In this video, we delve into the intricate landscape of the 2024 Housing Market and explore the looming possibility of a Real Estate Collapse.
As we navigate through the current trends, market indicators, and economic factors influencing the housing sector, our experts provide valuable insights and analysis to help you stay informed and make sound decisions.
Whether you’re a potential homebuyer, investor, or simply curious about the state of the real estate market, this video aims to shed light on the potential risks and opportunities that lie ahead.
Join us as we unravel the complexities of the housing market in 2024 and discuss what the possibility of a real estate collapse could mean for homeowners and the broader economy.
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Transcript:
Chris Bounds 00:00
If there is a real estate collapse, if there’s anything that has collapsed right now, it’s transactions. Like we’re a 20 year low and transactions, which
Rog Trigg 00:07
is hard. And a lot of people, I mean, you got lenders, whether it be hard money lenders, or, you know, long term 30 year mortgages. I mean, I talk to Clint every day. And you know, he’s like, Hey, we’re in a rough time, you know, we see it, maybe clearing up second quarter 2025 20 is waiting for sorry, but right now, you know, people have come up, they’re uneasy, you know, the overconfidence is really not there as far as your end buyer.
And I mean, we’ve had to tell our investors, like, Look, if this is going to be a buy and hold or bond sale, you got to understand, you’re gonna have longer hold times, and you have to mitigate those circumstances up front on the deal. You can’t be buying things, you know, at max 65% of ARV, and, you know, think that you’re gonna get 100% financing. And yeah,
Chris Bounds 01:03
it changed the investor game, like I remember. So Eddie was talking for a walk them years before I even caught on in my head that the game was changing to a landlord market. Yeah. And you saw hard money lenders like jet, that you really positioned some really strong and unique products to cater towards landlords. And then when I’m out there house flipping, I’m really like, I’m just getting be left and right by landlords that are willing to pay a lot more because financially, it made sense, they were able to get the loan product to help a cash flow with very minimum, and oftentimes no money down.
So that made sense, right? Now, it’s a little different. You know, I’m actually seeing house I mean, wholesaling has always been there, it’s just they’re having to change who they’re wholesaling to, it makes more sense to wholesale to the house flipper because the house flippers gonna get in, get a decent discount, flip it, put it back in the market make a quick buck. Whereas if your strategy is still long term holds, you either need to buy it cheaper, or you’re gonna have more money stuck in the deal, or the third option, which in my opinion, is the best if you can make it work, creative financing, getting either subject to or some type of owners financing, that where you have greater control over the terms. Yes,
Rog Trigg 02:18
yes, a lot of owner financing deals that have popped up worrying offering it a little bit on some, some stuff that we’re trying to offload as far as inventory, you know, just to try to just to try to get some more capital and stuff like that. I mean, at the end of the day, you know, you got to as a smart business person or smart real estate investor, you’ve got to be able to pivot with any market. And I think that’s where a lot of lot of investors mess up is they don’t pivot early enough. Yeah, yeah,
Chris Bounds 02:48
I made that mistake. I should have transitioned more to the buy and hold. You know, and I’ve talked about this in other other shows. But ultimately, we were focused on house flipping, and we didn’t quite position ourselves in the buy hold quick enough, I’m still all in on buy and hold. It’s just like single families little harder multifamily, you got a little bit more flexibility in how we can make that work. But even on the multifamily side, you know, it’s it’s changed that game. We’re having a brand name bringing private equity companies as opposed to doing an all out raise from LPS or equity investors, equity investors.
Rog Trigg 03:28
A lot of people don’t realize also, as far as active versus pendings, in an area that will hurt your your sale, you’ve got to be competitive, as far as your ARV. And a lot of investors right now are still looking at what they can max sell that property for. And we’re having to educate a lot of people say, hey, no, no, no, no, you got to pump the brakes. So yeah, you’ve got four cops, right? They’re selling at, you know, I don’t know, let’s say 650. Right. They’re selling it at a 650 mark, but most of your cops are in the 600 to 590 range. And then you got a whole bunch down here that are really moving at 525.
Where do you think you’re in? We’re talking about all same similar square footage, what do you think your movement is? And to be competitive, and for any lender, they’re going to look at what’s moving quickest, especially on the hard money side, because we don’t want the inventory sitting there forever. You don’t have a crystal ball and nobody does either that says hey, six, seven months from now, when you’re done with that rehab, interest rates are going to come down because we don’t know. So we got it. And I told somebody this. You got to underwrite it, not based off what the future is going to do. where you’re at right now, because the crystal ball is not out there for anybody. Nobody predicted that we seven and a half and quarter, seven and a half interest rates three years ago. No one’s
Chris Bounds 04:59
right. This can mitigate, in worst case scenarios that you don’t get that price. Yeah. And that could be refi out long term, you’re gonna rent it out. Which what does that look like? Are you negative cash flow? Can you support that? Are you going to put an extra 50 grand down just just to make it work? Or do you have the margined? Where, man, you could sell it at 45. But you know, you break even, but at least you can get it off your books, like, what does that look like? Versus you need 620 And if you get anything less than that, you quickly go negative like, maybe you should read either renegotiate the terms or way past on the deal. Yeah, yeah.