Top Real Estate Trends And Why I Love (And Hate) Them

by | BiggerPockets.com

Today I’m talking about some of the top trends in real estate and why I love—or hate—them. 

I want to start off this blog with this: Your network equals your net worth. What I mean by that is the more people who you speak to, the more you will know, the more you will learn, and the more you will be able to expand your existing thoughts. Doing so will make you a better investor and a better entrepreneur in general.

This is something that I have been doing for a very long time. I’m not the smartest guy out there; I quit school at a very young age. I can hardly type. I can’t read very well, and my grammar is pretty poor. But I always associate myself with other successful people. I make sure to network a lot, and I go to a lot of conferences. Over time, one thing will lead to another, and you will start to learn and start to expand on your existing horizon. And then you become better.

When Others Are Greedy, Get Fearful

One thing that I’ve been hearing at a lot of these conferences is about the lack of inventory, but I don’t see that lack of inventory here in the Midwest. I’m also seeing a lot of folks buying high. They’re buying properties in Georgia, Florida, Texas, and on the East and West Coasts where the markets have appreciated quite a bit. Everyone’s talking about fairytales and butterflies, the market is booming, everything is great. But I’m kind of hesitant. Warren Buffet said it, When others are greedy get fearful. I’m not saying that the market is greedy right now, but I’m kind of seeing a trend going in that direction. It’s kind of easy money. You do not have to work hard for it anymore.

Related: THIS Major Tax Benefit Convinced Me to Put My Money Into Large Multifamilies

Guys, I want to tell you this—if it was easy, everyone would be doing it, right? They are doing it right now, but that won’t last. A few things that I don’t like is people are buying high, and people are using a ton of leverage. I don’t like or accept this from my investors. I know you guys are probably shaking your heads in disbelief. I just believe there are many ways to make money in real estate. I’m just sharing my beliefs with you, so don’t crucify me for them.

 

 

Look, there are a lot of people doing stupid things using a ton of leverage. I don’t like it. There’s a lot of people doing development-type deals where you buy a house, you knock it down, you buy a new one, you subdivide the lot, and you build on the other side. I like to be the master of my fate, the captain of my soul. I want to control everything. You want to control the entire process, because, in my opinion, that’s the best return on investment and it will be the safest way for you moving forward.

A Word About Crowdfunding

Let me backtrack now. People are buying high. People are using leverage. People are developing. And then people are investing in syndications in these crowdfunding schemes. I’m being a little derogatory here guys, but I don’t like it. That’s my belief. Take it or leave it. I’m just sharing my thoughts with you on the current real estate trends that I am seeing. What I think you guys should be doing is finding distressed properties in whatever market you’re located in. There is always a deal to be had, you just have to know where to look. You need to have the cash to buy it, and you have to be able to close quickly. If you really want some tips on where to look, I think the Midwest is the best place to look for distressed properties. I still think there is a lot of opportunity here, and there are a lot of foreclosures hitting the market.

So find the distressed property, negotiate really well, buy it cheap, fix it, and then sell it. Yes, I know there is more to it, but I don’t want to go into too much depth. You should be in control from start to finish. I don’t want you working with lenders. I don’t want you buying high. I don’t want you investing in crowdfunding syndication-type deals where you really don’t control your destiny. I also don’t want you investing in full-blown development deals where you’re building a house from scratch, subdividing an existing lot, or doing a full-blown structural rehab where you need approval from the city, the county, an architect, whoever it may be.

Related: How I Bought a Multi-Million Dollar Apartment Complex at the Age of 26

Guys, you control your destinies. You should call the shots. If you make a mistake, it’s your fault, not anyone else’s. Blame yourself. Then pick yourself back up, don’t make the same mistake again, and keep moving forward.

So find distressed assets, buy them at dirt-cheap prices, fix them up to the best of your ability, and sell them at a profit. Rinse and repeat. That, in my opinion, has been the quickest, easiest, and best way to make money in real estate for as long as I can remember. I have been doing it since day one. I’m still doing it to this day. I’m going to continue doing it long into the future. At the end of the day, you make money when you buy and not when you sell, so make sure that you buy cheap.

Look, that is my opinion and I never say that I am right or wrong, but I am always happy to share my perceptions, opinions, and experiences with you guys in a very passionate way.

What are some trends that you are seeing in the market right now that you like or dislike? Share them with me below! 

 

About Author

Engelo Rumora

Engelo Rumora “The Real Estate Dingo” is a successful property investor, motivational speaker and serial entrepreneur that quit school at the age of 14 and played professional soccer at 18. He is also a soon to be published author along with becoming a TV personality in his very own real estate house flipping show. To find out more go to engelorumora.com . Engelo Rumora has been involved in over 400 real estate deals and founded five businesses in Ohio. The most successful is Ohio Cashflow, a company that specializes in providing turnkey properties in several Ohio markets. The newest venture is List’n Sell Realty, a real estate brokerage based in Toledo, Ohio and soon to be known as the #1 discount broker in the country.

16 Comments

  1. Jerry W.

    Engelo,
    Thanks for taking the time to share your thoughts. While I am a buy and hold guy, my deals are almost always a distressed property. My market is tough. Not much appreciation, and ratios on purchase price versus rental potential is pretty poor. You cannot buy for $120K and rent for $800 and make any money. The answer is distressed properties. I am unfortunately getting too good at buying them and too slow at fixing them up to rent. I have to take breaks from buying to get the work done. I am working on that problem, but I struggle.

    • Engelo Rumora

      Thanks for comment Jerry.

      I always said the “Cash is King and Cashflow is Queen”

      I don’t think I’ve ever invested in a property that had potential for appreciation lol

      It’s always about the numbers to me 🙂

      Thanks again and I’ll catch you at the next blog

      Much success

  2. Matt Donnelly

    Engel, thanks for the post, your words are music to my ears as I am a rehabber at heart. I’m having a hard time finding properties that are distressed enough though and competion in my market is fierce if inexperienced…how are you cutting through the weeds…direct mail or what?

  3. Patrick Harrington

    Great article Engelo, the buy distressed and fix they up to reposition them is my nitch were I am a contractor. But in the north east market I am having a hard time finding deals were everyone is jumping on the band wagon. They are over paying for the properties, just seeing if you had any advice to help find the off market deals? Thanks for all your great articles I like how they are no b/s

    • Engelo Rumora

      Thanks for your comment Patrick and kind words,

      Keep submitting low ball cash offers with “quick closes”

      You will eventually pick up a bargain.

      Auction sites and Craisglist have suited us well over the years

      So have yellow letter/direct mail campaigns

      Much success

  4. Kathy Gilmore

    Great perspective Engelo. When you say look to the Midwest for rehab opportunities, can you provide any insight on what state / or states specifically do you recommend? Michigan? Ohio? Wisconsin, Iowa, Illionois, Ohio? Indiana, Minnesota? I’m looking specifically for flips. Thank you!

  5. What bothers me is the market seems to be shrugging off some very disturbing events:

    1 Higher rates – what ever happened to don’t fight the fed?

    2 The recent tax changes in deductibiliy of interest, property tax and state tax – this is a big deal in California

    What is strike 3 going to be? Not sure but the attitude that those two recent events won’t have an impact seems foolish

    • Engelo Rumora

      Thanks Kurt,

      You make money in real estate when you “buy”.

      As long as you can “buy” dirt cheap, I wouldn’t be worried about any other macro events.

      There is nothing wrong with any piece of real estate as long as the price is right

      Much success

      • Unfortunately there are no bargains in the LA Beach Cities right now. And I am hearing talk of a new paradigm where fundamentals like affordability no longer matter. Which may be OK, but now they are extending the “beach area” inland to North Redondo and East Manhattan Beach. I’m sorry, but if you can’t walk to the beach in 15 minutes it’s not a beach house.

  6. Kevin S. Campbell

    I am very much interested in doing a deal with Engelo. We have a lot in common and see value when others offer their put downs about property and money making deals. Let’s get together and work out a sale that makes us both money without the bad vibes! Send me a note and we can talk. Thank you for your post and have a great day.

  7. Kevin S. Campbell

    I like what you wrote and we are a lot alike. I would love to do a real estate deal with Engelo and can’t wait to hear from him. Please send me an email and we can talk about doing a sale and making money as team. It is hard for me to find open minded people here in Fresno where I live and there is a lot opportunity. Please send me an email and we can see what works best. Thanks for your article and have a great day.

  8. John Barnette

    California transplanted midwesterner here. The main threat I see to investing in SFRs in high cash flow markets in many Midwestern communities is long term population decline and employment. If there is a drain on younger population and also aging and dying of Baby boomers who will live in all these houses and apartments? Whereas the expensive areas with low cash flow have growing populations and solid employment. That said at some point I will be exchanging my Bay Area properties for higher cash flow properties in the Midwest or south.

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