What’s the Investor Opportunity Forecast for 2017?

What’s the Investor Opportunity Forecast for 2017?

Are we off to a Happy New Year America?  Things affecting our business could be changing big time in 2017.

For the real estate sector there are many areas likely to be affected by the new administration.  Residential and commercial construction, infrastructure projects, interest rates and legislation are all likely to see increased activity.  Which will have the greatest impact remains to be seen.

Residential construction will likely outpace commercial projects and eventually bring balance to many areas of the country.  Currently there is a seller’s market in many MSAs with brisk sales reported in many parts of the US.  According to the National Association of Homebuilders, there is only a 4.6 months supply.  A balanced market is usually reflected by about a 6-month inventory.

Things look promising for increases in infrastructure projects, which will create jobs, not low wage – fast food jobs but more skilled labor jobs with higher paychecks.  America’s roads, bridges, airports and tunnels need, in large part, a major facelift.  Infrastructure projects appear to be a priority for the new administration.

The elephant in the living room for most people involved in the housing markets are those pesky interest rates.  10-20 loans dating back to 2006 that haven’t been refinanced are now beginning to reset and will likely put a lot of properties at risk.  It might also create some excellent buying opportunities from sellers who will not be able to handle the significant increase in their monthly payments.

More importantly are the concerns that rising interest rates will dampen the robust seller’s market.  Interest rates are very likely to rise because there is nowhere for them to fall as they remain at historical lows.  With the growing reports of increased consumer confidence driving fears over inflation (which the Federal Reserve seeks to control with interest rate hikes) we’ve seen the first increase in an exceedingly long time.  More will follow, but remember this, at $20 Trillion in government debt, interest rates cannot rise too fast or our federal government’s interest only payments would cause a further decline to our nation’s debt rating and increasing a risk of recession.

Last, but certainly not least we are likely to see legislative reform involving the Wall Street Reform Act, commonly known as Dodd-Frank.  This legislation is not all bad but it has had negative consequences in the provision of liquidity for the residential housing market.  Over-regulation and a lack of accountability of the Consumer Financial Protection Bureau has in some ways hamstrung banks.

Dodd-Frank has also impacted the ability of investors across America to provide seller financing to underserved sectors of the population in a manner that makes it beneficial for all parties involved.  It remains to be seen what changes will occur but with the support of organizations such as National REIA and the National Association of Realtors there may be some relief in sight.

Price growth I continuing on along the east and west coasts and major inland cities.  The breadbasket and rust belt states are likely to see less price volatility while enjoying rent stability.  Both types of areas create opportunity for the disciplined investor whose exit strategies are guided by their acquisition methodology.

OK, so what do we as investor’s do?  Keep making offers; use good metrics on your real estate purchases, use positive leverage – don’t speculate and work within your sphere of influence.  While it is possible, even probable, for rates to rise in 2017 they do not rise vertically.  They rise gradually over time.  A 50 to 100 basis point increase could happen between now and year-end but what does than mean to buyers in real dollars and cents?  This is the key question not what the alarmist media broadcasts.

The payment on a $100,000 mortgage at 4% is $477.42 a month and at 4.5% it rises to $506.69 a month.  That is less than a dollar a day or about 1.6 Starbucks a week and an increase to 5% increases the payment to $536.82.  Yes, this can impact some families but if they are that tight on their monthly budget, they may be better off waiting to purchase a home.   And yes, that would diminish demand somewhat but by how much?

Many of the families that would potentially fall into this category will be buoyed by the improving jobs market and higher wages.  I don’t want to sound like a societal blasphemer but there are some families that do not and should not qualify for home ownership until they have a better financial position.  In many cases they need education to help them understand how to become a successful homeowner.

They need the financial discipline required to manage a household budget and the responsibility that comes with home ownership.  This is where rent to own and lease option programs can really serve families who want to achieve the American Dream, but aren’t fully ready, can benefit from working with investors.  They can become homeowner’s in training; learn the ropes, save for a larger down payment and clean up bruised credit that will qualify them for lower interest rates.

All told, these are my personal opinions and you are welcome to agree or disagree but know this, 2017 will have plenty of opportunity for those willing and able to get out there and take effective action.  Rentals will remain vibrant, as rents are likely to continue rising and fix and flip activity will serve those who buy right and deliver a quality product.
The clock it ticking so keep learning, keep growing and keep making offers!  It isn’t construction, legislation or  interest rates that will make 2017 a great year … it’s YOU!  So play full out and take effective action everyday!

Augie Byllott is a full time real estate investor, trainer, speaker and coach.  He is also the author of the Financial Freedom Formula now available on Amazon.com.

Check our upcoming events calendar here http://www.creatingwealthusa.com/

Fast Nickel or a Slow Dime?

Fast Nickel or a Slow Dime?

Fast Nickel or a Slow Dime?

I never intended to be a “wholesaler”.   My goal is to buy any house that makes sense, big or small, ugly or pretty, wood or block, 3/2 or 2/1, multi or single family home – any property that can make a profit of course.  I don’t want to limit myself and only buy houses in certain areas that meet certain criteria only one way.  

When I first got into real estate I was so worried that I wouldn’t find a buyer or the money to buy a house and it held me back.  As soon as I realized if it is a good deal buyers and money won’t be an issue. 

My confidence dealing with sellers immediately increased. They started excepting more offers like magic, simply because I was more comfortable making them.

The first week or two I typically try to wholesale most properties (especially those that my cash offer was accepted), I think that a fast nickel and no further investment above my typical $100 Earnest deposit is always better than a slow dime.   If you could make $5,000 in less than 30 days versus you could make up to $25,000 but it could take 6-9 months or sometimes even more which makes more sense?  The answer is probably different for everyone and for me it is different at different times of the year and any number of factors including what else I have going on, projects on budget or rentals all filled! 

I typically try to make around $10,000 on a wholesale deal, I have made as little as $7,000 and as much as $38,000 but it all depends on what the property can support and it is extremely important to leave room for the next rehabber or landlord to make money or you wont be wholesaling for long.  

You should only put a property under contract that you truly intend to buy.  That being said a properly written contract gives us multiple opportunities to back out if needed.  You should have an inspection period that doesn’t mean it has to show something wrong, it could be you budgeted $5,000 for renovation and your contractor is quoting $15,000.    

I am very open with sellers, I typically let them know there are a few options and I may keep the property as a rental or I may fix the property up and or may sell it.   I always want make sure they understand I may have a partner – even if I don’t know who that partner is I don’t want them surprised when I need to show someone else the property.  I want to put a lockbox on the property if it is vacant, if I am meeting the seller at the property I bring it with the contract.   

So, while wholesaling isn’t my primary business, it is a great tool in my tool kit.  It is an exit strategy that can bring me quick cash with minimal effort…

You can learn how to Wholesale too on February 11th at Bird Dogging for Big Bucks! You’ll be on the path to mastering the simple steps to entering the real estate game and playing to win!  The best part is that you’ll be doing it in a way that won’t make you risk losing money or your future.

You will learn how to generate leads and negotiate agreements to bring to guaranteed, ready and waiting cash buyers who want to put money in your pocket! You never have to own the property, put your cash into the deal or handle any muss or fuss with the closing. It’s as simple as putting 1 and 2 together and generating real cash in the middle.

I hope to see you there!

To your success,

Alexa Michna

My husband and I started out less than a year ago after a TV Show “free” seminar and we made no progress with realtors and the MLS in the first 3 months. Then Creating Wealth’s QuickStart Program changed everything! In the last 12 months with Creating Wealth’s support, we’ve closed more than one deal a month (creatively financed too) and we are constantly increasing our goals to the highest level! Creating Wealth’s programs jumpstarted our real estate goals faster than we could have imagined.

A Focused Acquisition Strategy Can Earn Higher Investment Returns (Podcast)

A Focused Acquisition Strategy Can Earn Higher Investment Returns (Podcast)

Good news! I’ve been featured on a Podcast by the

Invest Florida Show!

 

Click below to listen!

Beginning real estate investors often get caught up in the appeal of high returns. However, the focus on high investment returns can come at the expense of a sustainable exit strategy.

A focused acquisition strategy can mean the difference between a profitable investment and a failed one.

It is important to consider a seller’s circumstances when making a potential investment deal.

 

By tailoring a deal to fit individual circumstances you have a higher tendency to close.

By structuring multiple deals, you can easily see what acquisition strategy works best for your investment goals.

Click here to listen to the podcast!

Practice Makes  Perfect? Well, Not Exactly…

Practice Makes Perfect? Well, Not Exactly…

Practice Makes Perfect? Well, Not Exactly…

When I first began investing in the early 1980’s I did what I thought were all the right things. I read books, listened to tapes and gurus, but for some reason even with all that education behind me I found that I didn’t close as many deals as I thought I should have. Have you ever felt that way?

As I think back, I learned many important lessons in my life, but some of the most important ones came from professional sports. Back in 1983 I had the opportunity to attend my first professional golf tournament, the Doral Open in Miami, Florida. I was the guest of AT&T, one of our corporate vendors, (yes, friends, I had a real job back then) and I have to say, I was impressed.

They did it all first class; a hospitality tent, gifts for all the guests, cocktails and gourmet food. I had never experienced anything like it! It was all a bit intimidating for a junior executive just starting out.

P110905sc-0250dh President Bush presents PGA champion Jack Nicklaus with the Presidential Medal of Freedom Wednesday, Nov. 9, 2005, during ceremonies at the White House. White House photo by Shealah Craighead

During the second day at the tournament I came face to face with one of my all time idols, the Golden Bear; none other than Jack Nicklaus. I was nearly speechless but at least had the presence of mind to wave my pairing sheet under his nose for an autograph, which he graciously provided.

So how does any of this relate to real estate investing or closing more deals, you ask? It doesn’t, but here’s what does, the next morning I arrived at the course early, 6:30 am and there were at least 10 pros on the practice tee and they were hitting ball after ball after ball. By 7:00 am there were 20.

Over on the practice green there were another dozen or so professionals putting ball after ball after ball. That afternoon after they finished, many headed right back to the practice tee or the practice green and again they would strike ball after ball.

Jack Nicklaus…Ball After Ball

These were top professionals, the best in world, yet they practiced before the tee off and again after the round. They didn’t show up unprepared when the money was on the line. They were as prepared as they could possibly be. Can you make the same claim when you are talking with a seller, a buyer, a realtor, banker or contractor?

Are you always ready for the big game?

What I have learned that helps close more transactions than anything else is to be prepared for the big deal. When that motivated seller calls and needs to sell quickly, do you have the ability to analyze the opportunity quickly and correctly then get it closed? Do you see more than one way to make the deal? Can you see multiple exit strategies?

Perfect Practice is the Key

We’ve all heard the old expression, practice makes perfect but it is untrue. Unfortunately just plain old practice won’t help you get better. However, perfect practice does make perfect! What I failed to mention about many of the golfers on the course that day were that they were there with their coaches. They had objective feedback to help them make those subtle swing changes that might serve them well next time a $500,000 prize is on the line.

The goal of this blog is to provide you tools and ideas to help you achieve that “perfect” practice ability. If you do it wrong and continue to practice it the same way day after day you’ll just get better at doing it wrong and keep a low batting average. But if you start developing and sharpening your skills the right way, you’ll be hitting them out of the park in no time!

As a good southern buddy of mine puts it, “even a blind squirrel finds an acorn every now and then.” Don’t be a blind squirrel, practice, study, learn and grow! You’ll find enough acorns to grow a forest!

To Your Success,

Augie

Foreclosure Investing Do’s and Don’ts

Are foreclosure properties a good investment? That was the question I was recently asked by a reporter for Investor’s Business Daily in New York. She was doing an article on alternatives to the stock market because, let’s face it, there are other investments out there besides stocks and bonds, right? The subject was profitably investing in foreclosures.

We talked about what it takes to make money in this segment of the market and where the land mines are. Based on an investor’s risk tolerance and experience, I shared the fact that there are basically three ways to buy foreclosure properties:

1. Before the final judgment – any time between the filing of the lis pendens (initial notice of the foreclosure action) and the final judgment whereby the property will be offered for sale at public auction. The most common way this is done these days is via a short sale whereby the banks accept less than the face value of the mortgage. These transactions sometimes involve a realtor and are relatively safe transactions because the investors get to thoroughly inspect the property and also receive a title insurance policy at closing. They still have to know their numbers but get to do their due diligence in evaluating the investment opportunity.
2. At Public Auction (aka Sheriff Sale) – also referred to as buying at the courthouse steps. This is usually the most risky way to buy because frequently the properties are boarded up or otherwise inaccessible so completing a thorough property inspection can be a real challenge. Additionally, the utilities are rarely on if the property has been abandoned. Last but not least the successful bidder is only issued a certificate of title. You get no title insurance and there could be title defects that will need to be cured before the property can be resold.
3. After the Auction as a REO – The acronym REO stands for Real Estate Owned. As in, owned by the bank. These properties were reclaimed by the bank at the foreclosure auction or taken back via a Deed in Lieu of Foreclosure. REOs can be good deals because you can inspect the property before making your offer or once it has been accepted. The buyer also gets title insurance at closing. Depending on your market REOs can be a bargain or sell close to retail so just because it says bank owned doesn’t make it a good deal. Always check comps, repair estimates and know your exit strategy before jumping in to any real estate investment.

In addition we talked about the value of discipline when investing. We use a formulaic approach to evaluate properties in terms of purchase price, repairs and holding costs. If the numbers don’t work, we keep looking. We also look at the location of the property as well as and potential impediments to our ability to sell such as neighbors, commercial areas near residential properties, traffic and noise. We want to maximize the salability of the properties because the one downside of foreclosure investing is the lack of creativity when it comes to buying. When it comes to the foreclosure auction method or buying REOs cash is the only language for buying and that usually limits our exit strategy.

Our exit strategy on deals where we can’t get terms and have to pay all cash is usually to retail the property. With cash transactions we typically buy, fix and sell. This allows us to turn our cash over and produce profits with each turn. It is not my favorite form of investing buy it is a good way to produce chunks of cash.

I was only one of a number of the people interviewed for the article but I have to say it was an honor to be asked and included. I was interviewed on behalf of Homeowner Resource, alongside Sand Dollar Realty and Realty Trac. Thank you Investor’s Business Daily.

I wonder if I could talk them into a sister publication…Creative Real Estate Investor’s Business Daily! What do you think?

You can check out the whole article at: Foreclosure Market Gives Savvy Investors Big Profits

Happy investing!!

Augie

How Do I Get A Green Card?

How do I get a green card? Well, if you’re a holder of an E2 Investor Visa the answer is you can’t. Go ahead, check with the USCIS, The United States Citizenship and Immigration Service. Green cards are out of the realm of possibility for these legal immigrants who come to the United States in search of a better life. The odd thing is that the must buy or build a business, hence the “Investor” part of the type of visa. They must create jobs…and they do.

As a result they pay taxes, raise families and become part of the fabric of the USA. Even their kids, at least until they turn 21…then its adios amigo…The family gets split up as their children (who grew up here, pledged allegiance to our flag and played little league or joined the girl scouts) get shipped back to their country of origin. Of course they family can stay together if they all leave thereby closing their business and eliminating some jobs and taking tax dollars back out of the treasury. (yes, in some cases they might be able to sell it).

Wouldn’t it make sense for them, along wth their parents, to be able to apply for citizenship in the country that, for many, has been their only home? They come families who work for a living and provide jobs for others as well.

Last but not least, the inability to ever get a green card isn’t the only hurdle, every two years the Visa must be renewed with no guaranty that it will be renewed. Talk about having a sword dangling over one’s head.

How can a successful investor consider additional investment in their business, which could create more jobs and tax revenues, be a consideration when in the event your E2 Investor Visa renewal request is declined you are given 30 days to leave the country. It seems like the E2 Investor Visa as currently structured is actually anti-business, although it requires foreigners to invest in the U.S.

If this sounds as crazy to you as it does to me please take a moment to go to http://wh.gov/4TP and sign the petition which seeks to change some of the negative aspects of this Visa. It is a two-step process (why should the government make anything easy for its citizens?) so please be patient while the send you a confirmation email and then follow their instruction.

It takes about 5 minutes…here’s the catch; you must do this right now. 5,000 signatures are needed by October 27. We have a short time and a long way to go. Please forward this information to your family and friends and anyone else with some common sense and a respect for families who came here legally and create jobs. Thanks!

To your success….

Augie Byllott