Epic Real Estate Investing - This is the Right Time to Buy Real Estate | 1255

Episode Date: February 14, 2023

Let’s evaluate and understand the financial position of the USA, and let's just face it right now. It's not too impressive. Here are some facts from Mercedes Torres. Inflation is on the rise. It's going up so much so that if you have money sitting in a bank account or any account for that matter, whether it's the stock market or an IRA or an idle 401k… If you just have it sitting, you are losing your money. How does that make this moment the right one to buy real estate? Listen to the Cash Flow Queen and learn everything you need to know. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. She's been helping busy professionals for more than a decade now build passive cash flow with real estate so they could take their foot off the gas a bit and enjoy the good life. Let's raise our hands, unless you're driving, of course, for the turnkey girl Mercedes-Torres. Hello, my name is Mercedes-Torres. Lucky enough to be partners in crime with Mr. Matt Terrio, jumping in here to give you some intel, on another facet of real estate, cash flow. Well, as you know by now, I'm known I've been endearingly called the cash flow queen

because, well, it's very simple. I love cash flow. I mean, I am a really big believer in having money work harder for you than you did for it. In fact, that is one of our company models. It's having money work harder for you than you did for it. I'd have to say I've evolved over time because I'm constantly seeking education on the real estate market. I keep up with what the economy is doing. I like to evaluate and understand really the financial position of our country.

And let's just face it, right now it's not too impressive. I mean, here are some facts. inflation. It's on the rise. It's going up so much so that if you have money sitting in a bank account or any account for that matter, whether it's the stock market or an IRA or an idle 401k, if you just have it sitting there, you're losing money. I will definitely do a podcast on inflation because there is so much to say about it. And I'd have to say, not a lot of people talk about it because it's the topic that's a little overwhelming in just really understanding all of the facets and breaking it down to how

inflation happens and how it's affecting us directly. So I'll do a podcast in the near future about that. Another interesting fact is real estate. You know, God isn't making any more land. And real estate, land is limited. And as such, this is something that is really, really good to have. Now, I recently, about a month and a half ago, I went to the IMN single family rental conference in December.

It was in Phoenix, December of 2022. And I've been going for several years because this is a conference that's been around since 2012. And that was about the time that I started cash flow savvy. It really started taking off. So I really rarely, you know, never missed this conference because there's so much valuable information that is shared by these list amazing experts. You know, there are hedge fund managers that attend and speak on these panels. There's institutional investors, lenders and property managers that have firsthand

experience and information. So I try not to miss this conference, but that said, these institutional buyers that you and I know as hedge funds, they make up a really small fraction of real estate investors in our space. I mean, it's like one in a tad bit over one percent of these investors are hedge funds. So the individual, individual investors like you and I and the mama and popper investors that I like to call, they make up a bigger investor pool in this space, believe it or not. So if you think these institutional buyer, these big hedge funds are gobbling up all of the inventory, I'm here to tell you that is not the case.

In the last few years, they have only really been buying around 3% of the inventory. So they're not a huge player in this space or are not as huge as we think. And that said, people are only affected by these hedge funds in the certain markets that they go really strong in. These markets, they tend to go in and they buy in bulk and they buy a bulk of inventory all at the same time. And these are markets like, Miami or Phoenix, Jacksonville, markets that I'm personally not in and cash flow savvy is not in because it's simple. I do not want to compete against a bigger monkey in the zoo, nor should you. So at this conference, a few things that really caught my attention, most were shared by John Burns.

John Burns, real estate consulting, this guy is a brilliant man. He's a great forecaster of data and gives builders great information about demographics, about pattern migration, about, you know, job growth and permit mandating. That's usually where a certain sector allows a certain amount of permits based on a particular city, the market, and the growth. So he really helps builders analyze the bill to rent market in particular areas based on these predictions and his forecast. And he shared that sales are down 57% with eye buyers and a 27% decline in sales with hedge fund buyers that own over 100 properties or 100 homes.

So what does that mean to you? Well, it means that competition has gone down. It means there's less competition out there because there are less buyers. And what I found fascinating and we really don't understand why is there was a 4% decline in sales for those individuals who own 9 to 100 properties, which is my typical cash flow savvy buyer. I mean, my average buyer buys two to three percent or two to three homes a year. Because once they get started, they just keep on going because we've made our turnkey operation super simple. In fact, some of my buyers, they tease me and they say that the process is addicting because it is so simple.

And that's exactly what my goal is. My goal was to make buying a turnkey property so easy that you would find it easy to buy at least one property a year. So all that to say is that the institutional buyer has really slowed down because with the condition of the market as we speak, it's really difficult for institutional buyer and hedge funds to, to scale that model. I mean, the reality is, with the rising prices of real estate combined with the higher interest rates that we are currently experiencing, the institutional buyer can't cash flow enough enough to cover what they need to make. So that's key.

An institutional fund buyer must make a certain return because, a hedge fund is usually buying properties with funds that are pooled together through different various sources, and then together they come to make a bigger pool in order to monopolize a certain sector of the market. Now, I'll tap into that in a moment because you may be surprised that this is the case as the institutional buyer can't really capitalize as much as a smaller private investor like you. I'll come back to that in just a moment. Okay. So because of this, the big funds have focused their energy on doing more of the build to rent because it makes more financial sense for them at the moment. So they'll buy up land and they'll either build

multifamily units or they'll build blocks of rental property. However, with the cost of material and labors going up and lending costs soaring, it really has placed a pause on the hedge funds. That said, experts are feeling like rates are starting to climb down just a little bit. But let's analyze rates for a quick moment. Now, I started investing in real estate when interest rates were in a whopping 12 to 14%. Now, I just totally aged myself. But now that rates are like at a six and a half, seven percent, it's not a big deal because rates are considerably lower in comparison to our country's history of mortgage rates. And that's key. It's the comparison that we're making that just has a spoiled rotten. However, if you buy right, you can still cash flow.

And keep in mind that cash flow is only one of the four profit centers that real estate grants you. So yes, we got ultra spoiled during COVID and just right after COVID, where rates dropped to an insane 2 to 3%, and that's a whole conversation. But folks, that's not the reality and the likelihood of rates dropping that low again are super, super slim. Because as a buy and hold investor, let me give you a scenario. Let's take a house that's worth $150,000, which is the median price point for a cash. Saffy properties. Now, most of the properties that I invest in and that I sell through cash flow savvy are properties that range between $120,000 to about $180,000. Now, why I chose that price

point? Well, that's what the average renter across the America can afford to rent. So with the higher interest rate, if you were to buy that home and own it, The payment at the moment is approximately about $1,300 a month. Now, that's including principal interest, taxes, and insurance, and property management. Now, owning this home, you have to worry about all of that. You have to worry about the HOA. You have to worry about the repairs, the taxes, the insurance, everything. But if you were to rent this home, your rent payment,

on the same property that I'm describing is roughly between $900 and $1,000 per month, significantly less than owning it. And you don't have to worry about the repairs and the maintenance and the HOA. So basically, if renting is 20 to 30% cheaper than owning, then this is an amazing time to be a landlord. And this is why the investor that I affectionately referred to as the mama and papa investor that is buying and holding these properties, the investor is going to do really, really well because although you're collecting $1,000 a month in your rent and you still are responsible for the taxes and insurance, you're also reaping from the other benefits of appreciation. depreciation, and all of the tax benefits that you get with it. That is something that the institutional buyer cannot really benefit from.

That said, there is less competition since that institutional buyer cannot benefit from all of those things. So that means there is more opportunity for you as the individual buyer. not to mention that it will be harder for the institutional buyer to scale that model because of the money they have to make to pay their investors because, remember, it's a hedge fund. And not to mention, they are not going to be able to benefit from all of the benefits that you will get as an individual owning real estate. So if you are that new investor that are just on the sidelines that are a little concern about what the market is doing, do not allow fear. Do not allow the unknown to hold you back during this unique moment in time in our real estate market. This is an incredible opportunity. And, you know, I cannot tell you how many time I speak to investors, to people at our live events.

And I ask them, what have you done? And they're just paralyzed with fear. And a lot of it is because they just don't understand how it works. Well, that's what cash flow savvy is here for. We're a turnkey operation that provides you with the opportunity to look. learn how to do everything there is to do while we're doing it for you. And everything is done for you. You know, we help you learn how to become a real estate investor.

We do all of the heavy lifting. And we spend a lot of time educating people, helping them get adequate and appropriate lending. And then we spend time for ourselves analyzing the markets and situating ourselves in the right markets. in the markets where the purchase price and the rent ratio are going to give you a solid return, not only for us personally, but for you as well. And we look at the right markets with the right growth and combine that with the local teams. And I mean, I can go on and on about how we help that new investor or that investor that cannot necessarily scale because they don't have the ability to do it or they think they don't

have the ability to do it. All that to say, I go off on my tangents. This is an incredible time to become a real estate investor to just buy and hold properties. And if you're already an investor, kudos to you. Buy more. Buy as much as you can in the next couple of years because I guarantee you're going to look back at this time and you're going to say, I wish I would have bought more. This is an amazing time. So buy them, hold them, and, you know, it's important to remember that real estate is one of three basic needs of humanity. Think about it. A human needs three things to survive. We need food, we need clothing, and we need shelter. That said, the combination of one, the competition for real estate and the market is currently limited. Number two, shelter. Shelter,

is a necessity and it is currently limited with our market. And number three, rates are creeping down slowly. So again, this is an incredible time to become a real estate investor. Now, if you want more information about how to become a real estate investor or how to benefit from properties that are already turnkey, feel free to go to cashflow savvy.com. That's savvy with two Vs and download the frustrated investors guide to passive income because there I show you how to jump into real estate investing if you're a newbie. And if you're a more seasoned investor, it teaches you how to scale. Also, if you like what you're hearing, please take a moment, leave us a five-star review. This will certainly help put our podcast in front of other people

to spread the word of financial literacy, allowing the possibilities of helping others create wealth in their life as well. Thank you for joining me today. On the next episode, I'm going to discuss inflation and inventory and how population and the market are affecting the average real estate investor like you. Until next week, this is Mercedes-Torres,

living the dream where cash flow is queen. 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. We got to dash low. Okay, only 10 more presents to wrap.

You're almost at the finish line. But first? There, the last one. Enjoy a Coca-Cola for a pause that refreshes. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit c-sweetradio.com.