Navigating a Shifting Market Buyers Are Still Buying
Yo, yo, what is up everybody what is up? Welcome back to the science flipping podcast. I am your host, Justin Colby. And as always, our main number one sponsor minute.pages.com is our sponsor for professional real estate investor websites. If you are in real estate aspiring to be in real estate and you want credibility, influence and authority right away, make sure you go to minutepages.com for your $97 a month website. It is for us real estate investors buy us real estate investors, make sure you go to minutepages.com.
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All right, all right. Welcome back to the podcast everyone. This episode is going to talk on a couple points. But one is the upcoming Fed has another meeting coming up. And what that really means and then to some of my philosophies on how we need to start to navigate as real estate investors, many of you who are active right now have felt some level of change fluidness in the market, obviously, we went from almost Well, a record low listings to more substantial listings on the market. In large part this is going to be because the interest rates are hiking. And that’s why bring up this pending November meeting again. They also have one on the books for December. Now whether the meetings for sure hold on those dates, that remains to be seen, which is fine. However, I can tell you, from all the research that I’ve been doing, it looks like it is almost guaranteed that they are going to raise rates again by point seven five basis points.
So for all of you that have been paying attention to what’s going on, on my social media, I’ve been questioning all this recession talk because I am seeing people in high end restaurants, I am seeing people and in the malls, I am seeing people wearing very expensive bags, clothing, watches, etc. And it feels like nothing really has changed regarding the consumer. But in real estate, we do feel some change. I myself in my business have been feeling some change. Now Lucky for me, I have gone through these things before I’ve gone through and made it through the great recession of 2008. And so I have prepared myself, I have de-risked my business, I do not have a lot of flips going on. And I’m really focusing on finding the right buyers, which is really, really what I want to jump into on this episode. So here’s the reality is yes, interest rates are going on. But there are trillions of dollars sitting on the sidelines right now that are ready to plug and play as they see this dip happening. Now most of that money will be to buy and hold. Okay, they’re not reliant on interest rates, per se. So as they see a dip, they are going to be more opportunistic in buying rental properties. Now, the key here is how do you align yourself with those buyers? There’s not just one company that has trillions, right? There are a lot of buyers on the sidelines, some have hundreds of thousands, some have millions, tens of millions, hundreds of millions to play with. So the key and one of the biggest pivots I’ve been doing is making sure I’m in alignment with my buyers. Even as recently as last week, we got a deal in Cleveland, Ohio. And what I immediately was talking to my team about in that market is less first reach out to the buyers that we’ve worked with in that market and just see where they’re at, what are they doing? What’s changing? How are they buying? Because I like the buy number we have in recent past I do believe and it still may sell. However, I’m aware that people are buying differently, they’re buying a little bit deeper, and maybe they’re not buying as much. I want to know what their buying criteria is. I’ve done a lot of deals in the state of Ohio as a whole Akron, Cleveland, Cincinnati, you name it. And so I’m really trying to hone in on what is changing in those markets. Cleveland is pretty special because there’s not a lot of appreciation that happens in that market. However, rental rates stay really consistent in are really good. So while we contracted the property at a really good buy price relative to the rents, we want to make sure the buyers see the same thing. Well, again, going back to point number one, as interest rates increase even myself as a buy and hold buyer. It makes it harder to pencil Will the 1% Rent ratio as well as make sure I’m buying it 75 Or at least all in it 75% of ARV. So I can refi out, that model is getting pinched a little bit right now, meaning I need to buy deeper. Right. And so we contracted it at a pretty deep discount, right, like 30% of what they wanted, right? So much deeper than what the seller wanted. But that’s irrelevant, because I need to know what my buyers want. And that is the big pivot I want to share with you guys today. What are your buyers doing? How are you changing your business to make sure you’re in alignment and congruent with your buyers above the deal. For years and years and years. It’s always about find deals, find deals, find deals, I get it because the economy has been crazy. There’s been no properties on the MLS and I don’t mean literally no but incredibly low mount. You know, sellers knew that it was a seller’s market, they wanted incredibly high prices. So it’s been overwhelmingly difficult to find the deal and even that was still not that difficult. But as we change into a buyers market, we got to reverse engineer how we’re thinking about the business we need to go reverse the business. As my good friend and brother Kent Clothier has termed it reverse wholesaling, making sure you’re focusing on the buyers first, to go get the deals now what I will tell you is I’m not telling you to stop and go get the deals, I’m telling you to put more emphasis and focus on what your buyers are actually doing. Now, if you’re a student of mine, you know, I’m more than happy to help you sell the deals because I have 4.4 million buyers on my buyers list nationwide that are cash, real investors that are proven. So students, I do that I help them sell their deals so that they can leverage my team and my buyers list. If you’re not a student and interested in that, then reach out to me go to my social media, the Justin Colby, or even watch this on YouTube, Justin colby.tv and make sure you’re subscribing YouTube and throw a comment right there on YouTube.
If you’re listening to this on iTunes or Spotify or any of the listening platforms, reach out to me on Instagram, it’s probably easiest the Justin Colby, let me know you’d be interested in coaching. This is the time for coaching. By the way, this episode is not selling coaching. But I can tell you right now, many people who are in the game right now. They’re looking for mentorship and coaching because they know the market is shifting and they may have only been in the business 2345 years. Well what’s happened in the real estate economy for 234 or five years. Just awesomeness. That’s it just the best craziest, wildest, most profitable real estate market we have ever seen. So now things are changing in the business is getting pinched a little bit. So there are a lot of people out there looking for mentorship. So if you are, I’m happy to be that for you go to the Justin Colby, shoot me a DM I’ll personally reply to you. We’ll take it from there. But the real point I really want to make is I believe the Fed is going to increase interest rates again, I think twice before the year is over, they have a meeting in November, they have a meeting in December. So I you know whether it’s point seven 5% Or not both times I believe both meetings will have an outcome of increased interest rates. That means buyers are going to be pivoting the market is going to be shifting, and we need to adjust for that as an investor that affects me as a buy and hold investor because that means my interest rate is going to be higher, which means I effectively have to buy much, much deeper to be able to afford those or just buying cash right to be able to afford the rent rate versus my mortgage. As a wholesaler it means I need to be in tune with the buyer. Where are they buying? How are they pivoting? What are they doing? What’s changing for them. So that’s the big takeaway I would tell you right now is real time the market shifting we need to be shifting with with it. And one of the biggest pieces of advice I can give you is make sure you’re in tune with how people are buying how entities are buying in align yourself with those entities to make sure you’re congruent and you’re able to get them the deals that they’re looking for. With that said guys, make sure you go over to Justin colby.tv Subscribe right there on my YouTube channel as well as give us a five star review on iTunes as I’m trying to knock this out for you each and every day five episodes a week on the science of flipping. I will see you guys on the next episode. Peace