The Science of Flipping - Billions Of Dollars Going Into Real Estate
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Yo, yo, what is up Science of Flipping family?
Welcome back to another episode of the Science of Flipping podcast.
I'm your host, Justin Colby, and it is about to be Christmas as I record this episode and you are looking and
watching me wearing a hoodie. Now I know it's weird because I live in Miami but quite literally
this morning it is 56 degrees here in Miami. I absolutely love it. I love the cold weather
periodically let me tell you that but it is great to be able to throw on a hoodie and wear some
sweatpants around the house.
It just feels kind of like home back in the Bay Area. Anyways, I digress. I'm fired up about this
podcast episode because it's very pertinent to today and your future as a real estate investor,
specifically over the next 12 months or so. We're wrapping up 2021 and I want to talk to you guys
about this idea that
has been going around for the better part of a year and a half, which is this pending market crash.
Now, while I am one who has definitely lost their crystal ball, as you would say, in terms of my
thoughts of when this market is going to crash, I thought it would have crashed quite literally when COVID first hit.
Well, the reality is it sure didn't.
In a year and a half, almost two years later,
we are still experiencing an incredible market rising
in appreciation month over month, year over year.
And so I actually wanted to talk about this
and I read an incredible article that you're gonna see snippets of right here on YouTube and
again if you're not watching on YouTube and you're just listening to this make
sure you get over to youtube.com forward slash Justin Colby and subscribe to my
channel make sure you partake and make sure you're giving me a ton of likes
right there on YouTube so that that the YouTube gods can favor my
channel and share all this wealth of knowledge with so many more. Now, in this article, it is
talking about how the funds, funds like Blackstone, have actually raised more money than ever over the
last year and have only deployed roughly 75% of that. Now, what I will tell you about that
is that means they're going to continue to deploy their capital. Well, why isn't the market
crashing? Now, what this means for you and me is you should not be scared of the market crashing. One of the philosophies that I have, you know, abided by for my entire career
is surround yourself with people who know better, have gone through it, and are smarter than you,
right? Now, the smarter than me part is not very hard to do. There is a lot of people who are
smarter than me. And I can joke at myself because I don't care, right? So,
but these individuals quite literally are individuals with the highest degrees
and have the most money, right? So if I actually am looking here and I'm going to look up this
article again, because it says one fund has raised almost 300 billion to spend over the last year, and Blackstone has only deployed 25%
of the $33 billion that they raised over the last year. Now, why are they doing that and why?
Well, let me say this. Why are they doing that? But more importantly,
what does that mean to us? Why do we care that these funds are raising billions of dollars? Well, I'm going
to stop you there for a second because it's incredibly important to us small mom and pops.
Why are we so scared of this pending crash when the smartest people in the room with the most
money are spending more money than ever in real estate? Well, first of all, these funds really look at this as a great
hedge against inflation, right? We all see what the government has been able to do. And when the
government prints money at the rate that they have printed money, it is inflation time. And we're all
experiencing it right now today with the cost of goods on all levels from milk to gas, you name it, right? Well, these funds really
realize that real estate is a great hedge against inflation. The other thing here is
they're not going to slow down. In fact, this report even talks about how they're going to
continue to raise even more capital to buy more homes. And some of the critiques I've been getting recently
from all of you is, Justin, the market's going to crash. Why are you buying rentals at the top
of the market? Well, because these funds are buying rentals at the top of the market. And if
they continue to buy rentals at the top of the market. My top of the market when I bought will no longer be the top of the market and I will
have appreciation, which is why you like buying rentals.
Buying rentals is a great tax write-off for the interest that you're paying on the loan,
et cetera.
And you can write off the depreciation of the home.
But also you want the appreciation.
You want these homes to appreciate.
In a time like this, when money becomes less and less viable as a fiat, that the power
of money becomes less and less viable, being able to have assets such as real estate for
the long haul is very valuable.
Now, again, these people are much smarter, they have more money, and they're looking at going even further into this. In fact, this
report is actually talking about how one of these funds is actually raising money currently in the
billions to do more new single family rental home construction.
They are gonna build to rent.
Guys, I don't know about you,
but I can tell you I'm gonna follow where the money is going, right?
This fund is quite literally going to raise billions
or already did, I'm sorry,
so that they can build homes
for the intention to keep them and rent them.
Now, that's on a whole new level.
There's not many people out there that can raise that kind of capital,
let alone find the land, let alone have the team to develop the homes, etc., etc.
But for us, what are we doing?
We need to be following the leaders.
These are the leaders of the space, right?
These are, again, the richest and the smartest people in the room.
Why are you not following the trends?
Well, I can tell you why most people aren't is because they say, Justin, I don't have
that money.
I don't know where to find that money.
Well, I can help you with that in the sense of I coach hundreds if not thousands of people
a year on how to become true real estate investors,
not just wholesalers, but real estate investors that are flipping homes and buying homes to rent.
So if you want my help, I'm happy to help you. Just reach out to me somewhere on social media
and let me know you're interested in me coaching you. But also understand there's a lot of people
with money sitting on the sidelines that don't know what to do with it. I can't tell you how many conversations I've had recently that people are like, I don't
know what to do.
I don't know where to find deals.
In fact, let me actually press rewind here.
I actually, one of my private money lenders quite literally came to me saying, hey, I'm
making a God load of money right now.
I don't know what to do with it.
I don't have time to do anything. I want to be in real estate. How can we partner? They came to me
and said that to me. So there is a lot of money sitting on the sidelines. It's your job as a real
estate investor to take advantage of the opportunity of being a real estate investor.
You're the investor. They have money put two and two together. And let me advise this.
Do not, as the moment in time, be worried about this pending crash. Do I believe this real estate
market has been over-appreciating year over year, especially since COVID? Absolutely. We've never
seen anything like this. So stop thinking the way
we used to think, like every 10 years, there's a cycle. We have blown right by that. We are now in
uncharted waters. So why would you think the way you did in the past when quite literally,
we are looking at a blue ocean that we have never seen before and we do not know where and how to navigate it.
We are in uncharted waters.
We don't know anything about this.
This is unprecedented.
There's never been so much money going into real estate.
There's never been so much money being raised to go into real estate.
There's never been so many funds that I'm aware of.
I only know what I know,
that have raised this money with intention to build the real estate and then keep the real estate. I don't know if that's ever happened in this way. There's been funds that raised the money
to build the real estate, to sell the real estate. That I know is for certain, but now they're keeping it. So again, this boils back down to what does this have to do with you?
Well, it has to do with the fact that you're not in the game right now.
I know because I get a lot of comments from you.
Justin, the market's at an all-time high.
Why would you be buying and holding?
Why would you be buying rentals right now?
Wait till the crash.
Well, if I were to be waiting for the crash,
the 16% that my portfolio went up this year alone in states like Oklahoma and Alabama,
that 16% I would have missed out on because I would have listened to you. So I would tell you this. Without risk, there's no reward. But the long game is always the long game. I'm not buying
these rentals for quick flips. That's why they're long-term rentals. I'm buying these rentals for
the long game. I want to be able to look back in 10 years and say, I have hundreds of rentals,
if not thousands, because my model will be to accumulate hundreds of rentals
and turn those into thousands of doors with apartment buildings. But that's going to take
time. This is the long game. That's why these hedge funds, they play the long game. Us mom and
pop wholesalers and flippers, we're looking for the short capital. We're looking for the short capital. We're looking for the big hits, the $20,000, $30,000 hits so we can go buy the new Ferrari or Lambo or Rolex or whatever we decide is cool.
That's what we're doing in the short world, in the transactional world.
But these guys, they have their mind right.
They're thinking about how to build big wealth.
I mean a mass, huge wealth. We'll learn from them, follow them.
At the end of the year of 2021, I made a vow that this was going to be the year that I actually got
into the rental game. I've always been the transactional game. And I'm telling you,
and you guys have heard this from me before, because it is now
what I'm yelling from the mountaintops. Wholesaling as you know it is dead. Again,
the transaction, that definition, that is not dead. But you need to get out of the transactional game
and you got to get into the opportunity game. And that's why I found this article to be so
enlightening that I wanted to share with you my perspective. Get out of the transactional
game. Get into the opportunity game because guess what? The big money is in the opportunity game.
So us little fry out there, me, you, let's start thinking like them. Let's start moving like them.
Let's start understanding how and why they're doing things so we can just emulate. Even if we're not raising $33 billion,
maybe you go raise $30,000.
Think like them, act like them,
get into the opportunity business and you will forever make money and be rich
and then you level that into building wealth.
So again, if you need my help on how to do all that,
awesome, reach out to me on social media somewhere,
the Justin Colby, send me a message, happy to talk to you about how I how to do all that. Awesome. Reach out to me on social media somewhere. The Justin Colby.
Send me a message.
Happy to talk to you about how I can coach you on that.
But for now, I want you to enjoy your family.
I want you to enjoy the holidays.
I want you to look back at 2021.
Realize the great things that did happen because there was a lot of them.
Realize where you could have been better, where you could have performed better, executed better,
or maybe actually jumped out of your comfort zone.
Take a look, be retrospective about this year
so you can go into 2022 with a whole lot of gas
in your tank to go take advantage
of all this incredible opportunity that's out there.
Hopefully this finds you well.
Merry Christmas to you all.
And again, if you're on
iTunes, drop me five stars. If you're on YouTube, send me a like right now. And if you're not on
YouTube, get over there. Subscribe to my YouTube channel, Justin Colby. Look it up. Subscribe.
Hit the like button. I'll see you guys on the next episode. Peace. episode peace