What Happens When The Real Estate Market Crashes?
One of my students was talking to me about what I’m going to be doing with this pending market crash. And while I do believe something is going to happen, I can’t tell you when. And I can’t tell you how severe this doom and gloom market crash is going to be. And and I say that by saying I don’t even know if I like using the word market crash. The reality is I actually feel like there will be some level of correction. I don’t believe our economy could handle the crash
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I believe people are now smart enough based around the 2008 debacle. And I believe a lot of the banks are going to end up loan modifying people that have not been paying. But I do believe there will be a correction I don’t believe we can continue at this appreciation rate. I just found out that Miami is one of the top two cities of appreciation Phoenix being the other as well as Atlanta being the third. And so awesome. I bought a home in the market as seen one of the top two highest depreciation over the last two years. Great good for me. With that being said, I would tell you my business isn’t going to change a lot. And I know that sounds kind of crazy. But the reason why I’m so emphatic about Wholesaling is because it is a wealth creator, for me, not only does it spit out a bunch of cash, but it also gives me opportunity to be able to buy and hold rentals. Now why does that mean my business model will not change a lot? Well, that means that it’s a funny way of saying that. What I’m trying to say is it opens the opportunity for me to do a lot more creative financing, right. homeowners that are in financial trouble tend to be the best option for a creative finance structure, whether it’s subject to maybe a rap, you know, that leaves the gate open for that type of acquisition model. Some people don’t understand the difference between wholesaling, and let’s just say subject to or creative financing. Let me clear the air here. Subject to wraps. credit financing is an acquisition strategy. It is not just a business model, the business model would be wholesaling marketing to sellers who are motivated to sell finding a buyer who is likely going to be buying that property and then assigning it that is the business model wholesaling. The acquisition strategy would be subject to or seller finance, or a rap or some combination of all of it, right? That would be my acquisition strategy. So when people ask me, and this student asked me, How am I going to change my business? I’m just going to buy more rentals, and maybe I’m going to buy it with cash. Maybe I’m going to buy it subjected to an existing loan.
But that’s what I’m already doing, I’m just gonna have more opportunity, because of the financial circumstance of the people in jeopardy of potentially losing their home or, or not affording their mortgage, it’s just gonna give me more opportunity, but my business model is going to stay the same, my acquisition strategy and exit strategy may slightly change in the sense of, I might keep more than I wholesale. And by the way, I know a lot of investors that would love to buy subject to properties, wrapped properties, so they don’t have to go out and get loans, and they can adopt a, you know, 2.85% loan that is already in place, and they can just make the payments and take over payments on that. So I’m still going to be wholesaling. Because I know a lot of buyers that would love to, you know, make those payments, subject to the existing loan, and also go make 510 15 $20,000 assigning my subject to or creative finance deal. So I don’t want anyone out there worrying about what happens if, you know, the reality is if you’re an active wholesaler, or you’re trying to get wholesaling, wholesaling is the very best model to be in, when times get tough, because you’re not at risk of losing any money. In fact, if anything, you will be providing more of a value to these homeowners who need you that you can provide value to that you can actually help. Right, your income is only a I’m gonna butcher the saying, but your income essentially is in alignment with how much value you’re providing. And when the going gets tough for a lot of people, they’re going to need your value a lot. And it’s going to increase your income and increase your net worth. So, you know, this is something that if you’re not actively investing yet and wholesaling, and or, you know you are, I would double down, I would get more aggressive. I mean, I’m literally increasing my marketing budget. As I’m recording this, we have a meeting coming up that I’m going to greenlight in increased marketing budget. And it because it’s because there’s just, there’s no downside, we already know our numbers, we already know our conversion, we know how many leads it takes to get a deal. We know the average profit margin per deal is $12,000. We know we can run fast, so why not. So I would encourage anybody in this are listening to this on iTunes, give me a five star review, or watching this on YouTube, subscribe, give me a like make sure you turn on notifications, I would encourage anyone to get really serious about wholesaling in scale the business, right?
We just had our intensive, which was a great combination of very experienced investors and some newbies. But scaling the business doesn’t mean you need to take on more cost operational costs, hiring a big team, get a big office, it means do more deals. And there’s a way that I’m able to do anywhere from 10 to 20 deals consistently nationally, across, you know, over 15 states at this point. Because I have a model that just simply works. And I’ve been there where I’ve built out the business really extensively, a plus office space, you know, multiple employees on salary, high marketing budget, and my profit margin was little to none. Well, I changed all that. And I can tell you, I know exactly what’s needed to scale this business and keep your profit margins incredibly high. And so I’d encourage you to do that. But, you know, I’m I’m looking forward to the correction. I’m not looking forward to maybe losing some of this equity I have in my house I just bought, but I’m not moving. I’m not selling I’m not at risk here. I have, you know, I have a good downpayment that way the, you know, I’m not in jeopardy of the bank saying oh, well, you know, you only have 5% equity here. So we’re going to call the loan do I’m not in jeopardy of any of that I didn’t over leverage. And so, you know, listen, if I lose 10% of the equity or 15% of the equity, I’m still fine, right? I don’t mind. What I’m looking forward is all these opportunities, I’m going to be able to help provide value to these homeowners, there’s gonna be a lot of people out there that are going to be in a tough situation, they know me and my company can help. And if you’re an active wholesaler, that means you can help you know my network and help. You know, one of the things that I’m really going to be passionate about going into 2022 is building out a badass network of active real estate investors and I want you to be a part of it. Right? I’m even, you know, I’m saying this now so you guys can hold me accountable by me even thinking about having power days and in you know, quarterly business, business accelerators, and I’d love for you guys to be a part of it. So we can change people’s lives. We can build a great business for ourselves, we can make a lot of income, build wealth, and provide impact for these individuals. And so I’m excited about 2022 I don’t know when this is gonna happen. That was his follow up question.
When’s this rollback happening once a crash gonna happen? Justin, if you would ask me what happened during COVID Right and even before COVID If you were asking me He was going to happen in 2020 2019. I mean, we’ve just had so much crazy appreciation. It’s crazy. So I don’t know that answer. I can tell you that much. I can tell you you know, Zillow leaving the market is not going to make a big splash. No, they won’t. I can tell you there’s a lot of hedge funds still buying and guess what the hedge funds by the way, they’re still sitting on the sidelines, they have so much more money they could be buying, they’re buying now during these times when it’s the hottest market ever. Wait till the market corrects, wait till there’s you know a better buy for them. They are going to be buying, like crazy. So you need to get in front of that, right? If you’re not in this game you need to get in this game. If you’re in this game, you need to pour gas on it. If you need help pouring gas on it scaling this business.
Send me a direct message and Instagram that Justin Colby. Make a comment on YouTube, go subscribe to my channel on YouTube. But connect with me. I’m happy to help. Anyways, I hope this does good. Hopefully that helps you guys answer what I believe about this correction, how I’m going to change how I’m going to deviate? The answer is not. If anything, I’m going to get more creative on my acquisition strategy, but I’m going to continue wholesaling and buying rentals like crazy. I’ll see you guys on the next episode. Peace