Podcast Summary
Adapting to market changes and pivoting your business: Focus on relationships, pivot business in response to market shifts, and consider investing in real estate passively through a private fund for monthly income.
Being adaptable and pivoting your business in response to market changes is crucial for success in real estate. Eric Brewer, a guest on the Bigger Pockets Podcast, shared his experience of pivoting his business multiple times in response to market shifts and changing buyer sentiment. Another key takeaway is the importance of focusing on relationships in real estate, treating people with respect and focusing on their goals rather than just the deal. Additionally, the podcast discussed the possibility of investing in real estate passively through a private real estate fund like PPR Capital Management, which offers monthly income without the headaches of property ownership.
Investing in Real Estate with Minimal Upfront Capital: Explore Rent to Retirement, investor loans, and mortgage funds for real estate investing with minimal initial investment, offering potential returns and work-life balance.
There are various ways to invest in real estate with minimal upfront capital. Rent to Retirement offers new construction properties at discounted prices and investor loans with low rates and even no money down options. Pine Financial Group's mortgage fund allows passive income through lending to house flippers, with a targeted 8% preferred return and 70% of net profits going to investors. Eric Brewer, a real estate investor, started in the business in 2006 after a career in automotive sales, seeking a better work-life balance. He chose to begin on the finance side and found success in refinancing loans. These opportunities demonstrate that real estate investing can be accessible with little to no initial investment.
Learning on the job in real estate: Starting a business involves making mistakes and learning from them. Adaptability is crucial in the real estate industry, where inventory and market conditions can change quickly.
Starting a business requires learning on the job and being adaptable. The speaker in this discussion shares his experience of transitioning from the car business to real estate and flipping houses. He had no prior knowledge of ARVs or budgeting for renovations, but he learned through experience. The first house they bought was a bank-owned property, and they underestimated the renovation costs, leading to unexpected expenses. Despite this setback, they were able to sell the house and make a small profit. They continued to flip houses, mostly in the lower price range due to the availability of inventory in their area. They were successful in selling the properties, but they struggled with buying and renovating them. They used newspaper ads to generate leads and sell their houses, even before the popularity of online marketplaces. The speaker's story illustrates the importance of learning from mistakes and adapting to new situations in the world of business.
Leveraging a strong business partnership for real estate success: Starting with limited resources, a successful real estate partnership allowed the investor to focus on buying and selling properties instead of dealing with lenders, leading to over 200 flips per year by the third year, while offering more flexibility than the car business.
Having a strong business partnership can significantly contribute to success in real estate investing, even when starting with limited knowledge and resources. The speaker shared his experience of flipping houses with a partner who owned a car dealership, allowing them to avoid dealing with private lenders and focusing on buying and selling properties. They went from doing a few flips in the first year to over 200 annually by the third year. Despite the long hours required, real estate offered more flexibility than the car business, enabling the investor to balance work and family life. The lack of advanced technology during their early years meant they had to physically inspect properties to make decisions, but the release of the first iPhone marked a turning point in how information was accessed and transactions were conducted.
Fearless approach to sales and communication in real estate: Success in real estate requires making calls and closing deals. The speaker's experience in the car business prepared him for this challenge. He chooses to wholesale over flipping when potential profits are significantly greater.
Having a fearless approach to sales and communication played a significant role in the speaker's success in real estate. During his time in the car business, he didn't shy away from making calls and selling additional services to customers. This experience prepared him for the challenges of real estate, where making calls and closing deals is crucial. The speaker shared that in the past, the difference between wholesaling and flipping a property was minimal, but now there's a larger gap. He explained that if the potential profit from wholesaling is more than 50% of what he could make from a fix and flip, he'll choose to wholesale. The speaker's willingness to make calls and sell properties, combined with his ability to assess market conditions, has contributed to his successful wholesale and flipping business.
Embrace the unknown and discover hidden talents: Being open-minded and willing to step out of your comfort zone can lead to unexpected opportunities and success. Discovering hidden talents in unfamiliar fields can broaden your skillset and help you achieve greater success.
Being open-minded and willing to step out of your comfort zone, even when you feel unprepared or unsure, can lead to unexpected opportunities and success. The speaker shares his story of transitioning from automotive service to sales, despite having no prior experience or knowledge in sales. He was surprised to discover his natural ability to connect with people and sell cars, eventually becoming a top salesman. This experience taught him valuable skills in human psychology, working in a system, and being different from others. Even though car sales may not be for everyone, the resilience and lessons learned in that industry can be applied to various fields. So, don't be afraid to try new things and embrace the unknown, as you might discover hidden talents and achieve greater success.
Building strong teams through military training: Military training teaches predictable processes, efficient communication, and teamwork, essential for success in business and life.
Building resilience and teamwork can come from unexpected places, like military training. The speaker shared his experience in boot camp, where he was torn down as an individual to build a strong team. This experience taught him the importance of predictable processes, efficient communication, and working together towards a common goal. In business and life, this mindset helps minimize miscommunication and maximize success. It may seem harsh or even negative to some, but it's an effective way to build resilience and thrive in challenging environments.
Building Strong Teams and Valuing Teamwork: Success in real estate requires building strong relationships and nurturing them, leading to meaningful relationships, financial growth, and a desirable lifestyle.
Building a successful team and recognizing the importance of teamwork, especially in challenging industries like real estate, is crucial for long-term success. The speaker emphasized that their experiences, including their time in the army, have shaped their brain to succeed as part of a team. They also highlighted the importance of going through the hardships and learning from mistakes rather than trying to change the past. Real estate may be difficult, but it can lead to meaningful relationships, financial growth, and a desirable lifestyle if approached correctly. Ultimately, the speaker's advice is to focus on building strong relationships and nurturing them, as this will bring the most rewards in both personal and professional growth.
Rethinking Financial Resources in Real Estate: Considering financial resources as energy and understanding tax implications and market cycles can lead to informed real estate decisions and long-term profitability.
Rethinking the way we view and manage our financial resources, particularly in real estate, can make decision-making easier. Instead of focusing solely on cash or money, considering it as energy that behaves differently depending on the environment (property or bank account) can help us make more informed choices. Moreover, understanding the tax implications and market cycles can significantly impact our financial gains and losses. The speaker shares his experience of learning these lessons the hard way during the housing market crash in 2008 and how it led him to discover innovations in real estate financing. Overall, this perspective can help us navigate the complexities of managing finances in real estate and make decisions that are more sustainable and profitable in the long run.
Staying informed about tax laws and being prepared to adapt: Adaptability is crucial in real estate investing. Stay informed about tax laws and be prepared to pivot when changes occur. During market downturns, consider alternative strategies like installment sales or turnkey investing.
In real estate investing, there are often tax codes and strategies that can provide significant benefits, but they may not last forever. A tax code discussed in the conversation allowed investors to maximize their tax advantages through bonus depreciation, but it has since been changed. This highlights the importance of staying informed about tax laws and being prepared to adapt when changes occur. Another key takeaway is the importance of being flexible and pivoting in response to market conditions. During the 2008 recession, it became difficult to sell properties through the MLS due to an oversupply of inventory and tightened lending standards. As a result, the investor discussed in the conversation pivoted to installment sales agreements, which allowed him to sell properties to buyers who couldn't secure traditional mortgages. Later, as market conditions changed, he pivoted again to direct-to-seller and turnkey investing. These examples illustrate the need for investors to be agile and adapt to changing market conditions in order to succeed.
FHA buyers gaining edge in market due to rising interest rates: Rising interest rates create opportunities for FHA buyers and challenges for investors, leading to potential market trend shifts
The current real estate market presents an opportunity for FHA borrowers, who were previously unable to compete with cash offers and conventional financing due to higher interest rates, to enter the market. With rising interest rates, these buyers now have a chance to purchase properties, creating a new niche for sellers looking to cater to this demographic. Conversely, investors are facing smaller cash flows due to higher borrowing costs, making their offers less competitive. This dynamic could lead to a shift in market trends, as FHA buyers become more active and investors reassess their strategies. It's essential for sellers to understand this shift and adapt their pricing and marketing strategies accordingly.
Marketing Strategies for a Shifted Real Estate Market: Eric generates 320-350 net leads monthly, aims for 40 contracts, and has a 32-35% closing rate. He uses mailers, television, and texting to attract leads and focuses on both buying and selling properties.
The real estate market has seen a significant shift in the last few years. While it was once a seller's market with multiple offers and quick sales, it has now become a buyer's market where sellers need to work hard to find buyers. Eric, who sells directly to sellers, shared his marketing strategies, which include mailers, television, and texting. He generates around 320-350 net leads per month and aims to write about 40 contracts a month, with a closing rate of 32-35. When a lead enters Eric's funnel, they could be looking for a home from his current listings or considering selling their own property to him. Eric's business focuses on both buying and selling properties. The final output of his funnel is a successful real estate transaction.
Understanding the Shift in Buyer and Seller Dynamics: First-time investors dominate the market, retirees seek real estate for tax savings, and adapting strategies and using predictive analytics are crucial for success.
The most active property buyers in every market are first-time investors, who pay the most and buy the most inventory. However, they are not typically found on buyers' lists, making it essential to find new ways to connect with this demographic. Additionally, investors nearing retirement age are increasingly looking to real estate for tax savings and wealth creation. To successfully invest in today's market, it's crucial to understand the shift in buyer and seller dynamics, adjust strategies accordingly, and utilize predictive analytics for potential investors. The key to success lies in adapting to market changes and simplifying the real estate investing process.
IDG and DealMachine: Simplifying Investment Opportunities: IDG offers new, tenant-occupied homes with cash flow and equity, while DealMachine grants access to valuable contact information for lead generation. Both companies streamline the investment process.
IDG and DealMachine offer unique opportunities for investors to grow their wealth through rent to own homes and unlimited contact information, respectively. IDG provides access to brand new, tenant-occupied properties in Florida with aggressive pricing, immediate cash flow, and built-in equity. DealMachine grants access to high-quality, reliable contact information for lead generation, simplifying the process and enhancing off-market deal opportunities. SimpliSafe, on the other hand, ensures peace of mind with its award-winning home security system, offering protection against various threats and a 60-day money-back guarantee. Eric's discussion on funnel marketing emphasizes the importance of guiding potential customers from the top to the bottom of the sales funnel, increasing conversions and potentially creating wealth for investors. While IDG and DealMachine cater to different aspects of the investment process, both companies aim to simplify and streamline the journey for investors.
Understanding sellers' motivations and circumstances: Focus on building relationships with sellers to gain transparency into their motivations and circumstances for accurate assessment of their readiness to sell.
When evaluating potential sellers, it's important to look beyond their initial response to questions about their readiness to sell and their asking price. Instead, focus on understanding their motivations and circumstances, as these factors can significantly impact their willingness to sell at a reasonable price. Additionally, making numerous offers, even to seemingly unqualified sellers, can lead to more opportunities to purchase properties. Furthermore, sellers may have hidden motivations or first world problems that can contribute to their desire to sell, but these may not be apparent during initial interactions. Ultimately, building a high-impact relationship with sellers through meaningful conversations is essential for gaining transparency and accuracy in assessing their motivations and readiness to sell.
Building trust with sellers for successful real estate transactions: Focus on qualified leads, earn trust through selective attendance and expertise, consider novation for non-distressed sellers and properties close to retail value, and prioritize financeable and insurable transactions for higher fees.
Building trust with sellers is crucial in real estate transactions. Unqualified leads, or those who are not ready to sell, should not be prioritized as they are less likely to be open and honest. Trust is earned through selective attendance at seller appointments and demonstrating expertise and reliability. Novation, a wholesale-style transaction, can be an alternative strategy where the seller is not in extreme distress and the property is close to retail value. Novation allows for the sale to a retail buyer, making it a financeable and insurable transaction, and provides a smaller fee for the seller and a smaller spread for the real estate investor. Novation transactions can be more common than traditional wholesale transactions, as many sellers are willing to sell slightly below retail price. Novation means replacement, and it alleviates the need for seasoning and arms-length transactions, making it a more micro wholesale transaction with potentially higher fees.
Leveraging Novation for Profitable Real Estate Wholesaling: Novation allows wholesalers to buy at wholesale prices, sell to retail buyers at retail prices, and secure more deals by offering reasonable offers to motivated sellers.
In real estate wholesaling, understanding the concept of novation can significantly increase profits and volume. Novation allows wholesalers to buy properties at wholesale prices, without closing on them, and sell them to retail buyers at retail prices. This method provides larger spreads than traditional assignment deals, as you're buying at wholesale and exiting at retail. Novation also offers opportunities to sell properties to retail buyers that may not have accepted a wholesaler's MAO in the past. By presenting a reasonable offer to motivated sellers, novation can lead to less tension in negotiations and potentially more deals closed. This innovative approach to wholesaling can save time, resources, and provide better profits, making it an attractive alternative to traditional wholesaling methods.
Finding Motivated Sellers through the MLS: Successfully investing in real estate involves finding motivated sellers through the MLS and selling to cash buyers for a profit, even in current market conditions.
Successful real estate investing often involves finding motivated sellers in distressed situations and selling to cash buyers. This strategy allows investors to acquire properties below market value and generate a profit through repairs or flipping. The best place to find such opportunities is through the Multiple Listing Service (MLS), which provides access to a large pool of potential sellers. New investors are often drawn to the MLS due to its widespread use, but it's essential to understand that the best deals may come from being selective and willing to walk away from overpriced properties. The current market conditions, with interest rates and seller attitudes shifting, make this strategy even more valuable. For more information on Eric Brewer and his investing methods, follow him on Instagram @EricBrewerInvest or visit his website, brewermethod.com.
Find an investor-friendly agent for long-term real estate success: Use BiggerPockets Agent Finder to connect with local market experts, analyze deals, and build confidence in your real estate investing journey
Navigating the ever-changing real estate market can be challenging, but the goal of financial freedom remains the same. The best investors understand that it's not about timing the market perfectly, but rather maintaining a long-term presence in it. If you're ready to enter or elevate your real estate investing journey, finding an investor-friendly agent is a crucial step. With BiggerPockets Agent Finder, you can quickly match with local market experts who can help guide you through neighborhoods, analyze numbers, and build confidence in your decisions. This free resource, available only at biggerpockets.com/deals, can help you get an agent, secure a deal, and move closer to financial freedom. Remember, the content of this podcast is for informational purposes only, and all investments involve risk. Always consult with qualified advisors before making any investment decisions. BiggerPockets LLC disclaims all liability for any damages arising from the use of information presented in this podcast.
