All Forum Posts by: Moses K.

Just wanted to see what some of your thoughts are on the debt crisis and how it will affect real estate in this next cycle. 

There are a couple of things I'm seeing now: 1) crisis in Europe and to a lesser extent Asia is sending capital to the U.S. For now, we're the only game in town, which is a big reason why real estate and stocks are getting bid. 2) Interest on our debt compounds even with a balanced budget, and that runs on an exponential growth curve. 3) Rising interest rates are probable on a cyclical basis after 30 years of a bull market. 

I am certainly not in the hyperinflation camp, because historically that has never happened with the core currency (U.S. dollar), only peripheral currencies. But this is the first time we've seen a sovereign debt crisis globally since the 1930's, so this is bound to affect real estate domestically. 

How would one prepare as a real estate investor?

Jaime,

If you purchased your property cash, you might consider a cash-out refi at current rates, which are very attractive. Wholesaling and flipping are also options to generate cash. 

If you have the ability to find undervalued deals through your marketing, you can present these rehab deals to seasoned investors and get a % of the upside. Ask them to walk you through the process- that way you learn while generating cash. Invaluable. As the saying goes, find the deals and the money will find you.

Hey Gianmarco,

Good to hear you're taking the plunge in real estate! It's a great business and there is always, always something to learn.

As far as China, everything I hear from people there is that the market is overheated. Might want to look at some basic metrics like median income to home price ratio to see what's going on there. I do know that capital is flowing out of China and bidding up markets like Australia, so there might be a reason.

Would be interested to know what you see happening there. China is certainly the next frontier!

I think you're technically looking at an AITD at $85,000. Are you sure the deal doesn't work at $76,000 in your market? Even if you could structure an AITD, your buyer pool of people comfortable with that type of deal will diminish. 

Hey Jason,

An important thing to remember is that you invaded their space. Naturally, potential sellers will be skeptical, and perhaps rude. You must prepare for this mentally and show you are credible as soon as possible.

I would focus on taking control of the conversation, which counterintuitively involves asking pertinent questions about the property. Don't go down the rabbit hole of answering all the questions they invariably will have for you. That means they have control. 

Not good. 

Your tonality is going to determine in large part whether they take you seriously or not, so practice at least an opening statement and a couple of questions regarding repairs or upgrades. You should also have them say what they are willing to sell the property for. That's the bare minimum. 

Hope this helps. Best of luck to you.

Have you purchased homes before? What I've noticed is people who've never invested before sometimes show their lack of experience at the deal table. Especially for a wholesale deal where you're not bringing any capital to the table, you have to inspire some kind of confidence in this seller that you can close the deal. So I would definitely work on some kind of basic script for questions you know he will ask.