\n
Dave:
Hey, everyone. This is Dave coming at you with another bonus episode. Just a few weeks ago, we released our first bonus episode and it got such great feedback, we decided to do it again. In this episode, I got together with Henry, Jamil, Kathy, and James to talk about whether or not you should still be considering investing in real estate even with today\u2019s crazy market. We were actually just intending to make this as a YouTube video, but it was so good we had so much fun and there was so much value created, we decided to throw it up on the podcast feed so you could all hear it here. That said, if you haven\u2019t already subscribed to our YouTube channel, you should definitely check it out because we are putting out a lot of content really regularly that doesn\u2019t make it here to the podcast channel. We can\u2019t get everything out on a podcast, so there\u2019s a lot more content there on YouTube, and it\u2019s a great opportunity for you to learn more from me and the rest of the crew.
But for now, please enjoy this bonus episode and as always, we\u2019d love to hear what you think. This is On the Market, a BiggerPockets podcast presented by Fundrise. Hey, what\u2019s going on, everyone? This is Dave Meyer and I am here today to talk about a super important topic, whether or not 2022 is a good time to invest in real estate. Believe me, I know there is so much conflicting and confusing economic information, so I brought my friends from the On the Market podcast. We got Henry Washington, Jamil Damji, and James Dainard joining me today to talk about what they are doing to invest in real estate and how you can jump into this market. Yes, you can do it even in this crazy market. In addition to all the insights, the panelists are about to share with you, we also have a ton of Easter eggs and free giveaways because we just felt like it honestly, and we have some amazing things to give away to you.
You can go to biggerpockets.com\/datadrop and download all of the rent data that I have amassed for the top markets in 2022. In the episode, we giveaway Jamil\u2019s Tricks to Underwriting. I built a house hacking calculator that you\u2019re getting for free. All of the links are below. You can download them all 100% for free, commitment-free on biggerpockets.com, so absolutely go do that. There\u2019s no reason not to. With that, let\u2019s jump into our question of the day, whether or not you should invest in 2022. What\u2019s going on, everyone? This is Dave Meyer, your host for today\u2019s panel conversation about whether or not right now in this crazy hectic market we see in 2022, if it is still a good time to invest and to have this conversation. I have brought my friends from the On the Market podcast.
We have Jamil Damji, master flipper, and wholesale coming to you from Phoenix, Arizona. Then we have Henry Washington, buy-and-hold and short-term rental investor from Northwest Arkansas, and James Dainard, the certified deal junkie from Seattle, Washington. Thank you all so much for being here. Before we get your takes on whether or not you are investing right now, and whether you think the rest of our audience should be investing right now, I want to just give a summary of what\u2019s going on. We are recording this in pretty much the middle of 2022, and since the beginning of the year, the housing market has changed pretty fundamentally, at least in my mind.
When we started the beginning of this year, we had interest rates that were about 3.1%, which is close to the lowest it\u2019s ever been. Now, as of this recording, it\u2019s above 6%, so they\u2019ve nearly doubled. At the same time, we are seeing that housing prices are still going up. They\u2019re up about 15% year-over-year as of May, which is not as high as it was last year, but is still ridiculous by historical standards. Inflation is running hot at about 8.4%. Inventory is still extremely low, but starting to tick up, and of course, many are calling for a recession. So I think it\u2019s reasonable that a lot of people are wondering is now a good time to invest in real estate? Just quickly, yes or no. Jamil, is this a good time to invest in real estate, and why do you think so?<\/p>\n
Jamil:
Absolutely. I think it\u2019s a great time, because you can actually get out there and get some deals. So if you stick to the fundamentals of understanding your numbers, sellers are having conversations they were not having months ago. They are ready to deal. They are ready to take haircuts on their numbers. You can get out there and snag up some amazing opportunities, get at it.<\/p>\n
Dave:
I love that, because that is super contradictory to what we hear a lot in the overall narrative about investing right now, but it sounds like you\u2019re finding good deals. We\u2019ll jump into that in a little bit, but Henry, what do you think? Yes or no, good time to invest?<\/p>\n
Henry:
Yes, absolutely. Real estate\u2019s cyclical. It\u2019s either going to be hard to find deals and easy to get money, or hard to get money and easy to find deals. That\u2019s how the market works, so jump in either one of those scenarios. There\u2019s always going to be a challenge, no matter what the market\u2019s doing. It\u2019s about figuring out how to overcome that challenge and the best way that fits your financial situation.<\/p>\n
Dave:
I love that. All right, James, are you going to be a contrarian here, or you also think it\u2019s a good time to invest?<\/p>\n
James:
Yeah, it\u2019s always a good time to invest. Scared money doesn\u2019t make money.<\/p>\n
Henry:
Amen, brother.<\/p>\n
James:
At any time you need to be ready, or at least for me, I\u2019m always buying. It\u2019s just about adjusting my numbers and changing things, but I am always a buyer in any type of market. It\u2019s just a matter of what kind of deals are coming in my way. Like Jamil said, they are coming. We are seeing them rapidly coming our way.<\/p>\n
Dave:
All right. Let\u2019s jump into that idea that there are more deals. Jamil, you mentioned that sellers are now having conversations that they weren\u2019t just a few months ago. Can you tell us a little more about that?<\/p>\n
Jamil:
Absolutely. In Phoenix, Arizona, for instance, in the last say six months, if I was trying to buy something at even 70% of ARV, I was having a really difficult time. I\u2019d been adjusting my numbers up and up and the fix-and-flip rehabbers had been doing the same thing over here as well. We were buying speculatively. It was starting to get pretty scary, to be honest with you and we were looking at our projects and we\u2019d done great on them, but we thought, \u201cMan, when we bought this deal, we really were underwater. The day we closed.\u201d Now we\u2019re back to the fundamentals. I\u2019ve been having conversations with real estate agents who are representing sellers right now, who haven\u2019t been able to move their property. I\u2019m getting discounts of 150,000 or more from what their original asking price was just because they didn\u2019t time the market right, so these conversations are happening. They\u2019re happening every single day. My team is cleaning up.<\/p>\n
Dave:
That\u2019s really encouraging to hear. I want to just reiterate for everyone listening and watching this that Jamil is not saying he\u2019s going on the MLS and just buying something that is at list price. He\u2019s able to negotiate with sellers because the dynamics of the market have shifted. Six months ago, a year ago, it was probably the strongest sellers market ever, probably. I think sellers are starting to see that the scales are tipping a little bit more in buyer\u2019s favor. In these transitionary periods, it can be an opportunity to buy. James, I know that\u2019s something you always talk about is looking for opportunities in these transitionary periods. You are a buy-and-hold investor. I know Jamil, we might have convinced him to do his first buy-and-hold the other day, but-<\/p>\n
Jamil:
Closing July 11th.<\/p>\n
Dave:
\u2026 are you seeing the same kind of dynamics in the buy-and-hold market as well as in the flipping and wholesaling market?<\/p>\n
James:
Yeah. We\u2019re seeing things across the board. It\u2019s kind of amazing, because everyone keeps talking about, \u201cHey, rates are so high, you can\u2019t make anything pencil,\u201d and that is just not true. We looked at four deals on market on Monday that all cash flow above 10% cash-on-cash returns at 30% discounts and really good BRRR opportunities. We\u2019re definitely seeing that things are balancing out now to where you can look at a property and go, \u201cOkay, does the math work or not?\u201d Then you get the time to evaluate it correctly, and then you can write your opera accordingly. But the market is definitely balancing out and it is making for great opportunities, and that\u2019s why we\u2019re just changing numbers around. We have lots of people reaching out to us on a daily basis right now like, \u201cHey, what will you pay?\u201d We\u2019re giving them the numbers. They might not be happy with them, but people are definitely starting to play ball.<\/p>\n
Dave:
That\u2019s really interesting. I hadn\u2019t even thought about the fact that lower competition in the market right now means that you have more time to underwrite your deals and you can actually sit and think about something probably for the first time in two straight years. Everything was going in four or five days before, so now you can actually have some time.<\/p>\n
James:
Yeah. Before you start throwing out hundreds of thousands of dollars, you actually can think about it for a second. The last 12 months was like, \u201cOkay, cool. I\u2019ll buy it. Here\u2019s a half million dollars.\u201d It\u2019s like, what is going on?<\/p>\n
Dave:
It is. It is a benefit to investors to be able to have some time to think about this. Now, I\u2019m sure there are people watching this thinking, \u201cThese are three successful investors with sophisticated marketing apparatus, great deal flow, and they\u2019re biased,\u201d because you all like real estate investing. That\u2019s your business. Henry, what do you say to that? Do you think there is some validity to the fact that we are all biased, and how do you respond to something like that?<\/p>\n
Henry:
I think the bias comes from the success and not just success, but life- changing success that we\u2019ve seen and how this vehicle has not only provided us a return on our investment, but provided us the ability to be good stewards of other people. We spent the first half-hour before we started recording talking about something really kind, James was able to do with some money that he made. So the bias comes from us understanding how powerful of a tool this is to change people\u2019s, not just their lives, but their family tree.
It\u2019s a generational wealth building tool, so I say that if we are biased, that should excite you, because we are biased because it\u2019s such an amazing vehicle. You look at the stock market and you think about you\u2019re building wealth, you\u2019re generating some income. It\u2019s more just like thinking about individually, what that can do real estate gives you that and the ability to be a blessing beyond just yo because of the abundance it can provide. So if we sound biased, we probably are, but that should be super exciting to you, because we just want you to be able to experience some of the amazing things that this tool provides.<\/p>\n
Dave:
A lot of people ask me and they say you\u2019re biased or people feel that there\u2019s fear. Basically, they\u2019re thinking that there is going to be a market correction seems to be the idea that people in the real estate space are either deliberately or are blindly ignoring the fact that there is going to be a market correction. The only true answer is, no one really knows what\u2019s going to happen. I certainly have my opinion. I think I know you all have your opinions about what\u2019s going to happen, but there is a genuine fear that people don\u2019t want to buy at the top of the market. I think even people who want to invest in real estate and are bought into the idea long term of investing in real estate say, \u201cWhy would I buy right now? Interest rates are high and the market could correct.\u201d So Jamil, I\u2019m curious, how do you handle that fear and how do counsel other real estate investors to managing that?<\/p>\n
Jamil:
Well, that fear always exists. I\u2019ve been hearing people tell me that the market was at its peak so many times on the ride up. Look, I can absolutely say that we\u2019ve hit a threshold. We\u2019ve hit a threshold of affordability. We\u2019ve hit a threshold of interest rates. We\u2019re in an interesting spot. At the same time, I believe that when you\u2019re looking at real estate and you\u2019re looking at it over time, we\u2019ve gone up. We always go up, and even though you get these little blips where values can decrease, you got to look at the use case. Like, what are you doing with the property?
My friend, Pace Morby, has a saying, and I love it. It rhymes. He says, \u201cThe equity comes, equity goes, but the cash will always flow.\u201d So if you\u2019re looking at a deal and if you\u2019re looking at it from a short-term perspective and you might lose a little bit of money in equity, well, are you still making money in cash flow? You\u2019re really only losing anything if you sell at this time. So I\u2019m about to make a purchase for $12.5 million on a multi-family building. I was talking to James before we started the show today, and does it make me nervous? Absolutely, guys. It, for sure, makes me nervous, but I have a plan and I know the fundamentals of what I\u2019m doing. I love the location of the property.
There\u2019s an absolute opportunity for me to increase rents. I\u2019m going to depreciate a lot of my income, so I\u2019m going to save money on taxes. This makes financial sense. I\u2019m using the fundamentals of real estate to increase my wealth. In a hot market, in a not-so-hot market, I\u2019m still making money. One more thing, yesterday, I was able to trade a $25,000 assignment fee. In this crazy market where all this fear is everybody\u2019s talking about, \u201cOh my God, this and that,\u201d well, what about the $25,000 that I made yesterday? Is that biased or is that actual money?\u201d That\u2019s money, so if you understand how to do this and how to make proper moves, and if you\u2019ve got the liquidity partners, you\u2019ve got the buyers ready, you\u2019ve got sellers ready to have conversations with you, you can always make money.<\/p>\n
Dave:
That\u2019s great advice. Obviously, it really just depends on the strategy, and there\u2019s so many different ways you have to operate differently in each type of market. You said something, Jamil, that you use Pace\u2019s rhyme. You said that the cash will always flow. James, you often hear, and there are fears of recession. I saw something recently where Bloomberg said that the risk of recession is about 75% right now. In my experience, I haven\u2019t seen rent go down, even in recessions. I haven\u2019t lived through as many as other investors have, but you can look at the data for this and see that it hasn\u2019t. Are you afraid that rent is going to go down if there is a recession? If so, how do you mitigate that possibility in your own investing?<\/p>\n
James:
I think it depends on the market that you\u2019re in. Some markets are definitely really elevated. People living in secondary home areas that moved out for pandemic reasons, I do think those rents are going to come down. Those are pretty juiced up right now. How we do it is, we focus on where the money is and the jobs are, and we\u2019ve always had good success. Even back in 2008, when the market crashed, I didn\u2019t see a lot of rent drop. They actually stayed very stable. The big difference was it took 60 to 90 days to fill rather than a week or two, and it was just a longer time to fill up your units, but we didn\u2019t see a lot of rent drop. Things that we\u2019re looking at is, like right now, we just wrote an offer on a 90-unit building up in Everett, Washington, but it\u2019s downtown. It\u2019s next to the jobs. It\u2019s still very affordable.
Our average rent or unit per rent or, it\u2019s a 1.75, a foot that we\u2019re performing and out, and so we\u2019re staying where the affordability are. Then, we\u2019re also looking at staying away from different types. I wouldn\u2019t go buy luxury apartment buildings right now, because I don\u2019t want to go chase those really, really high rents. When those rents went from 3,000 to 4,000 in Washington, that\u2019s a huge jump and that can come back pretty aggressively. But the affordable stuff, if you\u2019re around that median home price and you are staying in that median price range, that stuff doesn\u2019t really flex much.
Then, the other thing that we do is we make sure we get good tenants in and we don\u2019t slum board. Everything gets renovated to a high caliber because our quality of tenant that\u2019s coming in is good. They appreciate living in a good spot, so they\u2019ll actually rent quicker and they don\u2019t mind paying more money for a good unit. So everything that we look at right now, we have full stabilization numbers in. We have big budgets, and that deal has to work with all of this in there, or we won\u2019t buy it because we want it turnkey. We want low maintenance. Then also, with inflation going up, we also don\u2019t want this building to bleed us out for two to four years. So by stabilizing these correctly, you get better tenants, rent don\u2019t fall, less money out of your pocket.<\/p>\n
Dave:
Love the idea of just producing a great product that attracts a great tenant or a great customer. It\u2019s a surefire way to continue to generate the same kind of income that you are expecting or that you underwrite your deal with. Just for reference, James is right. Just to provide some data here, back in 2008, housing prices dropped nearly 20% nationally and rents, they stayed pretty flat. Of course, it depends market to market, but just on a national basis that is pretty dramatic, because if people do stop buying as many homes, maybe they need to rent. Just for some further context, right now, vacancy, as James is saying, it could start to go up in a recession. It is at its near all time low.
Vacancy is extremely low for the same reasons, or one of the same reasons we\u2019ve seen housing prices go up so much is because there\u2019s just not enough homes. Some of what, basically, what I\u2019ve heard all three of you talking about so far is that we need to adapt. You can\u2019t just go out and buy anything in this kind of market. You have to be smart. That\u2019s always true. I guess maybe the last two years you could have just shot from the hip and done okay, but we\u2019re getting back to the area where we need to be smart and considerate. Henry, what\u2019s one strategy or one niche within the whole realm of real estate investing that you think makes sense in this type of economic climate?<\/p>\n
Henry:
Oh man, absolutely. I\u2019m always going to be a big proponent of house hacking, because when you\u2019re looking at a tough economic climate, one of the things you want to be able to do is create more income, or reduce expenses and then be able to invest the difference, some sort of hedge against the economic factors that are pushing against you right now. So when you look at something like house hacking, it is fairly low ceiling to get into it. You can find a deal that works from a house hacking perspective, pretty much on the market and almost any market because you are also going to factor in that you are going to be eliminating a mortgage or reducing it substantially by creating income from that property that you\u2019re living in. It\u2019s also low barrier to entry as far as cost to get into the property, because you can utilize a convention or an FHA owner-occupied loan and get in with 5% down, sometimes even three-and-a-half percent down if you can qualify for an FHA; sometimes even less, if you can qualify for a VA loan.
There\u2019s no down payment, or there\u2019s assistance programs like NACA, Neighborhood Assistance Corporations of America, where you can get into it without having to pay a down payment and they will pay your closing costs. So there\u2019s all these types of programs that you can leverage to get into a multi-family asset or even if it is a single-family home and you rent out rooms, there\u2019s multiple options, and that\u2019s what I like about it is, you can take the place that you live, use it to create income and decrease expenses, which gives you this surplus, if you will, of money that you didn\u2019t have before, which now you can use to either make your ends meet if you\u2019re in that position, or set it aside so that you can invest in something that potentially you\u2019re not living in, but it\u2019s one of the easiest ways to do all of the things, which I think you need to do when economic constraints are tight, which is, save money and figure out a way to make more money.<\/p>\n
Dave:
That\u2019s awesome. I think house hacking is just such a no brainer for people, especially if you\u2019re just trying to get started. Rent is so expensive right now, you\u2019re probably not saving that much money renting. Even if you\u2019re fearful of the market, you can probably reduce the amount you\u2019re spending. We actually mentioned this on the On the Market podcast in a recent episode, but I did create a tool. It is a calculator where you don\u2019t just look at whether you buy or own, there\u2019s plenty of things out there in the media where you can do a buyer or a rent calculator, but this is a buy, rent or house hack calculator that can show you if and how much money you can actually save. We will put a link to that in the description below. You can download that completely for free on BiggerPockets. Jamil, what about you? What would your one niche or strategy advice be for people who are looking to jump into real estate investing right now?<\/p>\n
Jamil:
Well, I think if you\u2019ve got fear of holding a property and worrying about the equity potentially disappearing, really understanding the fundamentals of wholesaler. I don\u2019t just say that because I\u2019m a wholesaler, I\u2019m saying that because if you are fearful, then trading is the way to go. I was fearful coming out of the last recession because I got burnt in 2008. I lost millions of dollars. This is my second go around, so I learned what not to do last time, and that was collect a ton of leverage and get overextended. I\u2019m not in that position, but I can tell you this, that I traded property on the way down. I traded property at the bottom and I traded property all the way up, and I made money being able to do that. I sustained my life because I was able to understand how to wholesale contracts.
So I\u2019m telling anybody who\u2019s out there right now, if you\u2019ve got fear, if you think, \u201cHey, I don\u2019t want to buy a property and hold it right now, because I\u2019m worried I might lose 10 or 20% in equity if a correction happens,\u201d understand the fundamentals of wholesale, get yourself involved. You can wholesale a transaction. You can wholesale a house with an earnest deposit and just understanding the values and understanding the fundamentals of what a property is worth. Guys like myself, Henry, James, we\u2019ll buy those deals from you, so you can actually make tons of money understanding how to wholesale properly. I think right now, especially if you have any fear, that\u2019s the way to go.<\/p>\n
Dave:
That\u2019s great advice, because it\u2019s relatively low-risk compared to a lot of other real estate investing strategies. Jamil, you previously on our podcast gave away some underwriting advice and a spreadsheet that we were giving away on BiggerPockets. Now that I just talked about giving away my calculator, would it be okay if we linked to that in the show notes as well to that people can go download?<\/p>\n
Jamil:
Absolutely. Absolutely. They\u2019re called the Appraisal Rules, guys, and you can follow them to understand how to really hone in on how much a property is worth and what its potential is.<\/p>\n
Dave:
Awesome. Well, thank you. You can download that for free, again, in the description below. We\u2019ll have the link there. All right, James, what about you? What strategy would you bank on here in 2022?<\/p>\n
James:
All of them, because [inaudible 00:24:16] at the end of the day, a deal\u2019s a deal. It can be a great wholesale deal. It can be a great flip deal. It can be a great buy-and-hold and not all those are the same, but the biggest thing that I have had to do in the last 90 days is really establish my buy box. I see a lot of people, the people with fear are the ones that go, \u201cI don\u2019t know what\u2019s going to happen and I don\u2019t know what I want to do.\u201d So the first thing you want to do is narrow down what you want to do. So for each sector that we work in for wholesaling, we have a buy box like, \u201cAre we going to keep that deal or sell it?\u201d We know what deals we\u2019re keeping, what deals we\u2019re going to wholesale off.
We know if we\u2019re looking at a buy-and-hold, whether it\u2019s a two to four unit or 20, 40, 50 units or above, we\u2019d have our buy box and our process set in play. If it hits this return and we can get this kind of debt, we will buy the deal. Then with fix-and-flip, it\u2019s the same thing, because fix-and- flip, I keep hearing that it\u2019s very risky. It is. It\u2019s always been very risky. It\u2019s been very lucky the last 12 to 24 months. If you flipped a house and you made a lot of money in the last 24 months, half of it was luck. I\u2019ve flipped a lot of homes, and I know that I got lucky the last 24, but you can flip in any kind of market. 2008, we were crushing the market flipping and that market was dropping, like you said, 20% in a year and we still made margins.
So you just have to buy your right plan behind your buy box. We don\u2019t go and buy a house, design the whole thing before we have architect plans back. We want to know where our window schedule is. We want to know how it\u2019s laid out. What\u2019s the actual theme of the house. If we went and designed that down the road, we\u2019re going to have a disaster. So you don\u2019t want to just go buy without really putting together that core fundamental, which is, \u201cThis is what we\u2019re doing. This is what I\u2019m trying to accomplish, shrink my numbers down. If I still want to flip, I\u2019m just going with bigger margins now. I want 20 to 25% returns and I want to have 10 to 20% on my construction budgets, and then I\u2019m padded all the way through.\u201d The more people walk away from flipping, the harder I\u2019m looking at it because that\u2019s my biggest opportunity area.<\/p>\n
Dave:
This isn\u2019t theoretical, you\u2019re actually doing this. You\u2019re finding these deals right now.<\/p>\n
James:
Oh, yeah. The margins we\u2019ve seen have been at least 2X what we\u2019ve been seeing the last 12 months. I got a call yesterday from a seller that we actually gave an offer to nine months ago, a builder beat us out. They beat us out by 50 grand, but they had a very long close and they were supposed to close actually today. The builder just walked away from their earnest money, $40,000, and they\u2019re out that deal. These people have already packed their house up and moved, and they just got notified two days before. So they call us panicked and they say, \u201cHey, can you buy this?\u201d Then, for us, we\u2019re not going, \u201cHey, well, how do we get this just for nothing?\u201d
We\u2019re going, \u201cOkay, well, we have to reevaluate this property. Here\u2019s our new margin.\u201d We educated them on what\u2019s going on in the market and they know, but then we educated a little bit more about the impact of rates and the math behind it. Now, they just took an offer, we gave them an offer 150 grand less than we gave them nine months ago. It\u2019s in a great neighborhood, and they\u2019re going to take it because it\u2019s very logical at that point. So for us, by not getting that deal nine months ago, I just made $150,000 more in value. So as things get scarier margins increase. The last 12 to 24 months were not normal.<\/p>\n
Dave:
Is the same true for you, Henry? Are you seeing pretty good deal flow? Can you share with our audience, I\u2019m assuming you\u2019re getting pretty good deal flow, but assuming that you are, where are you finding those deals?<\/p>\n
Henry:
Yeah. Yeah. Real quick, to piggyback on what James and Jamil both said, the best insulation for risk is to buy great deals. I know that that sounds generic, but in essence, what that means is, you have to figure out how to go find people who have motivation to sell and equity. We\u2019re buying situations. You heard James just explain a situation that caused him to get a good deal. We\u2019re not buying houses, we\u2019re buying situations. So if you can get good at finding those situations, and they need James, they don\u2019t have another option, and so when you create those win-win scenarios by providing people who need to sell with a solution, then you can get good deals.
The better margins you have, the better deal you buy, the more you insulate yourself from problems. So if the market shifts, James can either reduce his asking price and still make a profit. He can potentially put a tenant in there and keep it as a rental. When you have the margins of buying a good deal, then you can have multiple exit strategies and multiple exit strategies is what helps you reduce the risk. If he goes over on his renovation budget, he\u2019s got cushion. It eats up some profit, but if you\u2019re making 80 grand instead of 92 grand because you went over 12K, you\u2019ve given yourself some cushion.
So being able to figure out how to find and purchase good deals or put them under contract, in Jamil\u2019s case, is how you\u2019re going to be able to insulate yourself from the things that most people are scared of when it comes to real estate investing. For me, Dave, we\u2019re absolutely still finding good deals. I am getting more leads coming to me now than before when I was having to go out and push for leads. So now people are trying to come find me, because again, it doesn\u2019t matter what the market is doing, if the market\u2019s high or the market\u2019s low, it doesn\u2019t dictate if a person\u2019s going to be in a tough situation. People get in tough situations, no matter what the market\u2019s doing.
In fact, there\u2019s more tough situations when economic conditions are the way they are now, it creates more difficult situations where people are going to struggle to sell. It also thins the pool. It thins the pool of investors and buyers to the ones that are the most serious and the most prepared. So if you are consistently trying to align yourself with the people who are moving and shaking in the industry with the people who are getting deals done, then you won\u2019t have a problem making money in those environments because whereas, a year or so ago, maybe even six months ago, if you put a house under contract, there was a million hands going up to buy that deal.
There\u2019s less hands going up to buy that deal now, and so the people like Jamil and James and myself who are connected with the people who are ready to jump and do those deals are the ones who are going to make the money. So right now, there\u2019s more deal flow coming. Access to money is what\u2019s getting a little more difficult, traditional money that is. So it\u2019s always going to be a two-pronged approach. You\u2019re going to have to figure out how to solve your deal flow problem and solve your money flow problem so that you can buy those deals. So if you can solve both of those problems, I think you\u2019ll be able to make money in any market, but man, we\u2019re getting great deal flow right now, Dave. Mostly I do direct mail and cold calling, but as of, I would say, the past two weeks, people have been calling me.<\/p>\n
Dave:
That\u2019s amazing. For people out there who want to get started, maybe they are listening to this, hopefully they\u2019re inspired by all of you and your wise advice. Jamil, what advice do you think, what would you give people in the next 30 days? If they just want to start and take action and jump in on these opportunities you\u2019re describing, what is one or two steps that they can take right now to move towards that first deal?<\/p>\n
Jamil:
Well, direct mail can take some time and cold calling can obviously take some resources and time, but there is nothing that costs less money than going to the MLS. Guys, listen to this. You can go to the MLS right now and look at anything that\u2019s been on the market 30, 60, 90 days. Believe me, realtors right now are more sensitive to this situation than sellers are. You can pick up the phone, you can have a conversation with a realtor right now and ask them, \u201cI see this property isn\u2019t selling, and the world has changed. Is your seller ready to have a real conversation about where this property\u2019s going to trade at?\u201d
Use that listing agent as your buyer\u2019s agent and incentivize them with a double commission and go offer on that property at a number that\u2019s going to make sense for somebody. Come to me and I\u2019ll be your buyer. I\u2019ll tell you what to lock it up at and make a profit. That\u2019s the first step. You can get a deal done right now in a matter of weeks by having that one hack. Go right directly to the MLS, go get some agents, build some rapport with them, have them represent you as well so they\u2019re double incentivized to work with you. Bring me the opportunity and go make a check.<\/p>\n
Dave:
All right. That is great advice. I do think, James, you told me the other day that you\u2019re getting a lot of on market deals right now, but do you have any other tips, anything, not just deal flow, anything that you think could help someone achieve that first deal in the next couple of weeks here?<\/p>\n
James:
Yeah. Just the first step is to find what you think is a good deal. That is the most important thing. If I don\u2019t know what a good deal is, I can\u2019t go out and go find it at that point. But yes, we are getting a ton of properties on the MLS. Honestly, the deals are really good because it is the market is telling them what the activity is. When someone lists a property on the market and they get zero showings in the first week, they are concerned, especially after what they saw from 90 days ago. So the market really tells them where it\u2019s at, but where we\u2019ve been getting most of our deal flow is, is we\u2019re defining what it is, and we\u2019re looking on the MLS. We\u2019re using call rooms now to get mass coverage.
There\u2019s a company call Magic we just used because we want to be able to hit more people, because as there\u2019s more fear out there and people are wanting to make that next decision, I want to touch more people. So we\u2019re able to hit five times as many more people. We ramp that up, so we\u2019re doubling down on all of our marketing efforts, because as people stop contacting, I\u2019m going to increase my contacts. Then the other thing is, like Jamil said, is talk to real estate brokers. Real estate brokers are the best avenues out there. They\u2019re talking to tons of people.
They have tons of clients that have been thinking about selling for 12 months and now their clients are having FOMO and they\u2019re going, \u201cI missed it,\u201d and they\u2019re rushing to get to the market and they want to rack in whatever equity they still have in that property. So reach out to all your brokers and let people know what you\u2019re looking for. Don\u2019t just say, \u201cI\u2019m out buying deals,\u201d tell them what kind of deals you\u2019re looking for, what returns you want to be at, set the tone and then start talking to everybody and expanding your marketing network, and you will get more opportunities.<\/p>\n
Dave:
It just seems like what\u2019s holding so many people back is just the fear without any actual action. The things that you\u2019re talking about, just going and actually calling someone, going and running numbers on a deal, even if you know that\u2019s a bad deal, just teaching yourself the skill to be able to run the deal, know what a good deal looks like, these are the actions that you can take for free. It doesn\u2019t cost anything. There is zero risk in doing research and learning whether you can actually find a deal, and I think a lot of people think, \u201cOh,\u201d they come up with these ideas or these scenarios in their head, \u201cThere\u2019s no good deals,\u201d or, \u201cIt\u2019s too risky,\u201d but you don\u2019t actually know that until you go out there and actually do something and actually look at a deal, talk to a broker.
For everyone watching this right now, there are so many free resources we have on BiggerPockets. If you want to find a investor-friendly agent, you can do that for free. If you want to download the stuff I was talking about, you could do that for free. You want to learn how to analyze deals, you could do that for free all on BiggerPockets. If you want to start taking action on real estate, if you agree like James, Henry, Jamil that this is a good time to invest in real estate, definitely head over to biggerpockets.com. It is entirely free. There\u2019s a community of more than 2.5 million real estate investors who have found success in real estate through the same thing that these guys are talking about, and you can do it absolutely too, so go check that out.
James, Jamil, Henry, thank you all so much for being here. This is a super important conversation. If everyone watching this likes this kind of conversation about what\u2019s new, what\u2019s happening in the world of real estate investing, you should check out our podcast, we have one. It\u2019s called On the Market, there will be a link below. We have our own YouTube channel. You can see all of their beautiful faces regularly there making some great content for all of you, and so hopefully check that out. Go take some action. Thank you all for being here. We\u2019ll see you all again real soon. On the Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett. Editing by Joel Esparza and Onyx Media, copywriting by Nate [inaudible 00:37:36] and a very special thanks to the entire BiggerPockets team. The content on the show, On the Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.<\/p>\n
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