Profitable Niches – Real Estate Development

In this episode of our Profitable Niches series, we’re starting from the ground up. Inventory of homes is tight in many US markets, and returns are diminishing. Enter real estate development.

Our guest, Jay Hartley, saw an exciting opportunity to expand his business into the real estate development space, and he’s got a wealth of knowledge to share.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your stately host, Robert Helms
  • His developing co-host, Russell Gray
  • Returning guest, Jay Hartley, real estate developer and property manager in Dallas-Fort Worth

Listen

 


Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Beginning with the basics

One of the questions we ask in our seminars is which is more risky: buying an existing building and renovating or building from the ground up? The truth is, there isn’t a right answer to that question.

From inheriting problems in an existing property to building too much or building something the market doesn’t want, there’s a lot to consider when deciding whether to build or buy. The key is knowing the market, the demand, and the supply.

One of the most exciting things about real estate development is the number of entry points. Throughout the lifecycle of a property, there is value being added. Taking raw land from a zoned area to a lot with utilities and a finished building are all steps in the process.

For those who find themselves in a market with a lot of demand but a squeeze on supply, real estate development can be a FANTASTIC way to add more houses into the market, whether or not you hold on to that inventory long term.

Shifting your investment mindset

Jay Hartley is known as one of the best property managers in the Dallas-Fort Worth real estate market. He began like many investors with buying and renting fixer uppers.

Eventually, inventory started getting tight, prices escalated, and returns diminished. That’s when Jay took his first steps into development.

“We had to look at the marketplace and see where the opportunity would be to add inventory,” Jay says. “We started looking at acquiring vacant lots that were already in subdivisions and doing what they call infill.”

Infill meant building one or two homes on lots in subdivisions and then either renting or selling those homes to investors as turnkey properties.

It wasn’t long before Jay’s successful turnkey model got plenty of competitors and Jay took it to the next level. He utilized the economies of scale by getting into bigger developments and subdividing tracts of land. That’s also when he started building his network and expanding his education.

“I had some clients in the building business,” Jay says. “I took them to lunch and started picking their brains.”

Jay soon learned it was a smart idea to partner with a few builders early on. But then the key to sustaining his business was to keep his contractors busy with his projects so he didn’t lose them to other projects.

Real estate development doesn’t necessarily mean you’re the one swinging the hammer. In many ways, it’s orchestrating OTHER contractors and moving parts to complete a job. That also means managing labor.

“One of the biggest issues we’re dealing with right now is having labor ready and available,” Jay says. “If we don’t keep them busy, we lose that framer, we lose that concrete guy, we lose that roofer. We try to set them up to go to one job site to the next to keep them busy and on my job.”

As the deals got larger, Jay had to deal with the growth spurt in his business. He was always known as the property management guy, but had to shift his mindset as he shifted into real estate development. One of those moves was toward selling properties rather than buying and holding.

“I’m not afraid to sell them anymore,” Jay says. “I was a collector before, and it was tough for me to wrap my head around selling them.”

But, with some help and guidance, he was able to work through those mental roadblocks and scale up his business!

Get rich in a niche with a network

Rolling with changing markets is what makes an investor successful long term. Even though Jay was doing really well in property management, he saw a need for more inventory in the market. So, he became one of the people to create it! That has also set him up to know about lots of different types of real estate, and it’s another tool in his toolkit.

“It’s not about what I’ve done. It’s about who I’ve met,” Jay says.

Building a network of people with all kinds of unique backgrounds is a way to tap into their experience. Jay says you can take classes and watch videos, but watching flipper shows on television doesn’t mean you know how to flip a house. Partnering with people on a build job, however, is worth its weight in gold.

And that’s the essence of most development. It’s done through syndication and joint ventures. You can partner up with people who have the land, capital, or expertise you need, and you can put together a great deal.

Jay started out financing his own projects, but it wasn’t until he started tapping into syndication that his business really took off. He attended a few of our programs on syndication and sales, and they catapulted him into success.

“I’ve been in real estate all my life,” Jay says. “The training there, I didn’t think I really needed it. It was enlightening … it gave me the tools and the ability and the confidence to talk to clients and investors and pitch!”

Jay’s journey has been propelled by his ability to be ambitious and coachable. The ability to shift and adapt to new markets is how he keeps his skills sharp and his business growing.

If you’d like to learn more about real estate development and property management in the Dallas-Fort Worth market, get on the inside track with Jay. Send an email to dallasdeals (at) realestateguysradio (dot) com, and we’ll connect you with Jay and his expertise!

And, we hope to see you at some upcoming events. Secrets of Successful Syndication and How to Win Funds and Influence People are packed full of information that you won’t want to miss. Register now!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Keeping it real in a surreal world …

If you’re a newshawk like us, you’ve probably noticed the world is a little crazy.  Even something as mundane as money and wealth has become weird.

The most obvious case in point is the dramatic rise and retreat of Bitcoin.

In 2017, something triggered a rush of money into Bitcoin … driving it from $1000 in early January to a peak of nearly $20,000 less than a year later.

Pundits are still trying to divine what happened and why.  Of course, what’s just as interesting is how the world reacted.

The People’s Bank of China (PBOC), which is China’s version of the U.S. Federal Reserve, has moved aggressively to crush cryptos.

Okay.  But does that matter if you’re not Chinese or a Bitcoin buyer?  How does any of this relate to Main Street real estate investing?

Patience, grasshopper …

China’s not the only government attacking private cryptos.  Six others have already banned it, though they admittedly aren’t big players.

But India is reportedly about to join the anti-crypto club.  They’re pretty big.

South Korea (home of Samsung, LG and Hyundai) is another biggie that’s floating the idea of banning cryptos.

Of course, legislation isn’t the only way to attack an alternative to government issued currency …

We’ve been listening to precious metals pundits allege that central banks … surreptitiously through their agents … use futures contracts to manipulate the price of gold and silver.

Interesting.  Let’s put on our tinfoil hats and think about it  …

According to this CNBC report, Bitcoin started trading on the futures exchanges on December 18th.

This chart shows Bitcoin’s price peaked at $19,180 on Sunday, December 17th.

But since then, Bitcoin’s been declined sharply … all the way down to under $7000 this week.  That’s a HUGE decline.  And it started December 18th …

Weird.  Probably just a coincidence.

Of course, the story of cryptos and their impact on the future of money and wealth is a MUCH bigger discussion.

But we think it’s safe to say that cryptos are here to stay in some shape or form.

What’s also interesting is how governments are now connecting cryptos to both gold and oil … linkages which are the heritage of U.S. dollar dominance.

Meanwhile, Russia (the world’s largest producer of oil) and China (the world’s largest consumer of oil) have both been accumulating TONS (literally) of gold.

Why?

According to this article in the India Times, “The Chinese central bank is trying to diversify from the US dollar on which it has become overly reliant

(Side note: you might want to think about how reliant YOU are on the dollar … maybe China knows something …)

This article in Russia affirms the role of gold in diversifying away from the U.S. dollar.

Apparently, gold does actually have a role in global economics … even though most Americans think of it as a barbarous relic or merely a trading tool to accumulate dollars.

But major sovereign nations are using gold as a hedge against the U.S. dollar.

Smart.  Turns out 2017 was the dollar’s worst performance in 14 years.

So if Bitcoin and gold each expose the dollar’s weakness … it’s not totally shocking the issuer of dollars, the Federal Reserve, might want to see both Bitcoin and gold prices held down.

We’re not saying the Fed is behind any alleged suppression.  But we’re not saying they aren’t.  We don’t know.

But in this surreal world where we’re not quite sure of the real motivations of those in power, nothing would surprise us.

The bigger questions are … what does it all mean to Main Street investors and how can we position ourselves to both grow and protect wealth in this crazy world?

Here’s some thoughts …

If the dollar is doomed to continue its 100+ year decline … then debt and real assets are your best friend.

Debt lets you pull future dollars into the present, where you can use them at today’s purchasing power (stronger than the future’s) to acquire things of real value.

By “real value” we mean utility …  things that provide permanent and essential service to people.  Food, housing, farmland, energy, and commodities all come to mind.

Of course, when you use debt, you have those pesky payments.

So it’s REALLY nice when you can acquire real assets that produce enough cash flow to service the debt you used to buy them.  They literally pay for themselves.

Naturally, debt-financed income-producing real estate is arguably one of the best investment vehicles in a falling dollar environment.

You can buy it with relatively cheap debt and use the income to service the debt.

Over time, as the dollar falls, the dollar price of the property rises while the debt stays fixed.

Not only that, but a debt-ridden government is highly motivated to perpetuate a weakening dollar (inflation), which benefits all debtors … including YOU.

In other words, using debt aligns your investing with the government’s motivations and likely actions.

Nice.  But it gets better …

Because real estate provides housing for people … who vote, work, and have pitchforks … or in the case of the USA, AR-15s …

…  governments are much more motivated to SUPPORT real estate than attack it.

They might go after cryptos (until they can issue their own).  They might go after gold again.

They might print free money for their friends in Wall Street to blow up paper asset bubbles and drive down interest rates (nice, if you’re a real estate investor).

But if they attack real estate … that hits home (literally) … and it’s a revolution.

That’s why, as we saw in 2008, even when they screw up and real estate is collateral damage to their financial shenanigans …

… governments, central banks, Wall Street, and even corporate America all rally to prop up real estate.

From that stand point, people still hold the power.  And people live, work, and depend on real estate.

So to keep things real in a surreal world, you could do a lot worse than making real estate the anchor of your investment portfolio.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

A tale of two Americas …

You might think this is a political rant about income inequality … or contrasting the America of today to some past period of “the good old days.”

But it’s really more pragmatic.

Right now headlines say the economy is booming, unemployment is down, the stock market is up, and the biggest problem in housing is there’s not enough inventory.

While all that may be true, there are certainly markets where pricing is low, vacancies are high, and “bargains” can be found.

And with lots of newbie investors getting on the real estate bandwagon, we think it’s a good time to revisit a timeless piece of investment wisdom …

Cheap isn’t necessarily a good deal.

Before we expound, let’s consider the opportunities which may lie hidden inside of a U.S. economy in transition.

In other words, might one of yesterday’s disaster markets turn out to be tomorrow’s rising star?

After all, the Trump administration is putting a big emphasis on bringing manufacturing back to the USA.

And as you’ll see, many of today’s distressed real estate markets are in so-called “rust-belt” states … many of which declined substantially since “the good old days” (sorry, had to) of the heyday of U.S. manufacturing.

Now, just because Trump wants manufacturing to come back doesn’t mean it will.  And even if it does, it doesn’t mean it will come back to where it left from.

But it might.  At least in some places.  So it all bears watching.

Because if you can see something happening before most other people, you can make your move in front of the wave and go for a nice ride.

Back in November, 24/7 Wall Street published an article 30 American Ghost Towns.

It was all about neighborhoods with TOO many vacant homes … even in the midst of a housing shortage.

Naturally, houses in these areas are CHEAP …  WAY less than $100,000 per house.  In some cases, as low as $20,000.

And there are some MAJOR cities on this list including Baltimore, Kansas City, St. Louis, Cleveland, Detroit, and Cincinnati.

Now before the hate-mail starts flying, we’re not saying these are all bad cities to invest in … or that houses are cheap and vacancies are high in the ENTIRE cities mentioned.

Big cities are made up of multiple zip codes, and when you look at the 24/7 Wall Street report, you’ll see it’s reporting on SPECIFIC zip codes within those cities.

So THIS is our first point for all out-of-area investors … especially newbies …

You don’t invest in cities.  You invest in NEIGHBORHOODS. 

 And you either need to take the time to get to know your neighborhoods well … or to build a good relationship with someone who does (our favorite method).

Over the years, we’ve seen rookies get into some bad deals by researching a city and seeing promise, then buying the wrong neighborhood and ending up with a big problem.

So be smart.

Also, just because a city or zip code has fallen on bad times, doesn’t mean it will last forever.  By paying attention, you might catch a down-and-out area on the upswing.

Of course, you can die of old age bird-dogging a dead market, so how do you tell the difference between a market with potential … and one that’s probably terminally ill?

Here’s what we look for …

Population – If there’s not enough people for politicians and CEOs to pay attention to, you can be sure that town won’t get much love … or money … to change any time soon.

Education – Industry needs skilled labor, which today is still fairly intellectual (as opposed to manual).  Even in trades, computers and sophisticated equipment are often involved.

When a community has access to quality education, it’s easier for a population to upgrade skills to take advantage of opportunity when it arrives.

Families also prefer to live in areas where educational opportunities are better in the elementary to high-school levels, so education’s impact on an area’s appeal is more than just college and trade schools.

Transportation – In order for people and goods to move around, there needs to be a good airport, highway system, and in some cases, a rail system for raw materials.

Public transportation is helpful too, especially if residential areas are distanced from employment centers.

But don’t discount a small town, IF it’s near a big one.  If the commute isn’t bad, when the big city economy picks up, that nearby small town can benefit too.

Business-friendly State – Some cities are just disadvantaged because they happen to be in a state that’s unfriendly to business.

We like to talk with the local Chamber of Commerce, and read the local Business Journal, because it gives us insight into how businesses feel about themselves, their community, and what they’re working on.

Most expansions don’t happen in a vacuum, so if you’re paying attention you can see trends (both positive and negative) developing ahead of the curve … giving you the opportunity to make your moves … in or out.

Become a student of markets …

It’s more than we can go into here, but a fun exercise if you’re a real estate investing geek is to do your own common-sense analysis of what markets on a list like this have in common.

When you know the common characteristics of good markets, or bad markets, then you’ll recognize when a shift is in progress.

Obviously, recognizing trends early allows you to get out of the path of problems, and ride a wave in the path of progress.

So it’s probably not good enough to simply buy a big market or a booming economy … because things change.

Detroit was once the richest city in the world.  Then it became the largest municipal bankruptcy in the world.  That’s a big shift.  And it happened for many reasons.

It also took decades, so even sleepy investors could adjust.  Even so, there were people who didn’t see it … or bought into a decline they didn’t understand.

Sometimes when prices fall, it doesn’t mean they’ll come back any time soon.

It’s also important to realize the world is moving faster today, so a market might go from boom to bust or vice-versa more rapidly than in the past.

That’s partly because information travels faster, so people paying attention see things sooner … and they react quicker.

But if you fail to pay attention, then no amount of information can help you. The world will just spin faster … with or without you … and you’ll miss out.

To paraphrase the late, great Jim Rohn …

The book, seminar, podcast, article, or homework you don’t see or do … can’t help you.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

Dollar death watch emergency conference call …

We just recorded an emergency conference call

 featuring Peak Prosperity’s Chris Martenson (The Crash Course) and Brien Lundin (Gold Newsletter).

Chris is a big brain PhD who studies economics, eco-politics, and how energy (i.e., oil) affects economics.

Brien is a well-recognized expert in precious metals and mining investing … and spends much of his time studying the gold market.

Both guys are hyper-connected to the smartest economists, investors, and niche experts in the world.  So they’re not just smart, they’re also well-informed.

The conference call centers around China’s recent announcement of plans to back their currency with gold for the purpose of settling oil trade.

This single move could substantially affect oil, gold, the dollar, interest rates, real estate … Uncle Sam’s credit line, budget and influence around the world … and YOUR financial future.

It’s a BIG deal.

China has been advancing … quietly at first, and lately much more overtly … a strategy to UNDERMINE the U.S. dollar as the world’s reserve currency.

This is HUGE for anyone measuring wealth and income in U.S. dollars.

It’s even more significant for Americans, whose government has been able to use its privileged status to go DEEPLY into debt … seemingly without consequence.

But that could be changing …

Uncle Sam’s unlimited checkbook … as well as his substantial influence around the world … has been largely built on the power of issuing the world’s reserve currency.

That’s because international trade is primarily settled in U.S. dollars, so getting locked out of dollars though U.S. sanctions can choke a nation’s economy …

… just ask Russia, Iran and Venezuela … to name a few who’ve been on the receiving end of this power.

Oil is the biggest component of international trade.

It’s no wonder Russia, who happens to be the world’s largest oil producer, was early to sign on to circumvent the dollar.

Iran (#5 producer) is on the team.  Venezuela (#11 producer), whose economy is 95% oil, also just got on board.

Now the U.S. is talking about kicking CHINA out of the dollar system.

But China’s been preparing to be independent of the dollar

… and has a LONG list of bilateral trade agreements signed with MANY trading partners (as chronicled in this free report on Real Asset Investing).

As the largest oil importer in the world, China has a lot of purchasing power to put pressure on the “petro-dollar” (U.S. dollars used in international trading of oil), as Chris explains in the call.

The petro-dollar has been a major component of the dollar’s power in international trade.  China’s move could be setting the table for a collapse of the petro-dollar.

This isn’t the end of the world …

But it could be a BIG change for dollar denominated investors …  

Those who are aware and prepared can protect themselves and get in a position to win.  Those who aren’t will likely be blind-sided and face potentially horrific losses.

We’ve been watching this develop for years … and now it seems things are picking up speed.

If YOU haven’t been paying attention, it’s time to accelerate YOUR learning and preparation.

Maybe this isn’t as big a deal as we think.  But better to prepared and not have a dollar crisis … than to have one and not be prepared.

The GREAT news is there are lots of smart investors watching this situation very carefully … and there are strategies to hedge … and even profit … from these developments.

So click here now to listen in on the conversation with Chris Martenson and Brien Lundin … as we discuss China, oil, gold, the future of the dollar … and how concerned investors can prepare.

Until next time … good investing!


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Yet another BRUTAL storm forming …

And the hits just keep on coming …

We know you’d like investing to be simple and drama free.  We do too.

But while real estate investing itself is a simple activity … the economics of real estate investing has become more complex.

There’s a LOT going on in the world.   Some things interconnect by cause, and others by effect … meaning they don’t appear to be related, but then converge.

As Jim Rickards points out repeatedly … economies and ecologies are complex systems.  They are difficult to understand and even more difficult to predict.

But even though no one can say with certainty what will happen, it’s still important to take precautions when it’s clear SOMETHING BIG is coming …

… just as Floridians watched Irma and prepared, not knowing fully what to expect.  Better to be prepared and not have a disaster than vice versa.

So let’s take a look at what’s forming on the horizon …

Hurricanes Harvey and Irma

While the total financial and human impact of these back-to-back disasters is yet to be calculated, one thing’s for sure …  it’s going to be expensive.

Short term disruptions to gas prices and orange futures aside, disasters like these redirect HUGE amounts of capital … which has a ripple effect.

For example, money insurance companies might otherwise put into financing NEW multi-family apartments in other markets …

… will now pour into re-building properties damaged and destroyed in Houston and Florida.

Federal money which might have been focused on infrastructure spending or tax cuts will also be redirected to damage recovery.

And it’s likely the demand for construction labor and supplies will rise, driving up total construction costs in many markets … not just those affected by the storms.

That’s because just as demand for concrete in China creates price increases in the U.S. … the demand for reconstruction resources will probably be felt throughout the United States.

Distressed inventory

Just like the financial disaster of 2008, there may be many problem properties coming out of all this … because many weren’t insured for flood damage.

Federal aid may help some of those homeowners.  It’s less likely such relief is offered to investors who were under-insured.

While it’s no fun to profit from someone else’s loss, there’s a role for profit-seeking capital to play in repairing damaged communities.

We wouldn’t be surprised to see tax breaks, loan subsidies or other incentives offered to entice investment capital to flow into affected markets … like when New Orleans was hit by Hurricane Katrina.

The Debt Ceiling  

In other news, President Trump and Congress managed to get the debt ceiling temporarily increased … while raising the prospect of simply eliminating it all together.

Talk about calling a spade a spade.  The ceiling hasn’t capped spending … ever.

Now billions of dollars are ear-marked for hurricane relief, and everyone can take a short break from “worrying” Uncle Sam might default on his debt.

So it looks like it’s back to over-spending as usual. Not surprisingly, the dollar’s year-long fall has resumed velocity.  

Then again … maybe the dollar’s fall (and gold’s rise) is part of a bigger story which has nothing to do with U.S. business-as-usual deficit spending …

Gold-backed yuan already finding friends

As we recently noted, China announced plans to settle its oil trade in yuan.

And to entice sellers to accept yuan, the Chinese are backing it with that “barbarous relic” … gold.

Days later, oil-rich Venezuela announced they’d start using yuan … and other currencies … to “free us from the dollar.”

It’s no surprise Venezuela would jump at this.  After all, just two weeks earlier President Trump signed an executive order sanctioning Venezuela … whose economy is 95% oil.

But as we note in our Real Asset Investing report, China began its plan to supplant the dollar way back in 2010.  So none of this is new.

And the first country to sign a bilateral trade agreement to “renounce the U.S. dollar” was … wait for it … Russia … followed by Brazil, Australia, and a LONG list of others.

We think this is a HUGE story that few in mainstream financial media are covering.  But we are.

In fact, we’re putting together an emergency conference call with Brien Lundin and Chris Martenson to discuss the ramifications … so stay tuned for that!

Is the U.S. dollar doomed?

This is the big WHY IT MATTERS … especially for Americans and everyone denominating wealth in American dollars.

Like Hurricane Irma, no one can say exactly if, when, or how disaster will strike.  And it’s possible the winds will change and the storm will miss your portfolio.

But what if it doesn’t?  Right now, the winds appear to be headed your way.

Are YOU ready?  Are you getting ready?  Many people don’t even know what ready looks like.  That was us 10 years ago.

It’s a complex problem so there’s no simple solution.  If there was, it probably wouldn’t be a problem.

Peter Schiff has been warning about this for years. As has Robert Kiyosaki, Richard Duncan, Simon Black, Chris Martenson, Jim Rickards, David Stockman … and the list goes on and on.

Each has their own ideas about when … and how to prepare.

There’s no one-size-fits all answer because everyone’s situation, portfolio, investing IQ, advisory network, access to deals, and investment objectives are different.

MISSION: POSSIBLE

Your mission, should you choose to accept it, is to get informed, educated, connected and activated … as quickly as possible.

And if you think getting educated is time consuming and expensive … it’s nothing compared to being ignorant and apathetic.

When storm clouds form on the horizon, some decide to pay attention and take pre-emptive steps.  There’s no guarantee of safety, but their odds are better.

Others only hope for the best, but don’t prepare for the worst.  Yet the higher the stakes, the more important it is to be preemptively cautious.

The storm warnings are loud and clear … for everyone paying attention.

But storms often approach slowly … and because most blow over … it’s easy (yet dangerous) to assume every storm will.

Slowly at first … then all at once

Longtime listeners know we’ve been watching this whole story unfold for years.

We talked about the very real possibility of China making a run at reserve currency status almost two years ago.  We said then we’d keep you informed and so we are.

Now things are picking up speed.  So if you’re new or haven’t been all that interested … NOW is the time to accelerate your understanding.

If you’ve read this far, we trust you’re interested and concerned … as you should be.

So we STRONGLY encourage you to SERIOUSLY consider attending BOTH Brien Lundin’s New Orleans Investment Conference (coming up FAST!) and The Real Estate Guys™ 2018 Investor Summit at Sea™.

These events each feature lots of big brains … with critical perspectives every serious investor needs to have to help understand and navigate these stormy times.

Sure, these events are capitalist ventures … we each make some money producing them.

But we’re not after your money … we simply use to it for event costs and to pay some bills along the way.  Your support makes these events possible.

We organize events so we can get brilliant minds in one place at one time.  And the only way to make it affordable for us … and you … is to share the cost with hundreds of others.

So yes, we need your help.  And in exchange YOU get access too!

With that said, these events are happening with or without you. Your absence or presence, while nice for us, could be LIFE-CHANGING for YOU … and that’s true of most important ideas, opportunities and relationships.

So with the winds of sea change blowing fiercely on the horizon, it’s a good time to consider carefully whether or not investing in preparation is a good idea.

We think it is.

Until next time … good investing!


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Getting Good Deals in a Hot Market

 

Generally, the harder a property is to find, the better it will be. But finding hidden properties means playing an insider’s game.

The key to finding properties in a high-demand market is developing your own deal flow from people with unique access to information.

Relying on the same information sources everyone else relies on means you get deals that have been picked over … and these aren’t the tasty kind of leftovers.

When the market is hot and demand is high, you want sellers and contacts who’ll come to YOU first.

In our latest episode, we share tips and techniques for how to get your unfair share in a saturated market, all through building relationships with insiders.

Our expert guest, John Larson, manages multiple turnkey real estate purchases each month in one of the nation’s hottest markets. You’ll hear from:

  • Your ahead-of-the-game host, Robert Helms
  • His gaming-the-system co-host, Russell Gray
  • Managing director and partner at American Real Estate Investments, John Larson

Listen

 



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Relying on relationships

John Larson is a managing director and partner at American Real Estate Investments (AREI), where they buy and sell properties in one of the hottest single-family housing markets in the nation. Dallas!

Because of steep population growth that shows no signs of stopping soon, Dallas is a market in heavy demand. It’s easy to lease properties and keep them leased, which is a big plus for investors.

But high demand also means a high saturation of investors. We asked John what it takes to be successful when lots of people are after the same properties.

He told us that success is all about two things: your relationships and your consistency.

First, relationships. John’s assembled a team of pros whom he trusts to do most of the heavy lifting before they even make a bid on a property.

Dallas has a housing auction once a month. Before the auction, John’s team gets a list of the properties up for sale and researches each one to identify properties that work for them.

When John and his team show up at the auction, a good chunk of the properties listed don’t show up.

John is very careful about sticking to a pre-identified target price and not overpaying for properties, so his team often ends up with only a small handful from the original list of forty or so.

Acquiring even one good property at a decent price takes hours of work and investigation, so having a team that knows what they’re doing is a HUGE asset for John.

John’s emphasis on relationships doesn’t stop with his team. If you go to any real estate networking event in the Dallas area, it’s pretty much a given that you’ll find John or someone from his team there.

John says this persistent networking has netted him connections with agents who have their hands on all kinds of properties.

We asked John why anyone would want to sell to an investor instead of an owner occupant who is willing to pay a higher price up front.

His answer? Eight out of ten investors he works with at AREI come back and buy another property. In the end, John’s entire business model comes down to relationships.

Cutting costs with consistency

Consistency is also key to John’s success. John and his team always use the same buying strategy: they buy with cash and close quickly.

They’ve identified a niche in the housing market and don’t generally stray from it … single-family properties in middle-class neighborhoods that lease for about $1,600 a month.

This is a sweet spot that John’s found works best in terms of finding trustworthy tenants who will pay on time, treat the property well, and stay long-term.

Last year, John also brought his property management team in-house. By doing so, he reaped multiple benefits.

Just to name a few, he now enjoys economies of scale, targets maintenance and management to a certain demographic, and buys materials in bulk.

John’s also been working with the same repair and maintenance crew for over five years. He takes care of them, and they know he’ll give them a constant stream of new work.

Basic tweaks and techniques like these allow John to make his properties more attractive—and thus more profitable—every year.

Finding hidden inventory

Many new investors start their investigation efforts by making a beeline to an MLS (multiple listing service). Although checking out what’s on the MLS isn’t necessarily a bad place to start, John warns that most inventory on the MLS will be picked through.

“All of our good opportunities are off market,” John says.

What needs to happen for John and his team to find that hidden inventory?

Well, first, investors need to know what they’re looking for, be financially prepared, and able to make decisions quickly once they find an opportunity.

Most importantly, they need to form the right relationships.

John has built a team of experts that is constantly in tune with the market—which isn’t too hard when AREI’s volume of purchases reaches into the hundreds.

For new and less experienced investors, John recommends they do their research … a lot of it. Before investors come to AREI, John asks that they research the market and make sure they understand exactly what they’re investing in.

And he recommends investors make sure they’re financially prepared. The best investors are the ones who know exactly what they want and what they can afford.

It’s these trusted and trustworthy investors like these who benefit from the properties people like John can acquire.

If you’re interested in more tips on succeeding in a crowded market, John has written a booklet called Hot Tips for Hot Markets.

And, a heads up: John is holding an investor workshop and tour in April. Participants will get to meet John and AREI’s investment coordinators, acquisitions team, and even some of the lenders AREI works with. They’ll also get to see how AREI professionally manages and renovates properties and get a good feel for how the Dallas market works.

 

Gaining access to the insiders’ club

Lots of beginning investors might read a book, attend a seminar, Google some information, maybe even visit a potential market.

John and investors like him are ahead of the game—they’re going to exclusive auctions and getting listings from short-selling agents. In short, they have access to inventory that no one else has even seen.

Can you work your way up? Yes. But it does take time to become part of the insiders’ club.

If you’re willing to put in the work, start by being prepared. Really do your research and get educated about your market. Then assemble your team. Use the example of John and other successful investors to guide you.

If you’re not willing to put in the time, but you do want to invest, start by finding someone like John who has access to hard-to-find inventory.

Building a relationship with someone who knows what they’re doing can be beneficial on both ends of the equation. An investment organization will get a dedicated buyer … and buyers will get better deals on properties not available to the public.

The key, on either side of the equation? Be prepared. Get educated. Form stellar relationships. And then take action.

Next week on the show, we’ll talk about financing multi-family properties. AND, we’ll introduce a pretty amazing new program.

Until then, go out and make some equity happen!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.