifting market. So I'm in the midst of a few projects right now. First, I've got quite a few vacations planned over the next few weeks, almost a couple months. And as well, I'm almost done with my real estate book, The Epic Approach, and I'm revamping the free real estate investing course, all of this to help you be more prepared for this shifting market.

It's going to be a lot. I'm going to, I'm recreating much of the first. free course and most of that information is going to be a lot of it will be the same but i'm going to update and and put a little bit more emphasis on what's going to be needed in this coming market okay so i'm working on that and yes even my vacations are helping in this cause because i i haven't taken a break in a minute not not even this past christmas did i take a break i mean we didn't miss an episode and and so a break right now it's it's it's well overdue and and And I want to focus really on, you know, creating the materials that are going to have you

prepared for what's coming over the next few years. I want you to be well equipped for that. And so you may experience a break in the podcast release schedule here and there over the next month or two. But don't fret. I haven't lost it. I haven't gone anywhere. I'm not getting bored.

I'm not losing interest. I mean, any absence of mine you may experience it's all for the greater good right now because I'm really focused on a few projects right now. And I'm focused on this new market. I'm getting my own business up and running and ready. And then I'm going to share with you in the free course exactly what we're really focused on. So you can have the same. You can shift with the market as well.

All right. But don't wait for me. Okay, I gave you a lot of information of what there is to do right now. But I'm just letting you know I'm going to support you also. All right. And then additionally, I'm in the home stretch of organizing my real estate hedge fund, of which I can't wait to tell you all about it. We're not quite done yet. I'm going to tell you about it.

It's seriously a hedge fund per the definition of Wall Street, you know, meaning should one strategy lag like on Wall Street? If one stock kind of loses ground or loses some money, then there's another one in, you know, kind of a, I don't know what they call that. The counterbalancing act will rise to limit the losses of that one that's struggling. So that's what the hedge part is. And so I've done that with real estate. One strategy, if it lags a bit, another one picks up the slack.

So I've been thinking about this for quite a while, and I've been thinking about how to exactly do it. And I'm happy to say, I've got it dialed in now. I've had it dialed in for a minute. And so now I've put it in place. I mean, I've got it so dialed in that I can't wait to share it with you of how I've duplicated the best of Wall Street in the world of real estate. So more on that to come.

Now, so all that to say is I've got a lot of stuff going on. and the one thing that might have to sacrifice a little bit is the release schedule of the podcast. So don't panic if you notice some dates missing in the next, I don't know, four to six weeks or so, I would guess. All righty. So if you're not subscribed to the podcast, make sure that you do click that subscribe button in iTunes or Stitcher or however you access this show. Because the new free real estate investing course, it's going to be off the hook, all right? And you don't want to miss that. and if you've already signed up for it, then no worries.

You won't have to sign up for the free course again, but you will want to stay connected here to learn how to access it. All righty. So should you have any questions or comments on this shifting market and what we're doing to prepare, feel free to contact us via phone or email over at cashflow savvy.com. That's where my main real estate business is or kind of ground zero for it. And so you can contact us there if you have any questions about, you know,

what's going on in the market right now and what we're doing to prepare for it. Okay, cool. All right. So that's it for today. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoy this show, please take a minute to visit iTunes and share your thoughts.

Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.