Epic Real Estate Investing - The Secret to Buying Real Estate at a Discount (without banks) | 1215

Episode Date: June 28, 2022

How do we find discounted properties without needing a bank? This question can be rephrased by changing a retail mindset to an investor mindset. In today’s episode, Matt will go through several different terms and explain how to coordinate and arrange those in a way that you can create a deal, without needing a bank. BUT BEFORE THAT, Matt reveals why real estate inventory is so low. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Why is real estate inventory so low? I mean, it's crazy, right? What happened to all of the houses? Why isn't anyone moving? Well, I've got the answers for you. You ready? Let's go.

Welcome to the all-new, epic real estate investing show. The longest running real estate investing podcast on the interwebs. Your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from. our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, EpicR-E-I.TV.

If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to rei-Ase.com. Here's Matt. By the time we're done here, you'll know why real estate inventory is so low, what it means for the market,

and when it will recover. Oh, and by the way, if you're still looking to get that first deal under your belt, I put together a free training just for you to help you get that first one done. And then how to earn $5,000 a month flipping contracts and properties working as little as one hour a day. And you can access it for free at mats free training.com. Okay, buying a house is an exciting event, whether that be your dream home or an investment. And many Americans are struggling due to the real estate market's lack of options. Low inventory is plaguing communities across the country.

Real estate inventory correlates to home availability. In situations where there are few homes available, there is low inventory. If people are not looking to sell, whether that be current homeowners or new home builders, there are no homes for buyers to purchase. That's what low inventory is. Now, why is it so low right now? Well, there are seven primary factors that are playing a part in our low inventory situation. The first one, COVID-19.

It forced a lot of lifestyle changes. Many American homeowners were given the choice to work remotely on a permanent basis. Thus, many of them chose to relocate to more affordable communities with more variety in housing options, more variety in land, space, and proximity to family and friends. Small suburban communities really saw an increase in population because of this. Second, historically low interest rates had home buyers and sellers in a frenzy. In the last year, mortgage interest rates hovered just barely above 3% for a 30-year fixed-rate mortgage. which is lower than 2019's average of 4.75%.

Many existing homeowners took advantage of the dip in interest rates and refinanced their home with plans to stay put, yet also purchased vacation homes and income properties. Third, the lack of new builds has contributed to low inventory. New construction plays a vital role in the number of homes that are sold in a year, and builders aren't building fast enough. The roots of this slow building problem go way back to the housing bubble collapse in 2008. It was the worst housing market crash since the Great Depression.

Many home builders went out of business. A lot of tradespeople left the industry and found new jobs and careers. The workforce was somewhat decimated. A few years later, as Americans started buying more homes again, building stayed below normal. And that slump in building continued for more than a decade. Meanwhile, the largest generation, the millennials, started to settle down and buy houses. They gobbled up the inventory relatively quickly. And that's the main reason we've ended up millions of

homes short today. By most estimations, five million homes short. To compound the building problem, COVID-19 initiated supply chain complications of which interrupted the availability of supplies like lumber, like concrete, steel, glass, and copper, of which translated to higher costs, causing builders to sharpen their pencils and adjust their plans to what they would actually build and how fast they would do it. The bottom line here is that the lack of consistency in building supplies and skilled workers is making it near impossible for builders to make a profit building entry-level homes, the type of homes that have the greatest demand right now. Fourth, the growing and aging population.

In other words, the demand for these entry-level homes, the millennials, having devoured the leftover inventory from 2008's crash before anyone really noticed, the peak of the generation is still two years away from the average first-time homebuyer age. We will need many more homes over the next two to five years than we would normally think we would need. Fifth, sellers aren't looking to be buyers. You see, they see what the market is doing. They're not blind. Potential sellers have recognized that the low inventory will affect them too. You know, everyone needs a place to live after they've sold their home. And finding a new home right now is definitely more difficult than selling one. So they're staying put. Sixth, a shift in

demographics. You know, since 2008, homeowners are behaving differently. People are staying in their homes on average of 13 years now. That's up from five to seven years before the housing bubble burst. Seventh, more people are investing in real estate. With interest rates having been historically low for such a long period of time, people are not stopping with just buying their primary residents. Homeowners aren't competing solely against other homeowners, but they're competing against investors too. And contrary to popular belief, these aren't primarily institutional investors. No, we're talking every day John, Rick, and Mary taking advantage of the market conditions securing an investment property or two or three or four. With so few alternative investment

options available to the average person these days, it's no surprise that people are turning to real estate. How this impacts the real estate market? Well, when it comes to buyers with historically low interest rates, even with the latest hikes, still historically low, potential new homeowners are entering the market excited to buy, yet finding a lot of disappointment. There are fewer homes for sale, sometimes resulting in months of searching, dozens of showings, and rejected offers. Some buyers have had to compromise on the size and features they require for their new home. The lack of affordable homes is the biggest challenge many potential home buyers face. Many homes are selling extremely fast and far above asking price.

Buyers on a strict budget have little room for negotiation and repairs. Rising interest rates are likely to push many buyers out of the market, however, not all of them. There are plenty still that are ready, willing, and able to buy. The competition amongst buyers is shifting from really, really, really competitive to just really competitive. And probably somewhere near the end of 2022, we'll see a competitive market. But competitive still. When it comes to sellers, low inventory puts the power in the seller's hands. It's a seller's market for sure.

But being a seller today, it's not challenge-free. While a homeowner can sell their home faster and for top dollar, the challenge for them begins when they become buyers needing to find a home to move into next. and within their specific time frame. And then, when it comes to real estate investors, there's likely never been a better time to get in. And I know that's going to sound crazy to a lot of people. But here's why it's a great time to invest in real estate.

You see, with inventory so low and the population growing so fast, and with the mortgage rates causing many new homebuyers to pause their home search, the demand for rentals is climbing like we've never seen. Rent prices across the United States climb to record high. in March, largely because an increasing number of potential first-time home buyers are quickly being priced out of the market by the record high home prices and fast-increasing mortgage rates. The price and demand for rent is surging. The median monthly asking rent increased 17% compared with a year ago.

This is the largest annual jump in almost three years. With the national median monthly mortgage payment having increased 34% in the last year, new homebuyers are being forced to move somewhere with a lower cost of living. or stay where they are and rent. And in urban areas of Oregon, Texas, New York, and New Jersey's examples, rent payments are rising faster than the rapidly rising mortgage payment. Furthermore, current landlords are taken advantage of the market by one, cashing in maximum profits by unloading their struggling rental properties,

and two, improving their thriving rentals with upgrades and repairs that meet or exceed market standards, of which is increasing their rents even more. You see, it's good to be a real estate investor when housing inventory, whether that be to buy or rent is low. So how long will the housing shortage last? It comes down to really just two factors. I've said a lot, but it's really just these two things. One, people need to stop making more people.

But considering there are so many people already walking the earth, more than enough to fuel the demand for decades to come, that's not really an option. So number two is we need to build more houses. And I'm going to leave my opinions out of this and just give you the straight facts. You see, the U.S. built on average, 276,000 fewer homes per year between 2001 and 2020 compared to the period between 1968 and 2000, all according to a recent National Association of Realtors report published by the Wall Street Journal.

Had building continued at the same pace, there would be 5.5 million more units of housing available today. So to make up for this shortage, that NAR report shows the U.S. would have to build 2.1 million homes each year for a decade, more than it built each year during the housing boom of the mid-2000s to bring the housing market to a normal balanced market between buyers and sellers. In other words, the housing shortage is worse than ever and will take a decade of record construction to fix. Bad news for some, good news for others. If you'd like to get on the good side of this by becoming a real estate investor,

it might make sense for us to hop on the phone and brainstorm a bit about what that might look like for you. Head over to rei-aise.com, answer a few short questions about yourself and what you want to accomplish and then just pick a time that's convenient for you, for us to talk about it. Please stand by. We've got overhead to pay.

We'll be right back. Boarding for Flight 246 to Toronto is delayed 50 minutes. Oh, what? Sounds like Ojo time. Play Ojo? Great idea. Feel the fun with all the latest slots in live casino games and with no wagering requirements. What you win is yours to keep.

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discounted properties without needing a bank. Right? So I can really tell like the phrasing of the question comes from a retail mindset. And we're all talking about you need to incorporate an investor mindset, right? And an investor looks at things very very differently. So first is how do we find discount properties? So we have to go off market. So we just finished by the second session of the Legends Challenge and went through

funding offers on Tuesday. I showed you our, or yet Tuesday, Wednesday. I showed you what we did on session one. I'm just kind of recap this, specific, what your business needs were, what you need to have a thriving business, particularly in this type of environment. So we did that a couple days ago, but yesterday we talked about our presenting offers, specifically our conversational conversion process. When it comes to generating leads, leads of motivated sellers and finding leads that are open to, you know, discounted offers in the way that you can buy discounted real estate, that's what we're going to cover next session.

And it's not too late to join us, by the way. If you'd like to, you can go to, you know, the Legends Challenge.com. These first two sessions have been recorded. They're up in there. You can easily catch up or resume on Tuesday. We're going to go after marketing and lead generation. We're actually going to show you how to find these deals offline and how you get to find the motivated sellers and how you purchase these properties at a discount.

By yesterday's session, what we did is we went through the science of lead conversion, because this is really the secret to the entire business. Can you take a lead to contract? And most people get really focused on the next part of the conversion process of taking the contract to profit. And that's really, really easy to take it from contract to profit if you get the lead to contract part right. So we went through the science of lead conversion of what that actually takes, went for the objective of the seller meeting, and we approached it from two different perspectives, whether we did that in person, which I prefer, and I prefer that every my students do,

but we can't always do that. So there's an alternative approach to do it virtually. So we went over, we covered both of those. And then here's where we really went all in as far as price and terms to where we don't need a bank. Because as real estate investors, we're going to purchase properties in one of two ways by either our price in the seller's terms or the seller's price in our terms. As long as we control one of those,

we can always deal for ourselves. So we talked about the relationship between price and terms and how we approach this initially and where most investors get stuck and can't get the creative part to really flow and to really connect. And the reason that they can't

So for a few reasons. One is they in the concept way too soon, right? Within, you know, the first few minutes, would you be open to seller financing? The seller says no and phone go over. They don't know what to say after that. You have to remember that as real estate investors, we understand terms, we understand financing, we understand all this creative stuff, right? But sellers, they don't have a clue.

It's like speaking Swahili to them. All they understand is price. So you always want to go on with the price first. If you can't come to an agreement on price, then you can introduce the terms. So that's how we went through that and all the different ways to introduce those terms. Now we buy, we have to control one or the other, and over how do we create the cash offer. Then the terms here, we went through a number of different terms and how to coordinate those

and arrange those in a way that you can actually create a deal for help without meaning banks. Or maybe even use the existing financing that's already on the property. There are only three types of buyer that a seller can expect. This is the only three ways that they're going to sell their house or their property. So there is a retail offer, which is your traditional offer through a real estate agent. You get fair market value for the house. This is how the seller gets fair market value. But it's going to require repairs.

It's going to require real marketing. It's going to require commissions, require time on market. It's going to require a loan approval. And so that's the first way. So if they want to get full market value, that's what they got to do. If they want the investor offer where we do all of this work, repairs, they don't have to do the marketing, the open house, no commissions, no loan continuity. We can pay cash now, but they're going to have to accept a price that's below full market value.

So that's the alternative. So those are the two options that most people go in with, but what they miss is the third option that a seller actually has, which is the co-op offer to where they still don't have to do the repairs. We can do that for them. They don't have to go to any marketing, no open houses. They don't have to deal with any commission. There's no loan contingency. Typically, it's going to be a higher price than the investor offer, sometimes even full price.

is long as it takes some money now and the rest later. So once you're really clear that the only three options every seller has, I showed them how to follow up and how they can make money with which one that they choose. This is a big eye opener for a lot and somewhat groundbreaking for some people because they recognize, oh my gosh, I could have introduced this on that last appointment or this on the last appointment. And once you get really good at articulating these things to a seller, They're going to pick one. Mr.

Seller, would you like the retail offer, the investor offer, or the co-op offer? Because those are the three choices you got, right? You're going to pick one. And you don't care which one they pick because we've set everybody up to be able to make money on whichever one they do choose. Right. So if this is resonating with you and you'd like to learn more about this, this is all been recorded, the detail, everything, all the documents, all the resources.

And then you can catch up on these two minutes on Tuesday where we're actually going to go over marketing and lead generation. How do we find these deals? But now that we understand those three types of offers, we're going to go through the conversational conversion process. So this is a step by step. Generating leads is really, really easy. And I'm going to show them multiple ways of how to do this, whether they pay for them or they work for them, a bunch of freeways, a bunch of paid ways. So we show them how to do this on Tuesday.

But the leads and then finding the money, those two things is like what stops everybody from investing in real estate. But those two things are really, really easy if you get this conversational conversion process right. So I just walked them through this process. We see the transition agreement. And a transition agreement, if you're not hip to that, you might have heard of it as an upfront contract. It comes with treatments. So there's not a real script.

But if you can cover all three bullet points in those conversations, it has a huge impact on the rapport that you build, on the trustability that you convey, the competence that you convey, even if you don't even know what you're doing, even if you've never even had done this before. If you get these transition agreements downright, it can go a long way and connecting with the seller.

But you want to use these at the beginning and at the ending of every interaction with the seller. And it just covers three points. Here's what's going to happen next. So you let the seller know this is what's going to happen next. These are the possible outcomes. And then the third thing is, you get to choose. And whatever you choose, it's 100% okay with me, Mr. Sellar.

Is that fair? So if you do that at the beginning and at the end, of every single of your interactions, you're going to find your rapport and your connection with sellers are going to really escalate. Then we went through the nine-point seller interview. This is how we sort the prospects from the suspects and how we ultimately set up an appointment with the most motivated sellers.

We went through our quick and dirty analysis, how you can determine the value of a property just like this. So that way you can get it under contract in the ballpark price. So we went ahead and we went through the assignable purchase agreement and we showed them how to handwrite it, how to type it, and how to set up for doocine. So you're totally efficient, run your business like a business, and then how to actually present the offer.

And this is an art form if there's a science to it. But it can be learned as well. You don't have to be a natural. And there's a process where most people, investors that go out there, they just go back and forth and negotiate the price with the seller. And when that's your only way that you know how to approach this conversation, there's going to be a winner and there's going to be a loser. And as real estate investors, you want to go in and you want to create win-win scenarios. You get a lot more deals accepted when you know how to create a win-win outcome. But ultimately, what you're doing is you are teaming up with the seller and you are on their side.

They called you to solve their problem. you're going to show up as the problem solver, and it's going to be on the same team against the market. So you are the good cop. The market is the bad cop. And when you approach it that way, you're going to find your negotiation is going to go a lot further, and your seller is going to be much nicer,

and they're going to be much more cooperative. And ultimately, how this is phrased is the seller is actually going to come up with the offer. And they're going to come up with an offer in a way that's acceptable to you, too. So there's a very systematic approach and how this conversation goes and we spent a lot of time on that and that's also been recorded that's available inside of the member's area.

But here's what I offered to everybody. If they get to a certain point in that presentation, if the seller agreed to take some money now and the rest later, I gave them all access directly to me to where I will go in and I will call the seller on their own behalf

and I'll take it to the finish line for them. So this is the whole goal is for everybody to get a signed contract 10 days or less. And that's enabling them to do this. So I'm given all the resources to generate the leads, which we're going to cover next session, initial conversations to have,

how to set those appointments, how to get them to a certain point in that whole process, and then they can just turn it over to meet. I'll close it, and then they'll get paid. So that's the agreement. And then again, you end up with the transition agreement at the end.

And then the last thing is, if the seller did not sign, we have two approaches to this. We're going to do both. But we have something of this, magic letter called the rejection letter. One of my clients, an RAA's private client, Josh, he took my three-option letter of intent, and he tweaked it a little bit and put some special, and he started using it in a certain

way. And he taught it back to me, which was really fun, something that I taught him. And he taught me how to do it actually better, or at least in a different way. And he sent out to this rejection letter to every seller that had ever said no to him. And it was funny. They all said, no, lead, buzz off, go pound sand. and sent these letters out for one year to everyone that I ever said no to him, and it resulted in 55 extra deals that year.

Well, that's one approach we're taking to all the people that say no to us. Then how to follow up, because the fortune is in the follow-up, right? You've heard that before. No secret there. So how to follow up, once we get through the conversational process, follow-up is a lot of people because they feel like they're calling back desperate. They're calling back needy, begging for the deal, or they just flat out feel awkward.

So what I gave them was the multi-option follow-up, which is really, really effective, and you can have somebody do that on your behalf. But 11 different ways of how to follow up with a seller to where you maintain your position as a person of authority, and you're maintaining your position and your posture as a professional little estate investor, and you don't really need them. You just follow up as a good cop trying to help them out. So we went through all of that. But where it really happens is the price and terms and how the relational conversion process goes. This is how you purchase these properties without any money. This is how you purchase these properties without a bank.

This is how you purchase these properties using more of your intellectual currency than your actual currency. All right. So if you'd like to join us, I'd love to have you. And I know everybody else there would too, because the more the merrier. And we're all having a bunch of fun in that. And we're all going to get a contract signed in 10 days or less. And that challenge officially starts next Thursday. So we've been laying the groundwork, completed two sessions.

And then on third, excuse this coming Tuesday, the third session, we're going to go ahead and talk about how we actually generate these leads and find these people and attract them to us to get them to call us. And we've got a bunch of paid ways to do it. And we've got a bunch of free ways to do it, even more of the free ways to do it, because that's how I started. It's what I know best. So that's what I'm going to show everybody.

And I'm going to lead by example. I'm going to demonstrate. It's not just going to be, at first do this, do this, do this. They're going to actually watch me do it. And if that resonates with you and you'd like to join us, we'd love to have you. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would.

And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us.

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