The Science of Flipping - Why You Need To Be Fix and Flipping

Episode Date: March 18, 2021

Why You Need To Be Fix and Flipping

What's up guys, welcome back to another video. I am justin colby and in this training I'm going to talk to you guys about why fix and flipping has never been hotter And while you need to continue doing it all the way through q1 stay tuned So what's up guys welcome back to another video I am Justin Colby and on this channel I think I talk all things business real estate and entrepreneurship and in this training I'm gonna talk to those real estate investors who are fixed and flipping and why that continues to be incredibly profitable and how you should be treating that going in to 2021. Now this video, I will tell you, you want to stay all the way through because there is one main reason I will tell you why fix and flipping is still an incredible business model

and incredibly profitable, but you got to stick through to the end of this video. Now I myself have fixed and flipped over 500 properties and with the economy, there are ebbs and flows. And over the last decade, the economy has been appreciating, which means for most people, fix and flipping has been really, really profitable. Now, of course, you can make mistakes on how you buy if you go over budget on your rehabs and several other different things such as your money situation and hard money payments and potentially if contractors do wrong work. There's a lot of reasons why maybe a property will not be incredibly profitable. So there are some heartaches that go along with fix and flipping. But what I will tell you is there is one main reason you should be bullish on fix and flipping

going into 2021. And that is from the lessons learned about mortgage applications going through November. Finishing November and going directly into December, mortgage applications went to an all-time high. What does that mean? That means people are out there looking to buy homes right now. Now here's what's happening. People are looking to buy homes that they can afford because of the interest rate being so low. There's the big key to this video. Interest rates are also at an all-time low. So while interest rates are below 3% for a 30-year conforming loan, individuals that are still employed are applying for loans at an all-time record high because they can afford the monthly payments this is all reported by

the mortgage bankers association so this is very real up-to-date data that we can look at as real estate investors to figure out what is going to be the best play for us now there are a lot of different verticals in the real estate investing space, but rehabbing can tend to be the most profitable. Now, just like wholesaling, rehabbing tends to make you the most money and it spits off a ton of cash. But because you're turning these properties over, you're not really building wealth. But that's okay, because what you can do with that profit margin going into 2021 is leverage your profits from those rehabs and start buying and holding rentals, which ultimately is what we're all in it for anyways. But let's get

back to why fix and flipping is still a very viable and safe way going into 2021. It comes down to supply and demand. As a moment in time, as I'm recording this video, Maricopa County, which is Phoenix, Arizona, is at an all-time low for available listings on the MLS. We are roughly around 4,000 listings, 4,000 and some change on the MLS, which is an all-time low since we've ever recorded active listings on the MLS. A healthy market here in Phoenix is to have roughly 30,000 listings active on the MLS. We have 4,000 listings active on the MLS. So what you can see clearly is simply supply and demand. Now, as are seeing, that there is still a high population of employed individuals, and because the interest rates continue to creep down

under 3% for a third a year, there's a lot of people looking to buy a home while they can afford the payments. Now, here's the disclaimer. Should you be buying a home that you can afford for just the payments because you can afford the payments or should you buy a home that you can actually afford it's a question you have to think about i tend to think people that are trying to buy an upscale home that maybe they

can't afford if it wasn't for the low payments, might stretch themselves if anything were to go wrong. Now, this is a question of personal preference. I tend to think you should always try to buy something that you can afford in a secure manner, not just because you can afford the monthly payments, which, by the way, is the majority of people. They do a calculation. They get sold on the monthly payments, not really the cost of the home. And so people are buying above their pay grade per se. They might make $100,000 a year, but they're buying a million dollar home. Just financially, I would say that isn't necessarily the right decision because when you just look at the cost of that million dollar home regardless of the payments you're talking about taxes you're talking about insurance you're talking about you know anything goes wrong in repair you are really putting

yourself in a tough situation if you're just looking to make sure you can afford those monthly payments now for the real estate investors I really encourage you to stay pretty bullish in fix and flipping because if the interest rates are low and there is low supply and demand, that means every home that you buy, remodel, and put back onto the market is going to sell quick as long as you price yourself right. Now don't be crazy and don't go way over budget on your rehab. And then also don't say, oh, well, because low supply and demand, I don't really have to put too much work into it. Don't underestimate people wanting quality still. Now, a lot of people are moving out of the cities and that tends to say that the city starts to sprawl and those outer circle, more of the rural neighborhoods start to have a

high demand for properties. And so I would just say, make sure you're remodeling up to the quality that everything else is at, at a very minimum. I do know investors who are kind of taking advantage of the economic play of supply and demand and actually are getting hurt because the reality is they don't they're trying to sell something for less quality to save some money to turn over you know the property but it actually is not making them as much money is if they would have done it right remodeled it correctly and move forward if you're liking this video please smash the like button, hit the subscribe button. I believe most people who are in the real estate investing space should be viewing

a bullish market going into 2021. This is why I'm advising if you are fixing and flipping, feel good about that. Go after some of those bigger profit margins because interest rates are an all-time low according to Mortgage Bankers Association and the demand in applications at an all-time high. They continue to increase going into this December. As we are finishing out the year, I see that this trend should remain the same going into January and that means anytime you put a home on the market, it is going to get sold. You will be able to move it quickly. And that gives you security going into your fix and flips. I hope you enjoyed this. I hope this helped you think a little bit more about what you're doing in your

business. If you're interested in talking to me further about how I can help you, just go to thescienceofflipping.com, thescienceofflipping.com. Go ahead and fill out a form. I'm happy to jump on a strategy session with you. Or also, if you are interested heavily in real estate space, make sure you are checking out my podcast, The Science of Flipping. It is on iTunes. It is on Spotify and all the other platforms. So The Science of Flipping podcast, as well as if you want to talk to me personally, head over to thescienceofflipping.com. Check out the form, fill out the form, and I'll jump on a strategy session with you. Hopefully you find this well. Smash the like button, hit the subscribe button, and I'll see you guys on the next video. Peace. Thank you.