The Science of Flipping - The 2022 Real Estate Market IS HERE!

Episode Date: January 3, 2022

ARTICLES MENTIONED: https://www.wsj.com/articles/red-hot-housing-market-fuels-mortgage-borrowing-record-11641033003?mod=markets_lead_pos1  https://www.financialsamurai.com/2022-housing-market-forecast/  https://www.inman.com/2021/12/30/why-the-housing-market-wont-burn-quite-as-hot-in-2022/ The #1 training and coaching system to launch, grow, and scale your investing business!𝐋𝐞𝐚𝐫𝐧 𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Become a 𝐓𝐒𝐎𝐅 𝐈𝐍𝐒𝐈𝐃𝐄𝐑 and get access to exclusive training and resources:https://insider.thescienceofflipping.com 𝐈𝐍𝐒𝐈𝐃𝐄𝐑𝐒 𝐆𝐄𝐓 𝐅𝐑𝐄𝐄 𝐀𝐂𝐂𝐄𝐒𝐒 𝐓𝐎: ✔️ Science of Flipping Academy  ✔️ All the systems and software I use in my business✔️ All the tools you need to run your business ✔️ All my Scripts, Contracts, Spreadsheets✔️ Special Discounts✔️ And Much More... 𝐇𝐚𝐯𝐞 𝐚 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧?Get immediately connected with a team member on messenger:http://split.to/tsof-messenger 𝐁𝐞𝐬𝐭 𝐑𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐅𝐨𝐫 𝐖𝐡𝐨𝐥𝐞𝐬𝐚𝐥𝐞𝐫𝐬✅ 𝐁𝐞𝐬𝐭 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐒𝐨𝐟𝐭𝐰𝐚𝐫𝐞: http://bit.ly/tsofsoftware✅ 𝐁𝐞𝐬𝐭 𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐟𝐨𝐫 𝐃𝐨𝐥𝐥𝐚𝐫𝐬 𝐀𝐩𝐩: http://bit.ly/tsofd4d✅ 𝐁𝐞𝐬𝐭 𝐒𝐤𝐢𝐩 𝐓𝐫𝐚𝐜𝐢𝐧𝐠 𝐒𝐞𝐫𝐯𝐢𝐜𝐞: http://bit.ly/tsofskiptrace✅ 𝐁𝐞𝐬𝐭 𝐓𝐞𝐱𝐭 𝐁𝐥𝐚𝐬𝐭𝐢𝐧𝐠: http://bit.ly/tsoftext✅ 𝐁𝐞𝐬𝐭 𝐃𝐢𝐫𝐞𝐜𝐭 𝐌𝐚𝐢𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞:: http://bit.ly/tsofmail✅ 𝐁𝐞𝐬𝐭 𝐃𝐚𝐭𝐚 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫: http://bit.ly/tsofdata 𝑾𝒉𝒂𝒕 𝒕𝒉𝒆 𝑷𝒓𝒐𝒔 𝑯𝒂𝒗𝒆 𝑻𝒐 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝑱𝒖𝒔𝒕𝒊𝒏: “Justin is one of the best trainers in this space. He really gives everything to his tribe.”– Brent Daniels (TTP) “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled”– Kent Clothier (REWW) “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.”– Sean Terry (Flip2Freedom) 𝐀𝐛𝐨𝐮𝐭 𝐉𝐮𝐬𝐭𝐢𝐧:Justin Colby is the founder of The Science of Flipping Podcast and The Science of Flipping Coaching Program and is an active Real Estate investor having flipped over 1500 homes in multiple markets across the U.S. Justin runs an 8-figure real estate wholesaling business that closes 20+ deals each month in multiple markets across the U.S and has helped 1000s of clients learn how to become successful real estate investors. Justin subscribes to the philosophy of "Wholesaling To Wealth" and is the foundation of his coaching program which teaches you how to get started wholesaling or streamline and scale an existing wholesaling business as well as build long term wealth through wholesaling, flipping, and building a rental portfolio. Subscribe To Justin Colby:http://youtube.com/justincolby View All My Videos:https://www.youtube.com/c/JustinColby/videos   

Yo, yo, 2022 is here and the experts say that the real estate market isn't going anywhere. Stay tuned to this episode as we're going to talk about what all the reports are saying as a moment in time about how the real estate market is going to continue to appreciate. I can't believe it. Maybe you can't believe it, but the reports are in and everyone's saying the same thing. Now, welcome to the podcast. If this is your first time to this podcast, my name is Justin Colby. I am your host, and this is all about real estate and business. We want to make sure I'm giving you the most tactical, up-to-date strategies and tools and systems for you to be using in your real estate business. Now, whether that means just trying to find homeowners or maybe just

trying to understand whether you should be buying rentals right now or not, that is what this podcast is all about. I am super fired up as we have now hit 2022. I was ready for 2021 to be done. I had good years all around. I set records, things of that nature, but all in all, there's some things that I was just very excited to get into 2022 and leave behind 2021. So here we are officially in 2022. And I want to bring to light all of what the experts are saying on all sorts of websites right now, which is that the real estate market is not going to go anywhere. It's going to continue to appreciate. Now, albeit some of these websites are talking about how it may not be as on fire as it was in 2021. And mostly that has to do with their projections of what's going to happen with the interest rates.

But as you see right here, the 10-year bond is actually more influential on how the interest rates are going to adjust rather than the Fed fund. And a lot of experts out there are kind of looking at the Fed fund to see how that relates. Now, interest rates for mortgages, if people are not clear, typically are heavily attached to the rise and fall of the 10-year bond. So if the bond starts to go up, our interest rates start to go up. So this is something to keep track of if you're in the markets. If you're well knowledgeable about that, all good. I'm not going to do a deep dive. If not, just realize that is really what's so influential with our interest rates going up. Now with that said, most, if not all of the articles I read, and I read several, came up with the same conclusion, which is this. The real estate market is going to

continue to appreciate just probably at a slower level because the need for housing is still so great, right? That there's still such a demand for housing and interest rates are still so low that it ultimately makes more sense for people to buy. On top of the unemployment being so low and people still having jobs and people leaving big cities and being able to afford more homes, all of this plays in to the rhetoric that is the theme on all of these different articles, whether it be the Wall Street Journal or Inman, Financial Samurai, and so many others are all essentially saying the same thing. So what does this mean for you, Justin? Why? Okay, great. Why do I care? Well, first of all, I don't know if a lot of people realize that. I think there's a lot of people out there

that are saying it's going to bust. It has to bust. You know, we can't continue to have this type of real estate market. And I'm going to tell you, we can, right? It really comes down to supply and demand. And I don't actually foresee, and there is an article that talks about how it looks as if the low interest rates are a thing that will stay. There doesn't seem to be any economic fundamentals that are going to say that there's going to be a drastic rise in interest rates, right? It's not going to just jump up to 6%. Now, that is actually the number that I bought my first home. Back in the 2000s, I bought a home at a 6% interest rate, which at the time I thought was really low. But now you can get super low. There are people that have under a 3%. And I just, you know, I'm looking at all the resources and all the data that's also read talking about how people are not even

able to afford a place to live anymore, even renting, because markets like Miami and Phoenix and so many others really just had such an appreciation in the rental rate that people are just simply struggling. And for many, it actually makes more sense to actually buy. Now, that's not always my rhetoric. I think you guys know me enough to know that there are times that I don't believe people should be buying a home. And the main reason is because of the cost of maintenance to that home. They may be able to pay the mortgage. They may be able to pay the principal and the interest rate. And yes, you get a tax write-off. But I would say for most people who are on a stuck

income, it can be a challenge to be buying a home, especially a home that they want, just because they can afford a mortgage and the interest rate doesn't necessarily mean they can afford the property taxes or the maintenance. I'm a great example of someone who bought a home that was already remodeled. I thought it was great, but I'm already having to do so many things such as part of my roof that cost me an extra $20,000 because the insurance wasn't going to allow me to have long-term insurance based around 180 cracked tiles on my roof. The lender didn't care. The lender said, absolutely, we're going to go ahead and fund this deal. It's a beautiful home, blah, blah, blah. The insurance said, we're not going to keep your insurance unless you fix this.

There's just a lot of those maintenance costs that go into buying a home that not a lot of people on a stuck income can afford. And so that's what I really try to urge individuals. You really need to be careful when you're thinking about buying a home. It's not always the best decision for everybody. Now, this episode isn't about my own beliefs about whether you should be buying a home. It is about what we should be doing as real estate investors. Okay. And as real estate investors, I'm a firm believer is still a time to buy. I know that sounds crazy. And I know, you know, the number one rule, well, the number two rule, first rule is location, location, location. Second rule will be is buy low, sell high, right? And I get that.

But if you actually look at the data I've been showing you here on this podcast, by the way, if you're not watching this on YouTube, you need to. I'm actually doing a video and you will see screenshots of these articles and what they're saying to support what I'm saying. So go to YouTube, subscribe to my channel, Justin Colby over on YouTube, and make sure you're giving me a thumbs up on each and every one of those videos that you are watching. But as real estate investors, what does this mean? Well, first of all, if you're in the game of wholesaling, as I am, then you understand that 99% of homeowners or more, 99.5% of homeowners are simply not going to want a low ball number. They don't need it. They know their house value and they know that it can list on the MLS. And because of such low supply, they are not going

to take a lower number, right? They know it will sell. Now that's 99.5%. But what happens to the other 0.5% who are motivated? Well, that's who we're looking for as wholesalers and real estate investors. But that doesn't feed the beast. So what do we do? Am I going to continue to buy? How do I find these deals? Well, the reality is I'm buying in markets that are under the median value. Now the median value is kind of anywhere right now, roughly call it $350, $375,000, maybe a little bit more on these articles, at least that's what they're referencing. And some of this is,

that price point of median value is gonna just continue to increase. So when I buy rentals, I'm sticking to 30% or more under median value. Well, that number has just drastically increased, which means the numbers I'm getting for rents versus what I'm paying for the home isn't really in line with a great investment property. But it does mean as I'm buying and as I am finding these individuals in these markets, that that is likely going to increase, meaning the median price point is going to likely increase. Now, where it will end, no one knows in that sense.

But by the end of 2022, some reports are coming out that it could be as high as like $420,000 for a median price point home, which is crazy. That is well above where it has been for so many years. I actually was hoping to keep things under 350 because when you're buying a median price point home at 400, it doesn't really pencil well for a rent. Now, to find a market that is 30% under median price point, then it takes a little bit more digging. And as I referenced back to the motivated seller,

the half of 1%, they're all through the nation, but those are the type of people that we need to find to find a property that would be 30% under value, right? And so we have to do a better job trying to find them. Now, here's the next big secret on why I just firmly believe it is the time to buy is because if you understand how to creatively buy these properties, there are a lot of people who are tired of being landlords. They just don't want to be. Now, they don't need the money like a big payday,

but if you can show them a way that they can continue to collect mailbox money and they can continue to make money on their investment and maybe put some money in their pocket and do a creative finance deal, this is the way that you're going to be able to continue to buy at volume. Now, this is, again, I'm using this podcast as a show to say, you know, listen, we're in uncharted waters right now. No one would have expected this. I'm constantly reading our articles and doing research to figure out, like, what are the experts saying? Like the people who literally have those degrees that say they're like an economist, right? Like, what are they saying?

And it's all going the same direction, that it's going to stay hot. It may not be scorching as it was in 2020 and 21. It may not be that crazy of appreciation, but it's going to be a hot real estate market. And for all intents and purposes, for two simple reasons, interest rates are not going to be going up and there's a huge demand. For us investors, the demand could be a safe haven for our money. We all know that the inflation is already happening. So as a real estate investor, I can put money in real estate as a great protection against that inflation. And so for those that just want a place to live, it is turning out that the rents are actually catching

up to cost of just buying a home. So many people are looking to just buy a home. And on top of all that, just one or two episodes of the podcast ago, I talked about how these hedge funds are not only buying a ton of rentals that are going to continue to increase the price of the home, they're actually buying land to build so they can build the rent, build to rent. I mean, the game has just changed so drastically now that the hedge funds and the big money are in. It's time for you to get in the game. Don't be on the sideline and watch and wait until this market crashes.

So you're waiting and your money is worth less and less and less every day that goes by. But it's your, because you're trying to wait. I tell you sitting on the sideline right now is not the game, not for us real estate investors and not for people who potentially want to buy a home. Now, again, I digress on my own opinions about buying a home, uh, because they are expensive. But listen, if you have a decision to make, whether you are, scratch this last part. So listen, it's 2022. It's an exciting, exciting year. I personally broke records in 2021 in terms of business records. I'm looking to do the same in 2022, hands down. 2021 was a great year for

me buying rentals. I'm going to continue buying rentals in 2022. I'm going to continue wholesaling, flipping, doing ovations, and every type of exit strategy that I know how to do here in 2022. If you're on the sidelines, get off the sidelines. It's time to play ball. Understand how to work the business because you don't want to be a part of the sheep that are out there just going along with everyone else saying it's going to crash. So I'm going to wait. Don't be that guy or gal. Get in the game, put your helmet on, put your shoulder pads on. I hope this fires you up a little bit and gives you some insight on what the experts are really saying

about this real estate economy. I'll see you guys on the next episode. Peace.