About 15 years ago, I attended a seminar in Las Vegas sponsored by real estate guru and millionaire Jack Miller. I remember Jack saying, “The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.” I wish I had taken Jack’s advice but one of my biggest problems was I could not find a lender or individual to lend me a million dollars.
I say that with some chagrin because I was there to learn how to buy property with nothing down or using other people’s money (OPM). Oh, there were some who was willing to lend on a single deal but at a ridiculous interest rate and wanted half the profit. As one friend, would say, “This is not good.”
Most of the deals back then were “subject to” deals, meaning the existing loan would stay in place until the new owner cashed out the underlying mortgage. I had success but I also had some failures. If anybody lost money on a deal who had partnered with me, I felt very bad. Most of the failures came from the 2008 real estate decline. Rather than sticking it out through the rough times, I sold what few properties we were holding. The bad reputation that some unscrupulous investors were creating at the time didn’t help either. I never came close to the millionaire level.
I have always been a people person and in real estate, my goal was to help people that were in a bad situation and make some money at the same. That’s when I got the idea to auction distressed properties. I wasn’t looking for junkers but nice home that were underwater, i.e., the mortgage was larger than the true value of the home.
I learned very quickly that the lenders knew nothing about real estate. They were in the lending business and not property management or real estate. They wanted what was owed on the home and nothing less. After having their properties out there for months on end with no sales, and in some cases over a year, I think they decided their previous approach was not working and was becoming more flexible with the offers made to them.
In the meantime, government agencies made it more difficult for investors to buy properties with new regulations, i.e., Dodd-Frank of 2010.
But I think things are about to change under the Trump administration. Federal regulations have been strangling small businesses over the last decade. Regardless of who won the last election, I think there will be another real estate bubble in the next 12 to 18 months. I hear this from several national economists.
Because of on-line buying, the value of commercial real estate is already declining. During the last holiday season, more purchases were made on-line than in retail stores. There are rumors that Sears might soon close down. Even Wal-Mart sales were way down.
So, is now a good time to invest in residential real estate? I think now is a good time to start preparing to buy some good deals. It can take weeks or months to search out some good deals but they are out there. Interested? If so, give me a call at 252-257-4822 and we will sit down and talk about it.
Happy New Years.