In this video, we delve into the fascinating world of real estate and explore the valuable lessons learned from navigating a shifting market.
From adapting to market fluctuations to capitalizing on historic events, we explore the key factors that can make or break your success in the real estate industry.
Whether you’re a seasoned investor, a first-time homebuyer, or simply curious about the dynamics of the market, this video is packed with valuable information and practical takeaways.
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Get ready to unlock the secrets to navigating the shifting real estate market and achieving your financial goals.
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Transcript:
Chris Bounds 00:00
You’ve gone through multiple historic events 2008. And then because most of your business probably is in Houston, three historic, of course, historic floods, and then a pandemic. So that’s a lot to take in and still, you know, be standing, you know, you’re like Rocky Balboa? What? What would you say? Going through those events like and coming out, and not just surviving, but thriving, like, how’s that made you a better investor today?
Chris Funk 00:34
Um, yeah, it’s really good. You know, it, every time you get in the boxing ring, and somebody knocks your lights out, you remember that. And you remember where that punch came from? How fast it came, and what it felt like when it hits you. And then you adapt, and you realize I need to move out of the way. You know, and, and so that’s what it’s done for me is and I realized, you know, moving out of the way, in real estate, it’s, it’s about having cash, you know, that’s how you dodge a punch in real estate is you have cash on the sidelines.
And when you can’t collect rent, because there’s a rent moratorium or eviction, you got to be able to pay the bills. And so that’s one of the first things I’ve realized is that your your frontline against these things that come come at you is having your deep pockets, having that money set aside, and not distributing that money to your business partners, or to yourself, not going out and buying a Ferrari or, you know, whatever. And I have so many friends that do that, you know, they get some cash in their account, they go buy a new car. Yeah.
Chris Bounds 01:48
And it’s like having I mean, a business is is like an infant. I don’t know if you have kids, but it’s like an infant. And babies need to eat a lot, very frequently. And related to business. It’s like, you’re sucking all the milk, like when you’re sucking all the milk, like you can’t do that it’s gonna it’s gonna really negatively impact the health of the baby, your business do, you can’t be making those distributions to yourself, because you want to go on lavish vacations, and you’ve only wholesaled four houses and you want to grow this great big empire. Like it doesn’t work that way.
Chris Funk 02:27
Yeah, and you always have to, you know, I took this from I took this from gas, what’s the guy that owns the rockets, and all the restaurant restaurants for TITO partita. And he said, Look, when I pencil out a deal, I always pencil out. Worst case scenario, and that, if you had if I had to sum up my strategy, it’s always been that which would probably make sense if you’ve seen my views about the economy. I’m always looking for the worst case scenario. But if it works, and if you can get by on the worst case scenario,
Chris Bounds 03:07
you’re gonna be fine. Yeah, everything, everything else is upside.
Chris Funk 03:11
Yeah. And that’s kind of the way I live my life. You know, everything I do. I’m predicting the worst case scenario. And I’m training up for that. And if that doesn’t happen, well then I’m leaps and bounds ahead of the next guy, because I was prepared to show up and have everything break, and I got backups. And that’s just been my whole position towards business. And then the other part of it is, you know, when that event comes, that you maybe didn’t expect, is just get to work and use common sense. You know, if you got a bunch of floods, well, you know, you got flood insurance, go fix your houses, get them rehabbed. Go talk to the tenants, go buy some more flood houses that are cheap, you know, if they’re on sale for 40 grand and in $120,000 neighborhood, go buy a bunch more of those, you know, if you get sick of it and you got a house it’s flooded more than once.
Sell it you know, and I’ve had to do that you know, I had a house flooded in Harvey and never flooded again kept it I’ve got one house was every time but Harvey sold it. You know, you just common sense I think is the is the biggest thing. But back to the like the market shifting on you. The first time it shifted on me was 2008. I was a wholesaler I had my own home. And a car that was really the only thing I had. And this is back when there was fax machines. And so all the sudden, the subprime collapse happened. Everybody knew about it hard money lenders kind of closed up overnight. And I had probably 10 wholesale deals on the market, you know, sending out emails, put them on websites and stuff. And overnight, people stopped calling me before you could throw anything out there and sell it, you can make the numbers up and it would sell overnight.
People stopped calling back there was no activity. I had to extend my contracts with the sellers explained to him what was going on. And then I just started calling people common sense, start reaching out to people reached out to a realtor. He said, Well, hey, maybe I can list some of these houses for sale. I don’t think he understood that I didn’t own them, that I was just wholesaling them. But regardless, he listed a few for me on the MLS. And I was out of town that weekend. And my roommate called me and was like, hey, the fax machines out of paper, there’s paper all over the floor. I don’t know what’s going on, it won’t stop. So we’ll put more paper and read me the paper on the floor. And he said, why he said 124 residential contract.
Chris Bounds 05:53
And for anyone out there that if you know what a fax machine, it was this little box that kind of like an email, but instead of looking at it digitally, it actually printed the paper out for you.
Chris Funk 06:04
That’s right. That’s right. And those were offers that were coming in on the fax machine, one after the next after the next. So here’s what happened. The local guys in town, got scared, quit buying the hedge funds, were sitting like a sniper, waiting. They’ve been waiting for years, they had a full clip, their site was teetering on the target ready to go. And so as soon as I started putting properties on the market at a certain price per square foot in a certain zip code that hid their little algorithm, and their agents came out of the woodwork on it. And this lady said, We’ll buy all three of these. Do you have anything else? I said, Yeah, I got like eight more that I haven’t listed. She said send me the address and the price. And I think that’s what
Chris Bounds 06:55
happened. And we’re talking about 2018 and how the market fundamentals for rentals, it was just really went out of whack. I think that’s kind of what happened because of the flood events that Houston had when we had I think three out of four years were historic events and I think that brought especially Harvey brought in there’s so much outside money buying up these blood houses whether they knew what was going on or not. I don’t know that was just my opinion on or my my observation. Yeah, it wasn’t the only thing at play, but it definitely was a big catalyst.
Chris Funk 07:26
It was a big catalyst. Yeah, it changed a lot and I think that people were you gotta be careful what neighborhood you buy and if that neighborhood floods every year
Chris Bounds 07:37
well I bought some of them. I bought some of them that went to back to the hard money this one out it was Arizona or New Mexico some some outfit and they weren’t a hedge fund. It was some investor who got way too much from the skis and he had like five or six and this national hard money company reached out to me and I knew them and they’re like, hey, look, we got the here’s our sheet. Let me know which ones you want and we’ll find them all. So I think I picked three and I wholesaled a hotel one meaning I closed it immediately sold it. I think another one I put on MLS and sold and then another one I kept with a rental and got a huge payday after just renting it for one year. Yeah, that was a those were good deals.