Epic Real Estate Investing - When the Housing Market Shifts, the Winners Will Do THIS! (Jamil Damji) | 1232

Episode Date: September 1, 2022

The housing market is shifting, and that is inevitable. There are many predictions about the possible outcomes of this shift, but how to be sure which one is the right one? In today’s episode, Matt is joined by Jamil Damji, an internationally renowned real estate investor, wholesale expert, and entrepreneur, who has been in the real estate business for more than 20 years! Stay tuned and hear some great tips for your next steps! BUT BEFORE THAT, Matt explains the due diligence period in real estate. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. What is due diligence period in real estate? I mean, if you don't know, and if you get it wrong, it could end up costing you a fortune. But if you get it right, everything that real estate promises with regard to wealth and freedom are yours for the taking. 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-EI.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-Aase.com. Here's Matt. All right, so by the time we're done, you'll know what the due diligence period is six things that you must pay attention to during this period.

And at the end, I'll also give you a free checklist to make sure that you don't miss everything else that's involved, especially anything that may cost you money or an opportunity. All right, so signing a contract to purchase real estate, that's just the beginning. Buyers must then navigate the due diligence period, which allows them to inspect the property and review important information before closing on the sale. So the due diligence period can be complex and requires careful attention. So I'll outline what's involved in the process, and I'll give you my due diligence checklist to help you smoothly sail through the due diligence period. So first, you got to know your contract.

Laws involving real estate due diligence vary from state to state. So if you're working with a real estate agent, they should be able to provide specific information about which legal issues pertain to you and your market and what your options are if problems arrives. And all this should be spelled out in your purchase contract. So ask questions if anything isn't clear. Real estate is a buyer-beware transaction. So take full advantage of the due diligence period to get all of your questions answered and any concerns to address to your satisfaction. Know what you signed, especially when it comes to the various circumstances that will allow you to walk away from a purchase if you need to, such as a home inspection that uncovers a significant

problem that the seller is unwilling to address or in event your financing falls through. These are your contingencies, by the way, and you have others such as the appraisal contingency. If during your due diligence period, something turns up that's a deal breaker for you, you must know your options. Further, how do your contingencies expire? I mean, do they have a deadline that automatically removes them, or do you have the ability to remove them in writing, that luxury? You want that luxury, by the way, because, you know, you don't want to be away on a short vacation or something to only be caught off guard when you return to discover that you're now locked into the agreement because your contingencies expired while you're unreachable.

Second, you've got to know what's disclosed because under federal law, sellers in all states are required to disclose any information about lead-based paints in their home. In some states, additional disclosures about known issues, say, for example, the terms of condominium covenants or the presence of asbestos insulation. Those are all required to be provided to the new homeowner. Now, most sellers, they'll play fairly and they'll disclose what they know about a property, but some may downplay issues or flat out omit important details. So if your spidey senses are going off at any time, trust them. I mean, no need to jump to conclusions, but inspect what you expect.

And that brings me to the third thing, perhaps the most important piece of due diligence, home inspections. Now, typically, unless your purchase agreement says otherwise, you will have the right to inspect the property during the due diligence period. Professional home inspectors can, they assess the overall condition of the house and its most important components, including the roof, the plumbing, the electrical appliances and heating and air conditioning. Home inspections can help identify the presence of termites. They can help identify the presence of lead and radon gas, defective drywall, and other hazards. This inspection, though, keep in mind, it's a general inspection.

If there's anything that your inspector deems serious, they will typically recommend you have an expert to further inspect. For example, if your inspector notices significant moisture, say, under the sink, they may recommend that you have a mold remediation company take a closer look. Now, if your home inspection turns up anything, something that you don't like, or something that's expensive to fix and throws off your numbers, at this point, you can ask for repairs or repair credits. Now, in most cases, you're going to have to come to some sort of an agreement with the seller on these repairs and these repair costs.

Now, while the seller may not be obligated to pay for repairs, oftentimes they will. or at least pay a portion to keep the sale in place. They don't want to lose the transaction. And sometimes, though, they will refuse to pay for anything. You see, a great deal of how your repair request turn out will have everything to do with the seller's motivation to move in the market conditions. Always ask, though, I mean, even if you're purchasing this property in as is condition, the seller cannot cancel the contract just because you asked for repairs or a credit. However, you, as the buyer, per your purchase agreement, will have the right to cancel the contract.

the contract if an agreement can't be reached. So I've got a free checklist for you that you'll really find helpful in your due diligence. But let me run through these last three important things real quick. Fourth, appraisals. Before closing, your mortgage company will conduct its own appraisal of the property to ensure that the market value of the house is in line with the purchase. If the amounts defer significantly, the seller may have to agree to lower the price or the buyer may have to bring in additional money to close.

Or you could have another appraisal done to prevent the bank from the tax. declining to finance the house. One thing to know about appraisals, though, it's not an exact science, meaning if I hire 10 different appraisers for their experienced and expert opinions on the value of a property, I'm going to get 10 different answers, and sometimes they can vary wildly, especially if a market is appreciating quickly. So don't freak out if the first one misses the mark. Number five, homeowners association, many condominiums, townhouses, and some single family homes fall under the binding rules and covenants of a homeowners association, an HOA. And these covenants may require specific upkeep. They may limit what you can do with the

home or property or impose mandatory membership costs or maintenance fees. I mean, if you're purchasing a property with the intention of making a short-term rental, for example, the HOA may prohibit that, and it's not uncommon for an HOA to prohibit rentals of any kind. H-O-A's have been known to present significant barriers for real estate investors, so know what you're allowed to do and not do. The HOA rules and covenants are provided for review by the seller during the due-dil process. And like the home inspection, you may be able to cancel the contract if you find something not to your liking in these documents. At number six, title and survey. As a part of the closing process, a title company will conduct a title search on your property, identifying outstanding

liens and other issues that could complicate the transfer. And in similar fashion, a survey will typically be conducted to ensure that property lines are clearly defined. Your lender may require any issues to be corrected before financing the purchase of your home. That's a lot. And there's more. I just wanted to cover some really important ones first, but for the complete checklist that I and my students use during the due diligence period, you can get it for free at epic due diligence.com. Oh, and by the way, if you'd like to dive in and make some really quick money in real estate, like flipping a house in just one day while using my funds to do it, I'll show you how you can pull this off in your market right now at matsfreetraining.com.

Please stand by. We've got overhead to pay. We'll be right back. Boarding for Flight 246 to Toronto is delayed 50 minutes. Ugh, what? Sounds like Ojo time. Play Ojo? Great idea. Feel the fun with all the latest slots in live casino games

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Remember that person that gave up on their real estate investing dreams? Neither do I. Let's keep going. Back to the show. Today we're going to talk about when the housing market shifts, what those that win will have to do to win. I got a great guest for today. He's an internationally renowned real estate investor, wholesale expert, and entrepreneur.

He is currently one of the co-hosts of the co-hosts of this. the A&E series triple digit flip. His journey through real estate began in 2002 when he overheard a conversation about a home builder looking for a popular property. That's all the inspiration that he needed as he's been able to leverage creative real estate transactions to not only build up his own portfolio, but found the number one wholesale real estate franchise business of Keatley and create the real estate education mentorship of Astroflipping. He currently lives and works in Phoenix, Arizona and loves spending time with his family and two children. So please help me welcome to the show, Mr. Jamil, Domji. There he is.

What's up, bro? Good to see you, man. Likewise. Nice to meet you. Nice to meet you as well. Yeah, we've got a lot of mutual friends. I can't believe it took us this long to meet. It's a small world, but also it takes time sometimes to get around it.

It does. I just want to kick it off back today, you know, acknowledging you for, you know, what you're up to and how you do it. Thank you. I can tell that you're smart dude, been around the block a few times. You make this business fun and it's just refreshing and I just really appreciate you for that. So thank you. I appreciate that, Matt. Thank you.

I try not to take myself too seriously, although real estate can be serious and the market and all the money that can be made and lost is serious. But at the same time, learning is fun and the process of what we do is not only incredibly fulfilling, but being able to share the things that I've learned in the time that I've been doing it has also become a very fulfilling part of my life. And so happy to be here. I appreciate you inviting me. And I'm excited to talk about what's happening in the market and what we can do about it. Totally, right?

It's exciting. Lots of new stuff happening. And I like to always talk about what's factual, right? And that's typically the media will give you the facts. But then on the other side of what's actually happening can be a totally different story. It just depends on how you interpret it. And I've heard you speak on this with some other people. I was like, you know what?

I think you've got your pulse on it. And I was happy to hear to talk to you about it. You know, before we could, though, you know, I've heard of Kigley. I didn't realize it was you that was behind it. What's the elevator pitch for that? Well, we are a wholesale operation. And we're franchised in 132 different markets now. So we began in Phoenix, Arizona.

No, that was our first ever location. Myself, my sister, Rahima Blaza, Josiah Grimes and Hunter Runyon all came together and formed it as a means to being able to provide solutions for wholesalers where they weren't able to sell their deals. And this is what we were seeing happening, right? I've been in wholesale since 2002, but really when I came to Phoenix, Arizona in 2012, is when I really saw how powerful and how popular it had become. But what I noticed, Matt, is that with all of the education and all of the YouTube

knowledge and learning that's been going on out there, there has been a lack of thought put into what actually creates a deal. And when a deal is secured, how to get that in front of the right people. And as I was growing my wholesale business, what I would find happened over and over and over again. And I think part of the reason why wholesaling has had a little bit of a negative connotation with it in the public is because a lot of these youngsters get involved. And they may be able to lock up a good deal, but they're not getting these deals sold. And because they don't actually have oftentimes the funds to perform on these deals themselves, it creates a problem. And the public isn't, they're not enjoying it.

They're not enjoying being canceled on. They're not enjoying being strung along. Real estate agents don't like having to come and clean up the mess. And wholesalers don't want to put themselves or other people in situations where they're damaging not only their reputation, but somebody else's life. And so there's all these problems that were being caused because people just weren't doing what they say they were going to do. Right. And so our first and foremost situation we were trying to solve at Kigley was, how do we become the buyer for these wholesalers?

How do we create a backstop for wholesalers who are out there negotiating good opportunities but don't have the liquidity or the buying capacity to take these deals down? How do we solve that problem? So we did that by being the buyer first and foremost. Right. And so we purchased properties across the nation, but our franchises are also purchasing in all of their home markets. and so, A, we are backstop as just being the buyer for you and your deal.

The second way that we add value to the marketplace is my company has become extremely well known for our capacity to build better buyers lists. So really connecting with those cash buyers who are looking for great opportunities, whether they be fix and flip or buy and hold or even short-term rentals, whatever their end results or their end exit strategy might be, we want to be able to be the company that provides them that opportunity. And so we've invested heavily millions and millions and tens of millions of dollars in building our buyers list so that we are top-notch in all of the markets that we operate in.

So if Kigli is not your buyer, for whatever reason, we will have a buyer for you in our database. And so what people have done is they come to a Kigli branch wherever they locate, wherever they're located. and they've created a relationship with either myself or one of the franchise owners in another market, and we will conduct business. Typically, our business model is direct to wholesaler or direct to agent. So we work very closely in a relationship-based business model, whereas a lot of wholesale stores that you find out there are wholesale operations are business to consumer, where they're going directly to the homeowner and negotiating with homeowners to put deals under contract

and then, you know, do with it what they will. Our business model is direct to wholesaler or direct to agents. So we're not going to the homeowner negotiating with homeowners and trying to get deals with them. We're working with real estate agents who may have listing agreements or maybe in some form of an arrangement with a homeowner. So there's that buffer there. And that also provides us some insulation when it comes to agency, right? because we're in business. Our job is to get as good of a price for a property as possible, right?

And so we are looking after ourselves in a transaction. Of course, we don't take advantage of people and we want to pay the most that we can pay, but it's our responsibility as business owners to do the best for ourselves and our shareholders. And so that's what we do. And therefore, when an agent's involved and they create an agency relationship with a homeowner, then it's their job to protect the homeowner and make sure that they are doing the best for their homeowner as possible. and getting them the most money for their deal, but that's not my business, right? My business is to do the best for me.

So that's really created a lucrative and a very safe business model for us, because, A, we don't have to worry about all of these regulations and new situations that are coming about in the wholesale space because we're not negotiating with homeowners very often. And so we're pretty much insulated from any of that or any of those. shenanigans. Got it. So what is the scenario where a wholesaler has a deal under contract?

They're unable to sell it themselves, but you are able to buy it. So how does that happen? Yeah, really easy. You know, what they would typically do. We like to work with a wholesaler before they contract a house so that we can guide in numbers. You know, one of the things that I've noticed happening is there's, especially when someone's brand new and they're just learning, they have a hard time differentiating between a deal and a house.

Right. And so we need to really teach people how to underwrite, how to evaluate, you know, how to look at where there's potential. And I look at wholesaling as the practice of spotting potential and selling a portion of it. That's it. So if you look at a house and there's no opportunity to force appreciation or there's no potential there that allows for a forced appreciation, there's not a real opportunity for a wholesale deal there, right?

And so it's teaching people to find. fundamentals of underwriting the fundamentals of how appraisers value houses and how a fix and flipper would monetize an opportunity like that. And so how that would work if a wholesaler brought us a deal, we'd look at it, we'd evaluate it for its numbers, for its, you know, merits as a deal. And if we were brought buyers for it, we would just say, look, we'll take it at the asking price and when's close of escrow and here's your earnest money and we'll close. If it doesn't work for us, we'll say, give us a non-exclusive option and we will market it to our buyers. And if we're successful, awesome.

And if we're not, again, that's that wholesaler's responsibility when they entered into that contract to know how they were going to close or if they were going to close or what their scenario was going to be. Again, that's not really our situation to deal with. That's the wholesaler and the homeowner's job to deal with. But our true value is in helping that liquidity situation take place. So we really want to help these wholesalers get these deals done because the worst thing that can happen is failed expectations

and leaving people in a lurch, you know, thinking their house is going to close and then nothing happens. Right. Right. And it's no fun. Not for anybody. What does the whole you look like then? Like on a monthly basis? It's significant.

So for us on a corporate level, We have corporate stores in Phoenix, Florida, Tampa and Orlando specifically, and we're in Texas, Dallas predominantly. And our corporate stores will do volume in the range of anywhere between 60 to 100 transactions every month. And that's just our corporate stores. And then our franchises are doing multiple hundreds of deals a month. So it's fairly lucrative. Our corporate store will on average do anywhere between one to one and a half million dollars in assignments a month. Wow. That's amazing.

So someone here's a franchisee, are they just kind of, they're just an investor with capital ready to buy? Is that kind of, and that's what I knew my franchise would be? Yeah, they would either be looking to buy homes or they want to be in the business of buying and selling. So they would either be backed by us financially to close deals or they would have access to their own funds or private money to close on opportunities or they would use the systems and the private. processes that we provide as the franchisor and giving them buyers list and giving them wholesaler leads and giving them agent leads so they can connect the dots and and get these deals done. One of the things I wanted to mention is we as wholesalers, we were the first ones to adopt having everybody in our office licensed. So we don't we don't actually operate in the gray area.

There's that question that often gets asked, are you an agent or are you brokering here? Well, it doesn't matter from us because we have licenses. You can call it whatever you want. Which one do you want us to be? Yeah. Right. I was curious, but now I'm like, I'm fascinated. So that's amazing what you built.

Thank you. It's a real great opportunity for somebody who wants to wholesale because they see the potential. They understand how lucrative of a business it can be. I mean, you know, for us, we are high volumes. So we're not the kind of shop that's making, you know, $70,000 or $100,000 on a house. first and foremost, I don't believe in deals like that. I think that they happen every once in a while, but you have to be able to create some incredible value in a situation

in order to extract that kind of fee from anybody. Otherwise, you literally did rip somebody off. Right? If we're being honest, if you can't justify a substantial amount of potential or a substantial amount of forced appreciation or a higher and better use for a property and then justify a $50,000 or $70,000 fee, cool, right? Now, because you were creative and you found a higher and better use and that potential is accepted by somebody else and they're willing to pay you for the rights to that contract,

that's great. But if you're negotiating so deeply and if you're, you know, representing the folks, property value that's half of what it is, then, you know, I don't think that's super fair. So for us, our average deal size, 10 to $15,000, right? But because we do such a high volume of transactions, it's very lucrative for us. Right. So I'm thinking like, why would anybody spend any time marketing a deal and just why they just bring them all to you? And what's a great question.

That's a great question. And what scenarios would you say now? When they have the numbers wrong or the property is just outside of our scope of desired. project, you know, so right now we're not really bullish on multifamily, large multifamily. I'm not bullish in new construction at the moment. Lending is just not where it needs to be in order to make a lot of those deals make sense. And I don't think sellers have come to the reality side of the equation yet where they're accepting that their values are significantly diminished because of where the interest rates have gone. So for me, I'm not looking to do any new

construction right now. You know, so if you've got vacant land and you're bringing it to me, I'm probably not a buyer for you. If you are unique, really unique properties, that's one thing that I tend to find, you know, folks, they will go and lock up houses in rural areas or very unique houses because they believe that there's fewer, there's less competition for that kind of house. But there's also very few buyers for that kind of house as well. So, you know, I like to play in traffic. I like to go where it's very, very, very busy. I like to go in the markets where it's highly competitive. I think that if you play in traffic, there's a good chance you're going to get hit. You know, I get the, I get the emails all the time from wholesalers. I'm on a bunch of

people's lists. And it's almost, it's almost always a no, because I don't think the numbers are good. Right. And so I'd imagine you get a lot of the same solicitations and the same present or same offers. Do you find yourself paying a little bit more than other people and making more stuff work than most people can. I think we can pay a little bit more than smaller shops because we do a higher volume. So that's a real thing. But a deal is a deal. And I think that what you're seeing, here, what's really interesting, Matt, is that the, I know the wholesaler emails you're talking about because I'm on all the list as well. In fact, I'm probably on more just because I've become known on the space as, you know, somebody that people should be sending deals to. But

What I've really found is that oftentimes what you're seeing in the email isn't the story. And if you actually called and talked to a lot of these people and asked them questions and really dug into where they are in the deal, what's happening in the deal, you'll find that there quite possibly could be a deal behind all of that crap. You're just, what you're seeing right now is somebody's hopes and dreams and not a real thing. I'd say nine out of the ten conversations that, you know, we'll have with people in a day. We'll say, well, you know, we're looking at this deal that you sent and, you know, appreciate you giving us an opportunity to help you out here. We see ARV on this house at 250 and you're marketing it for 220. So first and foremost, I want to understand what did I miss? because there's got to be a higher comp here or something that you saw that I'm not seeing.

Otherwise, I don't think you would have sent this to me at this price. And oftentimes it's like, no, no, yeah, it's, you know, well, where do you think it, where does it need to be in order for it to sell? Like, well, if ARV is 250, we're probably going to be looking at this to be, you know, somewhere at the, maybe the 150, 160 range, you know, that maybe if it's really clean, maybe 165, 170, but it's got to be super clean in order for that. And then you find out that, oh, they actually do have the room. They were just trying to make $100,000 on their first deal. And so it's all about having conversations and talking to people and really digging into what they're

trying to accomplish because the thing is, is people are just behaving based off what they think the norm is. And you see these guys with the checks on Facebook and you see the guy with the, check in the Facebook group and you see that incredibly large fee and you think that could be me. Yeah. And so I think everybody gets into the business thinking they got a powerball in their first contract and it's not really what it is. And so it's teaching folks the reality of this and how this is a long game and how we get rich off base hits, not home runs.

And once we really start building those relationships and explaining to people how it really works, it becomes a beautiful thing. And our relationships with wholesalers have become so deep and true now that they won't even go elsewhere. They won't even try other folks anymore. They'll just come to us and they'll say, hey, Jamil, this is where we're under contract at. Swing for the fences and sell it for as much as you think we can and let's split it. And those are the kinds of relationships we love because, look, you can come to me and say, we want X for our house. You know, maybe you don't want to tell me what you're under contract for. You're just going to say, we want to sell it for this much. And I might not be able to do that. And so I'll

just say no. But then what happens? This person is sitting there twiddling their thumbs, you know, in the days of their inspection period are counting down and they're not making any headway anywhere else. And so the question has to become, are you willing to make $10,000 today? Are you going to sit and hope that you'll make $100,000 today and nobody sees your house? So we really have to have those come to Jesus conversations with people all the time to really find out, you know, what are they really wanting to accomplish? And are we in this for the long haul or are you just trying to, you know, come in here and score a rip on your one deal and then, you know, right off into the sunset. What's the plan? Right.

Good question. What is this live about? How is it helping us investors? So good question, Natalie. And it's about the shifting market and how behaves and approaches that are going to be changing and how modifying your game. But, you know, if you were paying attention, there was straight gold in there. So that helped me a lot, actually, to get his insight on that. But it didn't mean to turn it into a deeply commercial, not at all.

No. But I appreciate your insight. And let's go ahead and move right on. The crowd is growing impatient. This is good. All right. So I pulled this up real quickly, just to kind of. go over some what's happening right now.

And, uh, no, a new normal. The housing market just seriously shifted and sellers may be running out of time. And I'm going to point to a few things that we can talk about it than how we should change our approach. It says, uh, our weekly call, da, da, da, do. Okay, so whole prices, number of new listings, total data on the market and mortgage rates. You need to pay attention to those because these are critical variables that show that the tables are turning in favor of home buyers more than sellers. Right. And you'll notice if you're reading the media and if you listen to the TV, it's always starting out like this.

But if you just go a little bit deeper and start reading everything, granted, a buyer-friendly direction does not mean we are in or anywhere near a true blue buyer's market. Correct. So his market that has raised since the COVID-19 pandemic is still going strong, but all signs say the clock is ticking and it's their numbered. So we've been here that all the time, but every time that people post the data, it's, well, not yet. It's coming, but not yet. This just came out today. Oh, wow, look at that. Nice.

Hopefully I'm going to start playing. Whatever that's going to be about. But U.S. home price growth to stall completely, Goldman Warrens. Yeah. To stall completely. This Goldman Sachs, too. They have a real estate division. I don't know if they do or not.

But buyers are faced with an affordability crisis due to surging mortgage rates and listing prices that hit fresh highs during the pandemic era, boom. You see this. The affordability prices, I think, is a real thing. Surging mortgage rates, I mean, they search for a second, but if we look right now, they sit today at 5.55%, historically speaking, that's really, really low. It is. But at the same time, Matt, I think that you have a situation right now where people have unrealistic expectations because of what we've just come out of, right? When you've seen mortgage rates as low as 2%, 3%, and that's what we've been used to for the last 5 or more years, that becomes you get addicted to that. you start believing that that's what is normal.

And I think it's going to require a reset and expectations. I think that you'll have a season. And I think this next season is what we're experiencing. If you're in the fix and flip business, I am. I fix and flip houses. And a lot of our inventory is sitting right now. And we also have to reduce pretty drastically to get deals sold. You know, there's a there's a time cost situation.

And so we just have to cut in order to get inventory. off of our books. And so, you know, is that going to create a drop in values? Absolutely it will. It'll absolutely create a drop in values. And I think that we're seeing that start to unfold in some markets across the United States. Not all of them, but in some markets, right? I think the ones that we saw rapid acceleration, rapid appreciation during those, you know,

few months of the buyer frenzy, I think that a lot of, of that emotional equity, I like to call it, the pricing where we went over $100,000 or $200,000 over list price and we waived appraisal contingency and this isn't lender-backed value. This is just straight emotions at play. I believe the emotional equity is going to get erased from the market. And so if we are looking at running our comps as fix and flippers or if you're looking at running your comps as a wholesaler to the individual who asked how does this help us? Well, first and foremost, we want to understand where's pricing going? Where should we be baking in our

ARVs over the next 90 days? So I'll give you guys some tips that I've been hearing from our fix and flip clients because we get to talk to hundreds, if not thousands of them on a monthly basis. So what we've been hearing is that fix and flip buyers are baking in around a 10% correction into their pricing right now. So if you want to continue wholesaling, if you are a wholesaler and you're and you don't want to be lean for the next 60 days, you want to transact, you want to be able to go and get deals done. What I would do is I would subtract 10% from the ARV that you're looking at and seeing right now. And I would, I would 10% off the top. 10% off the top if you're wanting to transact at the moment.

And we have been and we've been transacting. So it's working. Another thing that I would do is I would look at where the pendings are. So if you are running your comps, I would also, I would absolutely look at your high comp, but then I would take two pendings that are remodels in the area. And I would see where are they landing in comparison to your high comp? Are they dramatically lower?

and if they are lower, if the pennings are lower by what percentage point. And that will tell you about how much of a percentage correction your market should be heading into. And so I think if you can keep these factors into consideration and if you make the adjustments accordingly, you should be a okay in your wholesale business and you should be a okay in your fix and flip business. Yeah. I think also paying attention, what we haven't had to do for a really long time is even look at the actives. Yeah. If you're going to do, if you're going to, if your job or your exist strategy is to fix

and flip and sell to a retail buyer, you know, someone that's going to use this for their primary residence, you want to see what your competition is going to be when you put it on the market. And, you know, if you have cops that are saying your property is worth $500,000, but you got four actives that are been sitting for 30 days at $4.75, then you might not want to use that $500,000, right? I agree. I agree.

For sure. Let's move on. I've got a couple more things here that I want to talk about is I have a little bit, I think I'm a little bit more optimistic than most when it comes to it. And it's really kind of based on this right here. Here, so we look at our inventory. So, you know, that's two or three months. We are here in the spike in inventory.

And we can see that new listings are already on the decline. That's this black line right here. So seasonally, we should be coming down. But, you know, we're coming down either faster than we normally would right there, our year over a year on the inventory is down 15%. The new listings are down. So we always, we've all, we've known for a long time. That's not news that inventory is really low.

But it's certainly not spiking. There's nothing to liberatory coming on the market. It's the growth is slowing down considerably. And here's the other part that I look at. So we got low supply. And then we come here and we look at how our demographic, our population is divided by age group. And this was from 2020.

So it's going to get two years in the rear. the average age of the first time at homebuyer is 34 years old. Right. And we got, so that would be right here, this 32 year old right here, since this is a two years old. But we got one, two, three, four, five, six, probably six or seven years of unprecedented demand, more demand for housing than you've ever seen in the history of our country. And so, you know, whatever is suppressing the market, you know, the Fed, the government, the powers that be will do what they can to keep it in check.

But, you know, at some point, they can't do it forever with, you know, unless, you know, people stop wanting to live in houses, right? And then I'm just going to live under the stars and everything will be fine. And then the housing market can correct. Right. But, you know, we're all going to be moving in together or, you know, it's going to be government housing or government has to subsidize investors more or they won't do anything or just create chaos.

I'm not sure. I think you hit it on the nail with the first thing you said. I think that creative arrangements on how. we will live will be the norm here in the United States. And I look at it because the example has been set in other countries. Okay. The fact is, is that how we live here in America doesn't exist anywhere else on the planet. You go to Europe and you see how people live on top of each other. You see how many people live in one small property. If you see the size of properties over there, you really see a completely different housing story than what we have here in the United States.

And I believe that that story will be retold in much along the same lines as what we've seen happen in Europe and in other countries. And so I believe that in the next 10 years, this housing crisis is not going to get any better. We've seen somewhat near 20% of all housing inventory right now being bought by secondary home buyers by institutional investors. I mean, just think of that, right? One in five houses right now is being bought by a rental company that does not plan on ever reintroducing that house back into the market. Yep. Right? So that's inventory that's being sucked away and removed. On top of that, you have new asset classes being brought into the retail or an interstate,

the residential space with short-term rentals. Back in the day, we had, you know, Ma and Pa landlords were long-term renters and long-term landlords, and they were only looking for long-term tenants. Now we've got an even more lucrative rental situation where landlords are turning their homes into short-term rentals, which removes that property from the rental market, And so that again creates another inventory situation, right? And then you add to that the cheapest money that we had leading up to right now, which everybody's complaining about 5.5% mortgage rates, but even that is relatively low, right?

So you've got Taylor Marr from Redfin. He's the chief, I believe he's the vice president of data and analytics there. He said that there were three factors that caused this crazy approach. appreciation that we just saw before the market started to cool off. It was migration, millennials, and money, the 3Ms, all right? Migration is happening. The migration hasn't stopped. We're still seeing net migration from places like California and to states like Texas and Arizona. I mean, my city itself here in Phoenix, we're gaining two to 300 people a day. and they're coming from California and they haven't stopped.

And so that's creating an inventory situation as well, right? The money still hasn't got, the money has gotten a little bit more expensive, but it's still cheap at five and a half percent. And so you've got all of these factors here that I don't think we are really solving. And even though we've got this mass, this, you know, people came in in mass to list their houses trying to squeeze out every last penny of this crazy appreciation. that we saw, I think that's what we're seeing an inventory spike right now. I think we're just seeing everybody fearful that they're not going to be able to sell at the height of the market.

And so more people listed than would have normally listed. But you know what that's going to cause? When those houses sell, that inventory still isn't being replaced. Right. I think we're creating an even bigger vacuum. Yep. We got six months in a row where builders hit confidence is. gotten lower and lower and lower and lower. They're stopping the building. Yep. And they never caught up.

They never did catch up to what was happening from what happened in 2008. They never caught up their building inventory. And so I truly think that we're in for a very interesting five years in the real estate market. And I think inventory is not going to swell. I think inventory is going to remain dramatically low. I think pricing is going to still remain very high. And so I think what we're going to have is creative ways where people will be living in interesting dynamics. I think that you're going to have more and more households open up their homes to renting out rooms. I think you're going to have families living together in single family homes, multiple families living in single family homes. I think the accessory dwelling unit is going to be.

be one of the most popular renovations or additions that people will do in the next five to 10 years. I think that's going to be a massive, massive play for people is putting a pod in the backyard or putting a storage container in the backyard and turning that into a rental. I believe gave you permission to turn all his garages into living quarters. Right. Right. Yeah. And I also think that you're going to have multigenerational living become more normalized in the United States than it has been, right? If you go to Europe or Asia, you see parents living with children as the norm. You know, it's just how people do it. And I think that that's going to happen here as well. Yeah, I think that's a very logical prediction for sure. You know, we're texting back and forth

of what we're going to talk about today. What you had said, you know, in the housing market, You have a particular prediction on who's going to come out the winner. And so you want to speak on that and what you meant by that? Well, I think that there's a way to win as the market shifts. And I think that there's a way to win once the market shifts. And I think that as long as you understand, as long as you understand the key fundamentals of underwriting, I think that you can always play the game at the highest level and you can win. right and so matt the thing that i've been teaching my students and the thing that i've been

you know telling people who show up to my podcast i you know i podcast with bigger pockets as well and i get to talk to a lot of smart people who watch that as well and the thing that i am yelling from the mountaintops is really understand value learn how to comp learn how to comp correctly. Now more than ever, you cannot break the rules when trying to figure out how much a property is worth. And you know, it's interesting is I have surveyed thousands of real estate agents and I've asked all of them if any of them were taught how to value property when they were getting their licenses. Not one has said they were. Not one. Can you imagine that? We give real estate agents the title of fiduciary.

We tell them that they have a legal responsibility to have somebody's best interests at heart in a transaction. Yet we still haven't taught them how to understand how to evaluate those properties. So many of us, we rely on real estate agents to tell us how much something is worth. But they don't understand how much property is worth themselves because they were never taught how to do it. For sure. Yeah. There's a key knowledge asset that we can all gain, and that's learning how to value property the way in appraiser would. If you can learn how to value property the way in appraiser would, you can get ahead of the pack, and you can be the best investor, the best rental investor, the best short-term rental investor,

the best fix-and-flip investor, the best wholesaler. I believe that that's the one key learning technique that will separate you from everybody else and give you leagues ahead advantage over your competition. I couldn't agree more. The one caveat that I would add to that, though, is, yes, get it right. Learn how to do it and get it right. But understand you're not going to get it right. Meaning that, you know, if you took 10 appraiser out there,

had of all evaluate a house, you're going to get 10 different answers. So just be careful about, like, over-analyzing and getting yourself into this paralysis by analysis thing. I agree. Yeah. Yeah. Right. It's, you know, it's not an exact science by any means. But, yeah, the fundamentals are probably more important today than we remember that in the last two years for sure. Yes, sir. You know, the mark appreciating it and it covers up your mistakes. You know, it covers up your inexperienced. It has been. It did.

It did. But you know something. There were more people, you know, that's the thing about it, right? When the economy shifts, we get to see who's naked. Yeah, yeah. It's what it is, right? Yeah, when the ocean goes out, right? Yep, that's what it is. So that's what we're seeing happen right now.

Fantastic. What's the focus for you right now? Like, how are you changing your business? And it kind of touched on a little bit. but is there anything else to that? I mean, beyond really leaning into the fundamentals of wholesale, I mean, I think that as real estate investors right now, because the market is in flux, because we really don't know where values are going to land for us, we're leaning into our wholesale exit strategy more

than fix and flip at the moment. And so for anybody that's out there trying to create wealth or create opportunity for themselves in real estate investing, I think right now really understand how to be a wholesaler and how to be a good wholesaler. Once you do that for the next, I'd say 12 months, you'll really get a good understanding of where we are. And then if you decide you want to get back into fix and flip or if you want to start fixing and flipping or get back into multifamily investing, I think that would be a good time. For me right now, I just walked away from a multifamily deal where, I had a $470,000 non-refundable earnest deposit, and we lost it.

Because closing on the building would have been a complete mistake. Think of this, Matt. We contract a building in March. 53 unit, $12.5 million building. It was a great deal at $12.5 million when we contracted it. we had lenders who were willing to do 100% financing at 12.5 million. That's how great of a deal it was at 12.5 million when we contracted it in March. The rates doing what they've done at the moment right now, we had lenders who had decreased

what they were willing to do. Their loan quotes went down to seven. Seven. So I, first and foremost, if you're even thinking about getting, into multifamily, the first question I'd want to ask is when was the deal structured? Because sellers right now in the multifamily space, they haven't come to terms that their buildings may have dropped in value by 50%. I think if you are in a multifamily deal right now, I feel sorry for you. I think I think that if you are looking at multifamily as an opportunity, I wouldn't be making any moves for 18 months.

That's just my opinion. I think lean into wholesale at the moment, and I think pause on your fix and flips. That's the strategy that I have moving into the next 12 to 18 months, and I think that by doing so, not only will we generate a significant amount of cash, but we will have a war chest ready to strike when the correction finally shakes at the,

self out. You said that the multifamily owners aren't really, they're not hit to what's going on in the market yet. And sellers are typically always the last ones to figure it out. What are you seeing as far as, you know, your single family owners? Are they getting the picture? I think single family sellers have felt it much more rapidly than anybody else. But the fact is, is that, for sure. Yeah, absolutely. And here's the, here's the beautiful thing, right, about about single family is that it's usually circumstance that creates a selling event. And since circumstances creating the selling event, that circumstance isn't going to go away, right? If you've got to move for work, you've got to move for work.

Right. If you've got to sell this property because a family member passed away, you've got to sell the property. If you're getting a divorce, you've got to split the assets. Like these things are not going to go away, right? They're going to happen. And because those things are going to happen, sell events are going to take place. And because sell events are going to take place and they're going to need to happen whether the timing is good or bad, we are going to understand or sellers are going to be a lot more. They're going to get, they're going to be forced to hit reality way sooner than an investor who's sitting on a 53 unit 12 on what he believes to be a 12. and a half million dollar asset in an A class neighborhood of Phoenix who can very well wait another

two years before they sell the building. And so why should they decrease their value by five million dollars right now? Why should they they're saying, I don't need to sell. You're right. You don't. And so in that multifamily space, unless we're talking distress, there's no, nobody, they're sitting on enough equity right now. And their rents are so high. Inflation. has created such a great opportunity for them for cash flow that they're not going to come to terms with that fact that their buildings are worth significantly less than they may have been. But single family homeowners, they're going to have to do what they're going to have to do. And the other thing about it as well is that when they consult real estate agents,

guess what hasn't been happening with a realtor's phone over the last 60 days? It hasn't been ringing. It has not been ringing. And those agents are worried. they took out a lease on a BMW in March because things were really good and now they got to pay that lease. Yeah, yeah. You know, I've gone through a, I've been here in Vegas for about three years. I was in Los Angeles all my life.

And I got really excited when I came there because I was like, ooh, I finally get to start creating some sort of cash flow opportunity in my whole backyard, which I've been unable to do in Los Angeles for, you know, right. And I had this certain strategy that when I was an agent, I had an investor client and he had me go out and do this certain type of work in and created a bunch of a deal for him. Oh, now I'm the investor. Now I come here and I'm going to go and ask. Employ agents to go out to the same thing. And none of them even, some of them tried, didn't want to do it.

And to your point, I'd text him, say, the market's kind of softening. When I try that again, he said, hell yeah, I'm on. Let's do it. Yeah. It's like, oh, wow. And the total change of tune. But you can tell, just in the vibe and the conversations. And, you know, it was eight weeks ago, all of a sudden, I could tell just like this with

the sellers, like all of a sudden they were calling me back. And when they did call, they were reading messages. I was like, wow, it's new. Wow, you're being polite. Holy. Well, you know, here's another thing that I noticed is that like if anybody's watching this right now and you're thinking, hey, Jamil, thanks, hey, Matt, thanks. This was great. But where's the actionable advice?

You know, what can you give me a nugget right now that I can walk away from this podcast and go and earn a $10,000 check? here it is. If I was you, I would go and find any listing in original condition on the MLS right now that's been on the market for 60 days or longer. I would call that listing agent directly. I wouldn't get a buyer's agent involved in and add friction. I would go directly to the listing agent. I would call the listing agent and I would say, hi, sir, ma'am, I noticed your property at XYZ address. And I looked at the numbers on it and it looks to be priced as though the house had been totally remodeled. And, you know, looking at the photos, it hasn't been. So it's obvious that either one or two things happened here.

Your sellers forced you to list this property at this price. And or, or, you know, maybe you're, all just overpriced it because the market was where it was at that time. But I have a question for you. How serious are your sellers about actually selling this house? And the agent will give you an honest answer. They'll say they're super motivated or they're not. And if they're super motivated, then this is what you do. You ask the listing agent to represent you. Okay, so you incentivize the listing agent by doubling their commission. Okay, you double their commission. Okay, you double their commissioned by them representing you and you ask them to submit an offer for you at the price that

you think the house will trade at. And if you don't know how much to offer for that house, if you're seriously stumped, Jamil, we have no idea what we should be offering on this. Send me a DM on Instagram. I'll connect you with a Kigley franchise who will give you a buy number so you can know exactly what we'll pay for a house. Then all you got to go do is lock it up $5,000 or $10,000 less than that and make yourself a check. Nice. That's a good note to lead on. That's a good one.

Appreciate you, Jamel. If you wanted to get in touch with you, you're all over the place. You probably don't have to. But what would be the best way for them to get to reach out to if they wanted to? You can find me on my Instagram. It's at J-D-A-M-J-I. That's at J-D-M-J-D-M-G. Also, I've got a YouTube channel.

It's just YouTube.com slash Jimil Damgey. I put out information, much like what we talked about today, and I can give you all kinds of advice and tips on how to be an awesome wholesaler. And beyond that, I just hope that you guys are all having a great day and just keep your heads up and keep working hard. For sure. To be an awesome wholesaler, one more thing. What are the three things that make up an awesome wholesaler?

I love that you ask that. Well, first and foremost, it's honesty. You start a couple times you need to be a good wholesaler. I want to know what you think makes up a good wholesale. I think where your intention first is, right? Do you have an honest intention? You can tell what your intention is based off of who are you trying to help yourself or the other person? So I think an awesome wholesaler has the intention to help other people.

You will make money by solving problems and being helpful. That is a byproduct of that service. Okay. Second thing is what makes an awesome wholesaler is they either have. money or they are backed by money. So don't be full of crap. Don't be that guy out there locking up deals that you can't perform on because that's not okay. In all honesty, that's fraud. Don't do that. So if you want to be backed up by a buyer, reach out. Again, reach out to myself, reach out to any Kigley franchise. We will backstop you or offers so that you're making legitimate

plays out there in the world. Make sure you've got the financial capacity to close on the deals that you're writing. Okay? And then the third thing that I would do if I wanted to be an awesome wholesaler is I would learn how to comp. Awesome. Thank you, brother. Appreciate him.

Let's stay in touch. Absolutely, man. It's been a pleasure, man. I got something before I want to talk to you about, but the time's up. And so we'll just have to do it again. Yeah, man. You got my phone number. Let's be friends, bro.

I love chatting with you today. Likewise. All right. All right, partner. Take care. Take care, guys. 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 the cash flow. This podcast. is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.