In a Fortune Magazine article by Chris Morris, published in February, it is reported that in January 2019, there was more inventory available and houses sat on the market about a week longer than in January 2018.
As of January, there was an available inventory of 1.59 million homes overall, versus 1.53 million in December 2018. Of course, the article is lacking by treating the entire country as one monolithic real estate market. Needless to say, there are hundreds of markets, and they don’t always perform in lockstep.
Nevertheless, there is a subtle shift, even in mentality, that is more favorable to buyers as opposed to sellers, who until recently reigned supreme. Since we are primarily buyers (and then we hold for the long term), a buyer’s market is a positive for us.
It is interesting to note, and one of the reasons I am posting this blog based on an article several weeks old is that while in January 2019 sales were flat, in February 2019 sales surged up, but then dropped only slightly. This is likely to continue to lower rates and sellers having to adjust expectations. Overall, we can see that while there is a shift towards buyers in many markets, the market is still hovering near a relatively stable point. With the low-interest rates and more friendly sellers, this becomes a positive for the investor.
We like to buy brand-new homes. Clearly, the sellers for us are builders. Some builders don’t want to sell to investors. Our market teams successfully convince the builders that it pays to work with our investors, as they get good volume from us. As the mood changes, these very builders may become more receptive to working with buyers, and perhaps even offer more incentives.
Many would-be rental home investors waste years before getting started. Some of the reasons for that are: too busy, fear of the unknown, the all-too-known paralysis of over-analysis, and lack of information. Conversely, the notion that they might never have enough information or money, and need to spend more time researching and studying before they act. Exacerbating this phenomenon, many new investors make what we call “rookie” mistakes when they finally do get going.
The most typical rookie mistake is believing that low-quality homes in bad areas in lesser cities will provide better “cash flow” (foreigners like to call it “yield”). While cash flow may appear to be better ON PAPER for such lesser properties, life doesn’t happen on paper. In real life, these bad properties usually end up wasting even more years of the investor’s time (and also the investor’s money).
Get started on the right foot
There are ways to get started fast (and correctly). They are: buy the right type of property (s), get the right (type) of financing, and use the proper management. Using these simple steps, the new investor can get off to a good start regardless of how much time or knowledge they have.
Remote Control Retirement Riches
On my Public Television special titled “Remote Control Retirement Riches with Adiel Gorel”, which will be airing through the weekend and into early September on Public Television stations across the country (KQED-TV in the San Francisco Bay Area, for example) this coming weekend, August 24th and 25th, I cover these points. Of course, I cover many other important related topics as well.
In the package I have created for the people who pledge to help Public Television, I have included two newly-written books, an extensive video course complete with motion graphics, three booklets, a quiz, and a newsletter. The package also comes with the DVD of the show, as many may miss the showtimes.
One of the booklets I have written Is called “Making it Happen”. It targets the exact barriers preventing an investor from getting started correctly. This booklet also contains a self-quiz defining your readiness.
This booklet, coupled with all the other extensive information, and the PBS Special itself, which hits the important points, should get anyone up an running in no time. I will also happily support any investor, as we have already changed the lives of thousands, and I believe in continuing to change lives for the better.
For a partial list of the Public Television stations’ showtimes, please click here.
What does it look like these days?
The WSJ reports (in an article on Saturday 10/18 by Joe Light), that Fannie Mae, Freddie Mac, and mortgage lenders are in discussions to ease lending standards; including loans with 3% down to homeowners and allowing people with weak credit access to home loans.