The Science of Flipping - The Market Is Terrible! Here's What To Do.

Starting point is 00:00:00 When is it all going to change? When can we expect something different? When can there be more properties on the market? When is it going to open up? And my answer is multiple fold. First, it's not. Stop it. Shut it down.

Starting point is 00:00:15 The market is not going to change to the scienceofflipping.com podcast. I am your host, Justin Colby. And if this is your first time to this podcast, it is all about the proper tools, systems, strategy, procedures to be a successful real estate investor. I myself have now been doing this over 14 years. I have done 1800 flips and I am buying anywhere from two to four rentals right now. I am also wholesaling in over seven different states doing about 20 deals a month. So you are in the right place if you are looking to be a successful investor, whether you're going to wholesale, rehab flip, or even buy and hold. Well, let's get to a couple of questions that I think are just a hot point of

Starting point is 00:01:16 what's going on. And the idea and the concept of this hot question is simply this, when is it all going to change? When can we expect something different? When can there be more properties on the market? When is it going to open up? And my answer is multiple fold. First, it's not. Stop it. Shut it down. The market is not going to change for the remainder of this year. Now, the main reason for this is multiple fold. Again, as I mentioned, first, the interest rates aren't going to go up. So people are going to continue to try to get really good loans at low interest rates, which then secondly, there's no foreclosures happening and there's no inventory. It's a simple supply and demand.

Starting point is 00:01:59 So the cost of buying a home is going up at an astronomical rate. And between these two things, I don't believe anything will change. I don't believe we're going to have some big foreclosure tsunami, if you will. And I believe there is going to continue to be low inventory and low interest rates. And in the supply and demand is not going to allow the market to change at all going into 2022. So what does that mean for us investors? Where do we get the edge? What do we need to be looking for? Well, it's always most important to be trying to find the most motivation you can when speaking to a homeowner right now. For some of you, you may be trying to buy homes through realtors or whatnot, but I would highly

Starting point is 00:02:45 encourage all of you to be focusing on properties that are off market. There's a lot of different marketing strategies. In fact, over the several hundred podcast episodes I have, I would tell you this. You can do direct mail, pay-per-click advertising, cold calling, text messaging, door knocking, or otherwise they all work. This episode is not about that. But what this is saying is you need to find where the motivation lies. And what I will tell you is a lot of the motivation is going to rely in landlords. People at this moment are over real estate. They don't really want to deal with it. There's tenants that aren't paying. They're just stuck. There's maintenance that needs't paying. They're just stuck.

Starting point is 00:03:26 There's maintenance that needs to be done. And there are tens, if not hundreds of thousands of small landlords that own five or 10 properties, really didn't build a business out of it. And they would like to just be done. They would like to cash out. And what I'll tell you about those individuals is those people have motivation. And what's even better,

Starting point is 00:03:44 as someone who's done over 1800 flips, those individuals can get creative with you. So let's say those individuals actually want a top dollar number was a wholesaler. That doesn't work for me, but for someone that actually is looking to keep and build and buy a portfolio, I don't care about what price I actually pay for that home. I don't mind paying retail. I don't even mind paying north of retail. And let's just say retail is $100,000. I don't even mind paying 110 or 115 because if that person has enough motivation, they can get creative with me where I don't have to go get a loan. I don't have to have any money out of pocket. I can assume their loan and or at least pay their loan. Maybe not assume because that means you're putting it

Starting point is 00:04:30 into your name, but at least I can start paying their mortgage and whether it's a subject to, or if they don't have a mortgage, we could do a seller finance deal, or maybe they have a mortgage, but want more money than what the mortgage is. And we can do a wrap. Now, again, there's going to be further podcast episodes about all these different creative ideas. But what I can tell you, if you are an investor looking to wholesale and flip and buy more rentals, start focusing on landlords. They are going to be the people that will be at least, I would say at least they would entertain a conversation with you more so than someone who's sitting there knowing that their market is on fire, knowing that they can get top dollar

Starting point is 00:05:10 and they still have income. So there are no need to sell. Those individuals are going to be the same individuals that tell you they just want a number that's not realistic. These individuals will say maybe a number that is market value, but they're also going to say, I want to get out of it. I'm tired of owning it. Whether they inherited it or they just only have three or four or five properties and it's really not moving their needle much. Maybe the rent basically just covers their mortgage and cost because it's an older home. These individuals are the type of individuals you want to start a conversation with. Because in the game of real estate investing, it doesn't matter if you overpay for something, as long as the rents, the revenue generated from it covers the cost of that and continues to buy equity in the property. So let me just pause right there for

Starting point is 00:06:01 you guys right now, because this is an idea I don't think a lot of people think about. If you are using it as a rental and you can actually rent it out that covers not just the mortgage, but the taxes and the insurance and may or may not even put some money in your pocket, what you are doing is you're paying down the mortgage, which is buying you equity and you aren't doing it, the tenant is. So if you do a creative deal with a landlord and that landlord is willing to be creative, whether they do a wrap or a subject to, or they do seller financing, you are now by just pure ownership, buying in equity. Now, what I would be focusing on is people who have

Starting point is 00:06:43 owned the home for more than five years. That's the next target. Now, why would I tell you guys that? Well, because the first five to seven years of a mortgage typically is very interest heavy, meaning every payment is lopsided. You are paying way more interest in the first five to seven years than you are paying the principal of the loan. So when that breaking point happens, whether it's five years or seven years, now your payments start becoming heavier towards the principal. This is where buying down the principal creates more equity. And then you get to really rapidly create this equity, right? So I would be focusing on landlords who have owned the property, I would even say seven years or more. Because if you can get them to be creative with you, then you have the

Starting point is 00:07:30 opportunity to not care about necessarily your purchase price, because you're going to hold it for the long run, because the tenant themselves are going to be the one paying down the mortgage. And after five years of a tenant paying down the mortgage, you're gonna have the equity you're looking for. If you were able to do that one time a month, every single month, you would very quickly have 60 homes in five years. All of them at that point would have equity because of the buy down from your tenant. And you are now on a great position

Starting point is 00:08:01 because now you have opportunities like banks are gonna start lending you money against the equity in the homes. And then you can go buy more property. And again, within the next five years, there will be some sort of reshaping of this real estate market. There will be some sort of pullback of this real estate market. And because you have all this equity, because you focused on the right people that even though you paid retail, because you basically have to, it doesn't matter because you're not in it for the income per se. You're in it to buy down the equity and then come into a

Starting point is 00:08:33 waterfall of money because banks will just lend you money based around all of the equity you have in these homes. Now, this is probably a little bit more advanced than most of my podcast episodes, and that's okay because you guys really need to be thinking to the level where I'm at. I've done this for 14 years. I've done 1,800 flips. I'm buying two to four rentals every single month. And this is how I think. And I want you guys to use my strategies to achieve your results and you would like me to coach you, just go to thescienceofflipping.com, fill out a very simple form there. Some of my top advisors will talk to you about what that looks like. And we can have a conversation if I'm the right coach for you. But ultimately guys, the market is going to be where it's at for the remainder of the year. It's likely going to continue to appreciate. People are likely not going to want to take discounts on the property. The interest rates are going to remain low. So you need to take advantage

Starting point is 00:09:28 where there is opportunity, which is going to be landlords. So you can get creative. You can pay top dollar because you're being creative. You probably won't have to come out with any money at all, if anything, very little, and you're going to build a massive rental portfolio while you're doing it. That is my strategy. Hopefully this podcast episode helped you guys. Again, go to thescienceofflipping.com. I'm your host, Justin Colby, and I'll see you guys on the next Science of Flipping podcast. Peace.

The Science of Flipping - The Market Is Terrible! Here's What To Do.

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