What to do when the bubble bursts again?!
By now you may have seen some of the signs that the next bubble is about to burst. Let’s not forget what happened during the crisis in 2007/2008. If you were in the real estate industry, you most likely have felt the punch. I was a mortgage broker back in those days on wow did I feel it. One minute life is grand. There were loans coming down the pipeline, a motivated team, homes closing left and right and then…….doors slammed shut. They couldn’t come to a close slowly, it was swift and abrupt. Realtors took to different jobs and careers, mortgage brokers and loan officers did the same. I landed at Boeing to build aircraft and guess who I was meeting amongst the contractors. You guessed it, realtors and brokers!
Guess what ladies and gentlemen, something similar is most likely about to happen. There’s a new presidential election coming up to not include a third term, markets have been on a consistent rise again (in some areas, it was with as sharp of a trend as the “sub-prime era”), and if anyone has noticed, inventory in real estate has become more and more challenging. Well, if there is any reason to bother teaching history is so that we learn from the past, right? Most of the professionals the I encountered after that disaster that kept going adjusted their strategies before everything went down. As far as real estate investors, they stacked up on rental properties like it was no tomorrow. Fix and flips are fun, you get in, throw in a hammer, and presto you can make more money in a month or two than most people make in a year! What happens when the house doesn’t get sold? Or if it’s then more difficult to find these properties??
One of the strategies I personally favored was someone’s “2 buy 2” (it was a pun for 4x4 jokes when it came to construction, I might have laughed a little harder than I should have). Well, to put it in short, this investor bought two properties each month and never deviated for an entire year. One to fix and flip, and one to rent. Each profit from the fix and flip went to the down payment for the next month’s “2 buy 2” and after a while, it was vacation time.
“Chris, but if I have projects funded by a hard money already, I can’t be profiting from a 14% interest rate loan!”
Hey now, first of all if you’re at 14% still, you might want to consider another lender. You can do it, there’s a number to call in this email. With all the inspiration that I can emphasize in written words, YES YOU CAN! Refinancing a hard money loan to start making you cash every month is easy! Have an appraisal, throw in a loan app, a few more documents that might take an hour of your time, and have a couple good chats with a lender (maybe a Starbucks session?) and you’re set! Before you know it, you’ll be in a 30 year amortized loan and stacking up on some residual income some can only dream of making while they sleep.
“Renters? How am I going to find renters? Stephen King hasn’t even come up with a horror story as bad as the stories I’ve heard about renting!”
I’m sure even one of the great horror story masterminds has had that idea in their head, or maybe there’s one out, I don’t know, I don’t keep up with horror. Comic book movies coming to the screen after anticipating them since trading cards and reading comics in the 80s and 90s have been my thing. This is 2016, the age when the baby boomers are settling in, and their grand kids are almost all either living at home, or shacking up with roommates. Like in the last horrifying era, the rental markets are BOOMING. Would you like an example? Get on Craigslist, Backpage, or your classifieds section of your newspaper (I can’t believe they still do that). Call a few property management companies. There are LINES of people waiting for a place to rent. Apartment complexes are filled and more are being built. There is even an increase in demand from investors for multi-family residences like you wouldn’t believe!
So, where do we go from here? One thing you can always do, is give me a call. I love sharing stories and ideas. I could go on and on and display analytics but then you would have to make sure you set an alarm clock from the sleep I would put you in. I hope you have a wonderful day and I’ll talk to you soon!