Expected Air Date: 9/17/18

Opening

Thoughts and Prayers: Hurricane Florence

Nearly every event I attend or speak, someone is asking questions about the state of the market. Those who were paying attention 10 years ago when the market crashed are concerned it will happen again. We plan to continue to report on the state of the market as it goes through its inevitable cycles. We will talk about what we see, how we are applying it in our business and perhaps give you some ideas about yours. 

But we had a further thought about adding real value to your lives by sharing with you our data points and our sources for the information we share with you. Some of our data and research comes with a price attached, but today I’m going to give you some no-cost techniques that will enable you to stay on top of the real estate market. 

The question is always about the state of the current market, but what we really want to know is where the market is going. Are we going to crash? Is it going to keep going up? One of the great things about real estate in this regard is its LACK of volatility. Once you know where to look and what to look for, reading the real estate market isn’t rocket surgery. I’m going to talk about these things and how they impact your decision making in your real estate business. 

You are going to want the show notes from today so you can see a glimpse of how we research the market and keep in mind how this impacts our business. 

How to contact us

www.flippingamericanetwork.com

Facebook.com/flippingamericamedia

Twitter and Instagram @FlippingAmerica

YouTube: bit.ly/FlippingAmericaOnYouTube

Linkedin: bit.ly/FlippingAmericaOnLinkedIn

We now have a profile at houzz.com for what it’s worth. 

Call our National Comment Line: 404-369-1018, ext 1. Leave your message or your question. 

Announcements:

• Think Realty Saturday and Sunday, Sept 22-23
• FlipStarter Nov 2-33, Atlanta, GA  
• Lunch with me every Wednesday.
• Flipping America App is in the app store. You can listen to the show, read the show notes, and the entire catalog of shows is now available to you. It’s a free download and there are no upsells or in-app purchases. Free to download, free to listen. Go ahead and give it a try and drop me a line and let me know what you think.
• Want a quick analytical tool to tell you how strong a potential fix and flip deal is? Download the Property Grade app. You answer 10 simple questions about the property and the app instantly tells you what you can expect to make, your return on investment, your return on cash, and then the program gives the project a letter grade using the proprietary Flipping America Investment Property Grade algorithm.  

News!

• The July data is in from CoreLogic, Home prices up 6.2% year over year.
• Also from CoreLogic, Rent prices are up 4.1% year over year. 
• Scare Tactic Headline: https://www.cnbc.com/2018/07/09/the-hottest-housing-market-in-the-country-may-be-headed-for-a-crash.html
  • The article itself debunks the premise of the headline. 

Guest:  

Topic: Real Estate Investing’s Leading Indicators

This is how we predict where the market is going.

1. Pricing Trends. Impact: Informs our Offer strategy
   1. Where is the market heading in the past quarter?
   2. What is the year over year difference? Which direction is it heading?
2. Average Days on Market. Saturation rate. Impact: Informs our Offer price due to hold time.
   1. How long does it take to sell a house?
      1. https://www.zillow.com/sellers-guide/average-time-to-sell-a-house/
      2. https://www.thebalance.com/how-long-does-it-take-to-sell-a-house-1799050
      3. https://smartasset.com/mortgage/how-long-does-it-take-to-sell-a-house
      4. https://www.inman.com/2017/11/10/5-key-factors-average-time-sell-house-every-homeowner-needs-know/
3. How many months (or weeks) supply of inventory is out there? 3 months is balanced
   1. At the rate properties are selling, how long would it take us to sell out the current inventory?
4. Housing Starts
   1. https://www.census.gov/construction/nrc/pdf/newresconst.pdf
   2. https://tradingeconomics.com/united-states/housing-starts
   3. Permits issued are up slightly, Starts are down slightly, year over year. We cannot count on new housing starts in the near term to ease inventory concerns. 
5. Mortgage Default and foreclosure rates: Google: “Foreclosure Data” and “Default Rate”
   1. https://www.attomdata.com/news/market-trends/april-2018-foreclosure-starts-dataset/
   2. https://www.frbatlanta.org/community-development/data-and-tools/foreclosure-resource-center.aspx?panel=1
   3. https://www.realtytrac.com/statsandtrends/foreclosuretrends/
   4. https://www.attomdata.com/pre-foreclosure-data/
   5. https://www.housingwire.com/articles/43318-mortgage-delinquency-keeps-falling-drops-for-19th-straight-quarter
   6. The rate of foreclosure has dropped for 19 straight quarters. It is at an historic low and has nowhere to go but up. Therefore it is easy to predict it will go up soon, but that’s no reason to panic. The rate should grow until it reaches it’s historic average. 
6. Interest Rates: Impact – Rates determine relative affordability. Can impact sales.
7. Overall Economic Conditions: Strong Economy, low unemployment = buyers. Weak or uncertain economy will slow market down. 
8. Construction Costs: Affect our rehab and holding costs, impact our initial offer.

We buy in any market so what difference does it make?

If we know where the market is heading we can make adjustments:

Offer amount

Rehab Scope

Selling Price

Anticipate holding costs more accurately. 

This is all a part of being a responsible business owner and is the difference between a true professional and someone who took a seminar and is buying properties with hope, optimism and crossed fingers. And this is why I say on nearly every show, “it’s not for everyone.” So what should you do with all this? If you’re in the real estate business these trends affect your business whether you are paying attention or not. The difference is your awareness of the situation. And this is the difference between being able to plan for the future or simply reacting to it when it gets here. 

Motivational Thoughts for the day

• Your true success in life begins only when you make the commitment to become excellent at what you do. — Brian Tracy

Transcript

[0:00] Music.

[0:15] America the show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you flipping America is sponsored in part by American IRA

founded by investors for investors on the web at American Ira. Com.

And by Braswell Capital Solutions commercial lending made easy on the web at Braswell Capital solutions.com.

And now you’re sad flipping America guy Rodger Blankenship thank you Kathy good morning everyone we begin this week.

With thoughts and prayers for everyone suffering the effects of hurricane Florence and now tropical storm Florence.

We just want you to know that we are with you and praying for you and so saddened by the loss of life from this storm and.

Really praying for your recovery we know for many of you the worst is yet to come as the floods begin to creep into the area and over the next week or so things are going to be very difficult so our thoughts are with you and we certainly want you to know that.

Nearly every event I attend or speak recently.

[1:27] Someone is asking questions about the state of the market.

Those who were paying attention 10 years ago and I say that because a lot of people who are in the business now or who are young entrepreneurs now they were kids 10 years ago when the market crashed and they don’t really remember it they weren’t really paying attention maybe they were teenagers and we’re more interested about

that next date or something like that but it’s always that we’re adults 10 years ago in the market crash are concerned that it’s going to happen again.

We will plan to continue to report on the state of the market

as it goes through it’s inevitable Cycles here at flipping America we will talk about what we see how we are applying it in our business and perhaps give you some ideas about yours but we had a further thought

about adding real value to your lies by sharing with you some of our data points in our sources for the information we share with you.

Some of our data and research comes with a price attached but today I’m going to give you some of the no-cost techniques that will enable you to stay on top of the real estate market why am I doing this

well this is all in the area of teaching you how to fish okay so here we go the question is always about the state of the real estate market but what we really want to know is where the market is going.

[2:48] Are we going to crash is it going to keep going up.

It seems like a can’t go up forever one of the great things about real estate in this regard is it’s almost complete lack of volatility once you know where to look and what to look for reading the real estate market

isn’t rocket surgery I’m going to talk about these things and how they impact your decision making in your

real estate business you’re going to want the show notes from today so you can get a glimpse of how we research the market and keep in mind how this impacts our business I’ve got links to a

bunch of Articles coming up

in the end that segment when we get to it so I know you’re going to want to download the notes and how can you do that well the easiest way to do that is to download the flipping America app it’s free in the App Store there’s never an upsell there’s never an in-app

I purchase it’s always free and when you download the app you get to listen to the show as a podcast

so even if you may have missed one or two or a hundred or so on the air you can always go back and listen to the other shows and you get the show notes

and sometimes the show notes are comical because especially in the early days we were mostly winging it because we had no idea what we were doing.

Set the alarm as we go right but here lately you know you have access to all of the articles that we.

[4:12] Refer to during the show and many more that we don’t have time to get too and if you follow us on social media you will see

a ton of articles that we don’t have time to get to on the show maybe 10 or 15 post.

Day of things that’s out there that’s interesting and interested me anyway or the research team in and we put it out there for you but we didn’t get to covered on the show

just because you know we’re with you for 60 Minutes 3 times a week and we appreciate every one of those minutes I want to use them for Maximum Impact.

[4:45] Alright so speaking of the social media if you want to follow us I suggest you follow us on Twitter or Instagram at flipping America

now I understand that on Instagram the links are not clickable and I know that Instagram is just the way of looking at pictures of what’s going on your friends lives and that’s fine we posted a lot on Instagram at

the last flipping Atlanta event and we will continue to do that and it’s fun and it’s a good way to keep in touch but if you want clickable links follow us on Twitter.

You can also find us on YouTube please subscribe to the YouTube channel we do the video interviews here and.

When we have a few minutes we edit those videos and we throw them up on the YouTube channel.

Plus we do the occasional instructional video as well in fact as we’ve been thinking and discussing the topic for today we think this is going to become yet another new lesson and video for

our listeners and for our students and subscribers here at the living America Network

we’re also on LinkedIn on house on Pinterest and different things like that you can find this all over the social media and maybe I shouldn’t call it the social media I’m probably reflecting my age but that’s alright

my age is what it is some of you don’t do social media at all that’s fine.

[6:04] If you have the ability to send an email and you have a question about real estate

I encourage you to send your question two questions at flipping America network.com we answer every question that’s ever come into the show and we will answer yours even if you think it’s a dumb question or if you think it’s a question we’ve seen a million times believe me we’ve seen.

A lot of them a million times but that’s okay if it’s your first time to ask if it’s your first time and we will answer it as if we were answering for the first time we put a lot of care and thought into our answers in the way we treat people and we want to.

Help you in any way we can now some don’t want to do email that’s fine.

You’re welcome to call them call the national comment line that’s 404-369-1018 extension 1.

[6:56] Or a couple of announcements for things up coming this Saturday and Sunday in Atlanta Georgia that think Realty coverage is going to be here I’m going to be on the local market panel and that’s going to be on Saturday September 22nd.

But the conference is all day Saturday and Sunday the 23rd half a day it is a great value at $55.

If you want to get a discount all you need to do is text are you ready you need to text sync ATL.

And I suggest you capitalize the T I don’t know if that makes any difference but that’s what I have here think ATL 2.

[7:33] 96270 that’s 96270 text the word think ATL to 96270 you’re going to get a link and you will be able to get into

think Realty for $35 instead of 55 but you got to do it today today or tomorrow I think the option to get in at a discount going to run out in the next day or so so jump on it right now and that’s coming up this Saturday and Sunday

coming up November 2nd and 3rd that’s a Friday night and all day Saturday is our next live event flip starter flip starter is coming November 2nd and 3rd and we’ve been saying November 3rd.

And I apologize if I’ve created any problems here for anyone but we’ve decided that.

There’s just too much to get two in one day so we are going to start on Friday night November 2nd and that we’re going to get the content going.

[8:29] A fairly early I think by 5 p.m. so you’re going to have to take off early from work to get here and

I doubt we’ll do content from 5 to 7 and then we’ll break for dinner

and we will have a VIP dinner There’s an opportunity for you to have dinner with the flipping America guy and then we start back again Saturday morning bright and early at 9 a.m. and we’re going to go from 9 a.m. till about 4 on Saturday afternoon and we are going to tear up this topic

now I’ve got a couple of promises that I’m I’m always make about flip starter promise number one I am going to be there myself

sometimes you hear famous person on the radio talking about their program and you go to hear them speak and they’ve hired a speaker there well

maybe one day we’ll get to the point where I can’t be there for every minute but my commitment is always to be at my events and so I’m going to be there myself now this particular case I’m going to do most of the talking I’ll be there

teaching this topic for my own experience as the guy who’s looked under Janelle’s as myself so that’s promise number one promise number 2.

[9:32] I promise you I will not be able to tell you everything you’re ever going to need to know about flipping houses

it just can’t be done in the time that we will have together but promise number three comes right after that promise number 3 is I promise you I will give you the information that you need to go out and start your own business if you

are motivated and inquisitive

you can take what you hear on in this day and 1/2 seminar and go start your business and change your life it can happen you can do it

now that is a remarkable promise.

But I promise you I’m going to tell you I’m not going to hold back I’m not going to give you an overview and Rosie

sales pitches for what’s next I’m going to give you the information you need some people will want more mentoring

doubt that’s almost for certain and that’s going to be an option but if you’re kind of a self-starter and you really think you can handle it you won’t need it

all right now that’s remarkable for a seminar that’s just $199 and it is $199 but if you go now to the website flipping America Network

common registered today we have an early bird special going on you can sign up for $97 and you can also find out how to bring a friend to and you can find out how to have dinner with me on Friday night oh that’s it flipping America Network.

Come couple more announcements.

[11:00] You can have lunch with me every Wednesday and you can do that for free if you’re in the Atlanta area well you need to pay for lunch but if you’re in the Atlanta area and you want to come by and have lunch we do it every Wednesday at the Huey luey’s in Sandy

Springs on Roswell Road do you want more information Go to meetup.com.

Atlanta remember flipping Atlanta when you go to meetup.com that is our local chapter of the flipping America net.

And that’s flipping Atlanta we have the flipping America app in the app store where they mention that we also have the property grade app in the app store

make sure you download that so you can Fair one property from another okay before we get to this first break let’s see if we can get in a little bit of news.

[11:43] Music.

[11:48] We got some news from CoreLogic regarding home prices and rent prices home prices are up 6.2% year-over-year this from the last day to set and that goes back to July

home prices are up 6.2% year-over-year and just a reminder that we

hear it flipping America when we were projecting the year of the year for 2018 we projected that nationally home prices would be up in the mid-size around five and a half percent so this is ahead of our projection and there are some things that have surprises we don’t mind admitting when we missed it

we didn’t miss it in in a real bad way.

[12:26] And the interior is also not over because part of our prediction was it was going to slow down in the second half of the year but we’ll see this is kind of good home prices are up 6.2%

it’s you know what has its disadvantages as well and we’ll talk about them maybe a little bit later on but rent prices are also up

but they’re only up 4.1% so the gap of affordability between renting and owning is narrowing and as we see interest rates Rising this year it may narrow even further we already have some

information and thoughts out there about.

The advantages of renting over buying now I’ve got a headline here that I have to make fun of and I think we may have to come back

from the break and

I will tell you about this story because here’s the headline news from CNBC now CNBC is normally a reliable source for some pretty good information about what’s going on in the marketplace but this headline is the hottest housing market in the country may be headed for a crash.

[13:33] Alright I’m going to tell you why that is nuts.

[13:38] Music.

[13:58] Hey you want to learn how to flip houses I want to show you how to flip houses and there’s probably no one in the country better qualified than me to show you I’ve looked hundreds and hundreds of them.

And I also have some training and degree and experience and education so I could show you how to do exactly what I’ve done hundreds of times don’t believe me.

Head on over to put starter event.com but in the meantime Give a listen to Pat caywood.

[14:24] Cleveland Tennessee and I’ve been.

Doing some flipping since about March of this year and had started with a Nationals program that was very expensive I spent today with Roger Blankenship.

Learning about his program and boy do I wish I’d met Rodger.

[14:46] He has a clear concise program and many tools that are going to be very hot.

[14:52] And starting and managing a program and the mentorship and Leadership and coaching that he’s offering are in value.

[15:02] Thank you so much.

[15:04] Music.

[15:53] We’re heading into the break I told you that I was going to talk about this headline the hottest housing market in the country may be headed for a crash and tell you why it’s nuts it’s crazy.

It is well first of all it’s just not true but secondly the fact that it’s not true.

Is made clear when you actually read the article all right so the the market that were talking about it

is the Seattle Market okay the hottest housing market in the US is up 13% and now may be headed for a crash this is just.

Fake folks is designed to get you to click and made me click out of a desire to make sure I don’t miss anything in reporting to you but here’s

the purposes of the story home prices in Washington state Rose nearly 4% in the first quarter the most in the nation and more than 13% from 1 year ago strong job growth in tight supplies have fuel the housing market leading some

to fear that it is a bubble okay some to fear.

[16:58] First of all some is not all some is not necessarily a majority probably isn’t some is unknown some could be.

Two people experts say the housing market is vulnerable to Rising interest rates

job losses due to tariffs and local policies against development okay it doesn’t take an expert to see that those things would occur

anal impact the housing market Rising interest rates job losses due to tariffs and local policies against development out of the way that they have to they can’t just say job losses there a lot of things that can cause job losses

not just Terrace all right so when they say this then I want to see in the remaining part of the article mr. Scott ConEd of Scott

at Scott Cohen TV mr. Scott, and I want you to talk about Rising interest rates job losses due to terrorist and local policies against development that are on the horizon for Seattle.

[18:01] Because that’s the market you’re talking about which you’re afraid of a crash Seattle area real estate agent Jerry Martin said he he first entered the business and 77

which means he remembers the days a double-digit mortgage rates and multiple booms and bust that includes the bubble in 2006 and 7 and the historical apps that followed none of that he said quite compares to the craziness that is been going on lately

alright first of all we are trying to build a case based on a story one person’s experience listen my friends one of the

first rules if you ever study statistics and if you ever want to know anything about forecasting Trend you do not base your opinion on

anecdotal evidence.

[18:46] That is the story of one person why am I taking time to pick on this because it happens all too often and what happens is it passes for actual reporting and I see it

everywhere in the media and the chief among Sinners is in PR but let’s not go there right now

this guy says it would not be unreasonable for a three bedroom 1 and 3/4 bath 1500 square foot home go on the market and within the hour you’re looking at multiple offers she told CNBC we had situations for 20-30 offers coming you know what these property all right that is rare and I mean rare in history it’s not rare in Seattle it’s also not rare anywhere else in the US right now

most of the hot markets in the US you’re going to get multiple offers pretty quickly but it is also no question that the Washington State housing market is the hottest in the country

that’s not the question alright so how does the situation become critical well if we have.

Rising what were the three criteria that we’re looking for Rising interest rates job losses due to terrorist and local policies against development so let’s see.

[19:55] The

author of the story says that Puget Sound area in Seattle has added 55,000 jobs in the last year alone thanks to hiring a big employers like Amazon Microsoft and Boeing

combining combine the resulting surge in population with the slow pace of construction and you get a class at crunch all right am I missing something here or is this guy just basically an idiot.

[20:19] He said that.

Job losses will contribute to a real estate problem and then he said 55,000 jobs were added last year alone.

[20:31] Women if job losses create a problem what do job gains do do job gains also create a problem.

[20:41] Now he says a good healthy you keep quotes the realtor a good healthy Market this is.

[20:47] Martin again the realtor a good healthy Market in any areas probably for 6 months of inventory within the last year 3 months we were in our primary markets with about 2 to 3 weeks of inventory folks this is not news this is nothing new in the market for the last

probably

two to three years and it’s not just Seattle it is everywhere in the United States the demand for housing is hit every sector rental apartments condominium single family homes and.

People who live in the cities that are getting overpriced or having moved further and further out and then this.

[21:20] Mournful statement quote it can’t continue it just can’t continue because where is the end okay where is the end

well now let’s see if we have a bubble that’s about to pop James Young director for the Washington Center For Real Estate research at the University of Washington said that as long as there’s a real demand for property the market can continue to grow.

As long as there is a demand the market can continue to grow and didn’t we just had 55,000 jobs do this area.

Sounds like the man to me the bubble happens when you have prices going up without the demand going up you still got the man going up in Washington.

So I don’t see a huge issue here

I’m writing this article and I’m trying to build a case for a bubble about to pop I’m not putting that quote in there so kudos to mr. cone for actually including a quote here from someone that may disagree with him but this

quote kind of blows his whole premise I’m going to read it again.

A bubble happens when you have prices going up without the demand going up you still got the man going up in Washington so I don’t see a huge issue here.

[22:31] Doesn’t sound to me like this bubble is about to burst at least not based on what we’re reading here in the story

and its quarterly report on the Washington housing market for the first three months of 2018 the center for the Statewide inventory at little more than five weeks which it cause a slight imbalance a slight imbalance does not sound like a market crash

the report said around hundred thirteen thousand units sold in the first quarter of 5.1 in

percent increase from the same period a year ago but young cautioned that the market can change quickly here’s a quote.

Demand were to disappear Tomorrow there’s a lot of construction going on out there he said I’m not sure housing prices would crash or anything but it’s one of those things you always have to be mindful of.

Young said one of the biggest risk to the market involves local policies all right.

[23:27] This it’s almost Beyond, call it’s kind of sad because.

[23:34] He set up the three premises for determining whether or not there would be a bubble and now he’s tearing them all down you don’t have a concern do to interest rates you don’t have a concern due to demand and he cites in here a policy.

That.

The city started to put in but when Amazon seen as the main target of this tax threaten to stop for the girls in the city the council back down to repeal the tax so the policy could impact housing but

the city didn’t pass the policy so you don’t have the policy if you don’t have the rising interest rates you do have a little bit but you still have incredible demand and so.

This entire article is just space.

[24:17] It’s just taking up space it’s not saying anything it’s designed to get people to click

and maybe get some people to be afraid and

I’m telling you folks the market can’t go in the directions going forever I agree with that but crash is too strong of a word this is alarmist reporting and is irresponsible in my view.

[24:41] You know everywhere I go people are asking about the market and it is true and that’s why we kind of live with that story it is true that people are concerned about the market and it does beer

it is a reasonable thought to believe that the market can’t keep

going like it’s going forever there has to be a limit and first of all what happens when we reach the limit and secondly how do we know when we’re getting to the Limit and then how do we know what we should do.

My underlying premise and we’re going to get to the section in just a few minutes it probably after the next break but my underlying premise here is.

Real estate investing is viable regardless of the market

double-digit interest rates on mortgage loans you can still be a real estate investor houses still sold in the late 70s even win the normal price for a 30-year mortgage was 18%.

Yeah I know that some of you may find that hard to believe but that was a reality just in the last 40 years will it ever get there again who knows it might.

If we have enough dumb policymakers in Washington it could very well get there again but the point of that is even then houses cell.

[25:56] And real estate does have a little bit of a boom-bust cycle but.

If you think of if you want to draw a graph with the boom bust cycle when you think of the stock market think of a roller coaster ride when you think of

real estate think of an escalator.

Kind of gradually goes up and goes down and it’s pretty slow and you could see it coming all right that is what I mean by the lack of volatility.

It does change and it does have it Cycles but usually you can see it coming if you’re paying attention and you can adjust course.

Regardless of what’s going on in the overall Marketplace and regardless of what’s happening in the real estate market homes are being bought

and sold

homes are being bought and sold in the millions there are Opportunities For Real Estate Investors to make money in any Market in any condition you just have to know enough about the condition

to have the proper information for your strategy and after the next break that is what I’m going to give to you.

[27:05] I’m going to talk about real estate.

The real estate investing communities leading market indicators how we predict where the market is going and how that.

Informs our particular strategies.

For what we do in our business all that is coming up in just a minute.

[27:35] Music.

[27:46] Are you one of the 70% of Americans living paycheck to paycheck and tired of the stress if so I understand as I used to be in that 78%.

I start investing 2003 with my net worth with -80 thousand since then I’ve built a business that generates over $500,000 a month in income and allows me the freedom to do what I want I’m Brad Chandler and I tease people just like.

[28:06] How to find Freedom through real estate investing using a tactic that doesn’t require credit or tons of cash for a free training on how you too can do this please visit Brad camel.com.

[28:16] Hey flipping America listeners have you ever walked into her property and said I have no idea what it will cost to repair this home.

[28:24] Music.

[28:31] It was in your pocket designs by Real Estate Investors.

For Real Estate Investors ultimate rehab estimator just needs to know the properties measurements and what you want to do it produces a statement of work

adult materials and includes a deal analyzer which helps you determine if the deal is really a deal and the app adjust for labor cost in sales taxes by your state

using the properties of code alternate rehab estimator is for all Real Estate Investors new and experienced

just visit ultimate rehab estimator. Calm and click on plans and pricing we have for plans all designed to meet the needs of your real estate business ultimate rehab estimator works on every device you have and wherever your property is get the

contractor in your pocket today at ultimate rehab estimator. Com

but you can be confident that you’ll be ready for whatever comes your way Legal Shield and ID shield look out for you so you can get back to living life

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[29:45] Protect it for a number of legal issues and assistance with common legal need just go to Rodger b helps. Com right now to sign up

that’s Rodger b helps. Com Legal Shield protection for every part of life.

[30:01] Music.

[30:32] And we are back this is the show flipping America I am Roger Blankenship and I teach people how to make money in real estate.

We don’t believe that everyone needs to drop what you’re doing and start flipping houses like you see on TV but we do appreciate the fact that all those shows have created such an interest in this topic

that you my friends have made this flipping America one of the hottest

radio shows and fastest growing in America we’re grateful for that and appreciate you tuning in and what I do for a living as teach people how to make money in real estate.

Yes not everyone needs to be flipping houses but everyone should be.

Investing in real estate as a part of a balanced Investment Portfolio so today.

Our topic is real estates leading indicators how we predict where the market is going and what we do about it.

Alright I’m going to give you some of the data points is some of the resources right here

and. Really it’s their 8 data points that we consider when we’re evaluating what’s going on with the market and we do this kind of continually so you don’t have to

can we report on the results now as I mentioned in the opening segment.

Some of the sources and honestly some of the best sources for the information that we have are not free.

[31:51] There’s just no way around it but you know for us to be you know it truly informing you were willing to go to the expense that we have to in order to get you the information that you need however.

There’s a lot of free information out there and we’re going to just direct you to some free information I’m going to give you some strategies and remind you that when it comes to this Google is your friend alright so here’s how we predict where the market is going number one.

Pricing trends that we’re talking about pricing Trends in housing the whole this is about housing okay.

You know we we’re not opposed to the stock market or anything like that but this is a real estate show and so we tend to talk about real estate here on the show we’re talking about home pricing.

All right.

[32:37] The impact of this is pricing Trends informs our offer strategy and I’m going to come back to that in a minute I’m the first of all this talk about.

How do we find out where the market is heading in the past quarter and

what is the year-over-year difference which direction is it heading in are opening this new segment I quoted some stuff from CoreLogic the the Articles you can get a lot of free information from CoreLogic and then suggest

you just Google CoreLogic and start digging in and you’re going to be inundated with charts and graphs with all of this and if that’s not your thing

maybe you just need to keep on listen to the show because we read it and dissect it and tell you what it means but

we want to know where is the market heading in the past quarter and where is the market heading year-over-year now.

Here at flipping America we do this for the entire country and we look at the msa’s that’s the Metropolitan statistical areas but

in my own business we look at the areas where we are also doing business that would be

a lot of the Cities across the southeastern United States particularly metropolitan Atlanta where this show is recorded and from where it comes to you.

[33:50] Should we look at the Atlanta market and.

We are looking at what’s going on with pricing Trends and in our own Market we break it down by the neighborhood’s when we look at the Edgewood neighborhood or Decatur or Kirkwood or

do you know fill in the blank with multiple hundreds of possible areas to be investing in the Atlanta area I want to talk with the realtor about.

What’s going on with the pricing in this area where what’s happening in the past quarter what’s happening year-over-year and not just in this area but.

What’s happening with the different types of Assets in housing in this area that is condos Townhomes

single family homes apartments and then I want to know how it breaks down in price range as well and I have these conversations in formerly and formally.

Just about every week week before last I sat down with my broker friend John Durham has been on the show

a couple of times and we talked about the trends going on across the southern Arc of metropolitan Atlanta John’s very involved in that area and is other than the REO Brokers she’s the number one broker on the southside of Atlanta so I asked him.

[35:06] Tell me where is it hot and where is it not and he told me

and he gave me the price breakdowns in the numbers because he sells so many houses he knows the numbers and this is the stuff that I rely on I know now that if a right now I’m looking at a house in the three to $500,000 range on the Southside

I know my whole time on that house is going to be around 70 or 80 days and it will be best because it will take

you know probably 30 or 40 days to get it under contract but I also know if I have anything that I can resell for less than 200,000 on that

in that market my whole times going to be around 40 days total because it’ll be under contract within 2 or 3 days from of list so

that informs some of my activity that tells me you know what price range to look at UC.

[35:58] Now when I said that the pricing Trends informs our offer strategy here is how it works directly on our business if we see pricing trends that are.

Upward and direction that is see no prices are a little higher than they were last year and it looks like it’s still going up that’s a good sign.

So when we are evaluating a property of course one of the keys is to understand the arv the after repair value.

We will set our arv based on what today’s.

A RV for that property would would be in other words if that property were all repaired and good as new and looking great and we put it on the market today what will we sell it for.

That’s the number that we use from which we back into our offer price.

[36:46] Some of us some people are trying to sell me properties saying hey in 6 months it’s going to go up it’s going to be worth blah blah blah and you should base your offer on what it will be in 6 months we don’t do that why.

Well no one really knows what’s going to happen Trends or Trends and they can inform us but we’re not going to bank on it.

We’re going to bank on the conservative number which means we’re going to go with today’s number if the market is going up.

Then and it’s been going up over the past year then we know that the worst that’s probably going to happen in the next 6 months is it’s going to level off.

[37:26] It’s probably not going to go into decline that quickly because before it goes into decline it levels off so if it levels off we were buying it at a good price now

if it continues to climb then 6 months from now we’ve got a little extra bonus okay.

Well what is the market is trending downward we want to know what that trend is and if the prices are coming down we want to know where they are and we want to know what we think the price the property will be worth.

At some future point when we are ready to sell it and it whether it’s 4 months or 6 months whenever that is and.

If the market is trending downward we do use the future number why.

Because in this case the future number is the more conservative could the market turn around and and flatten out yes it will will it be going up in 6 months if it’s going down now probably not.

The best we can hope for.

Is for it to flatten out and if it does then we’re going to be okay because we based our decision on that future expected lower price.

Okay so when we buy a property we are basing our decision on the future value but we are making our offer based on the market trend.

[38:45] Pretty cool huh.

[38:47] That’s a huge inside her secret that I just gave you right there absolutely free number to average days on Market.

Sometimes referred to as the saturation rate but then that’s just jargon and it requires a definition and let’s just think of average days on Market okay the average days on Market is important to know in your target market

and I’ve got several links here and you can actually just if you.

Google average days on Market in your Market I’m going to tell you I’ve ripped on Zillow quite a bit as particular regard to the zestimate you know never trust a zestimate.

We all say that but.

[39:26] If you look at Zillow I’m there they have an incredible research arm and Zillow can tell you.

I’m what the average days on Market are in your market now you want to know the average days on Market in your local market but you also want to know according to price range because the price range will impact how long it takes to sell why is this important

well the average days on Market

informs our offer price due to hold time one of the things that we teach and we’ve got a formula for this as we teach our students who are learning from us.

To calculate how long they’re going to hold the price that the property wiped because everyday we hold the investment property.

It cost us money it cost us for the insurance for the utilities for the ongoing maintenance that is the yard working that sort of thing plus if we have borrowed the money there’s a cost of that and we break that down into a daily cost

now the other thing that we do is we look at the cost of the.

[40:30] They are the size of the budget for the rehab and based on what we know we can spend in a given day if we’re doing a full-on rehab we know how long the rehab is going to take him so that affects our whole time as well

should we get this down to a cost per day just to hold onto the property and that’s why we want to know how long we’re going to have to hold it before

we sell it once we know the whole time then we factor that into all of our numbers and our cost

to know whether or not it’s going to be a good deal and so our offer price is impacted by the whole time in the market next data point.

[41:09] How many months Supply them in Torrey out there this is really a question about the heat of the market and this is related to number 2 and B I even had him together for a little while but the the question here’s a little bit different the.

The Munsters are weeks of supply of inventory if it’s 3 months it’s balanced.

At and bicycle over asking here is at the rate properties are selling right now how long would it take for us to sell everything.

On the market at the MoMA.

[41:41] And that answer is 3 months is balanced if it’s less than it’s a strong Market if it’s more then it’s a weaker market and those things.

Help us make a decision if we’re choosing between one area or another we look at how many months of inventory are there number for

housing starts now this is more of a broad category of of information and it affects things on a larger scale but housing starts affect your area as well and.

For this I’m giving you links to some websites for example

census.gov / construction / in RC size PDF / news r e s c o n s t. PDF anyway that link is in the show notes and then.

Another link trading economics and what you do here is just go to Google.

And Google housing starts or housing start data and just start clicking on the links.

Now what I like to do is right click on the link and open it up in a new tab so that way I can click on several articles at a time and I can go and I can review them all and what you’ll see is that permits issued.

Are up slightly year-over-year but home starch are down slightly year over year and.

We make a conclusion on that about this based on the data that we’re seeing in these articles and some others that you may not have access to but.

[43:10] Here’s the conclusion we here flipping America made about this we cannot count on new housing starts in the near-term to ease and montuori concerns.

To the degree in which we have missed our projections for 2018 remember we said we would be around as five and a half percent nationalize growth and it’s at 6.20 every year in terms of price.

We have missed it because new housing has not started in the way that we forecast in mid 2017 that’s okay that Parts a little hard to forecast.

The housing starts definitely affect the way we conduct our business especially when we look at our love

local area and what’s going on with new construction can use means we’ll be right back not too long ago we did a one-day flip starter in Chattanooga Tennessee

and lo and behold one of my old College friends came out to the event his name is Peter Faulkner and here’s what he had to say about the event.

[44:13] Peter Falkner here I tended a one-day flip starter training session led by Rodger blank.

And I was amazed to see what has happened in Rogers Live from the last $15 plus years.

Flipping over 800 houses and then this one day training he told how he did it and what.

Falls the blessings the benefits and how to do it and I was so impressed with how well organized and how smooth the training went today.

You’re tempted are encouraged to go so it was not a bad price and if you get a chance to do it even just to consider investing.

But I just want to thank Rodger for a great day today and appreciate what he’s doing thank you bro.

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[45:45] Music.

[45:57] Tours in the middle of a conversation about the bleeding.

Market indicators for Real Estate Investors and if you just joined us let me just review very quickly a datapoints point number one pricing Trends and this informs our offer strategy

Whenever two average days on Market this informs our offer price due to the whole time why number 3.

The supply of inventory this talks about the heat of the market and that can help us to go One Direction or another.

Number for Housing starts and when were thinking about housing starts we’re looking at new construction that way we think about housing starts in our business

we are looking to see whether or not we are competing with new construction and if we are

what type of construction is it in the price points is so forth new construction should never be used as a comp for.

The rehab work that we’re doing a property that’s 10 years older or even 3 years old much less 50 years old is not a comprable property

with new construction now we’ve been in certain areas where the 100 year old houses were selling at a much higher cost per square foot than the new construction but

generally

new construction is going to sell for more on a cost per square foot kind of basis so when we have new construction going on and we’re paying attention to the new.

[47:25] Housing that’s going up everywhere that we are investing we are looking at that and realizing that in terms of a cost per square foot we are generally going to have to be below that.

That informs our.

Plans and our offer prices so that’s how housing starts and affects us locally mortgage default in foreclosure rates.

[47:50] When we now.

I’m talking about forecasting the crash you know everybody is wondering when is the next crash and when is it going to happen and what caused the crash and things like that and we discussed a variety of things over the

course of the history of this show about the things that caused the crash and I don’t want to go through all of that again fact we don’t have time but

when we are looking at what’s coming in the future and we’re thinking about is where’s the market going is it going to crash are we getting ready to have a huge mess on her hands a lot of that has to do with.

The number of foreclosures because foreclosures pressure the economy in the way that is little hard for the average person to see.

[48:36] Banks have a limit on its own.

That’s a limit established by the FDIC it’s a limit on the number of non-performing loans they can have in their portfolio and there’s a limit to the amount of properties that they can have.

Bank-owned properties and so once they start approaching those limits the FDIC while I’m actually it’s the opposite of controlling currency starts looking over their shoulder and this is what was happening in 2007 and ate all these banks that had made so many loans that were just failing and record numbers

the they had so many foreclosures that they’re Texas ratio got out of whack and we’re not going to talk about to text ratio right now but.

The OCC came in and then shortly after the FDIC shut them down and sold their assets off to another now.

One little nasty secret here is these Banks were

motivating apart by greed but also motivated because at the urging of the Clinton Administration and Fannie Mae and Freddie Mac’s relaxed lending guidelines and yes I don’t mind blaming the Clinton Administration for this because they were pressuring.

These Banks to make loans and

most of the bankers knew better but the money it was Garrett they were guaranteed loans and so they were just making these liar loans like crazy and hopefully that will never happen again but.

[50:01] If we see.

A rise in the rate of foreclosure this Woods should send off alarm bells in all of us so from that day until now.

And as long as I’m actively in the business I will be tracking foreclosure rates and.

[50:18] You know their ways you can do this you can just Google foreclosure data you can also Google default rate.

For mortgage default rate and you’re going to bring up a number of sources and we rely a lot on on data from Adam data but I’ve got a number of other links.

And including an interesting story from housingwire that says that.

Mortgage delinquency keeps falling and has dropped for the 19th straight quarter this is amazing historic development

and as a person who buys foreclosure data and

sits there and knows every month month over month how many foreclosures I have to look at because of the data that I bought I know that foreclosures are down there at a historical oh and we also know this.

[51:09] Real estate has its averages and there may be ups and downs but it never gets too far away if you if you.

You know steak three steps back from the chart and look at a hundred year Trend or even a 50-year trend they’re going to be certain averages and a certain percentage of mortgages are going to fail.

Now we did wildly exceed that percentage for a time in 2005 and six but.

[51:39] Over the last 2-3 years we have historic historically low rates of foreclosure below that.

Kind of historic average so since we’re at a historic low.

The Foreclosure rate has nowhere to go but up. This is affecting America interpretation of the data has nowhere to go but up there for it’s easy to predict it will go up soon but that’s no reason to panic.

The rate of foreclosure should grow until it reaches its historic average about 1% of all for all loans will foreclose and as long as it’s hovering around that.

[52:15] We don’t have anything to worry about in terms of a national crash instead we just need to look at other things too that are going to impact the housing market and they will not be a crash but they will

can you predict ups and downs and the next one is one of the bigger ones that’s interest rates interest rates.

Can impact relative affordability and the affordability can impact sales simply put the higher the interest rate the less home you can afford if you have a fixed income.

You know just a regular steady W-2 income

you’re only going to be able to qualify for a certain amount of alone and that’s impacted quite a bit by interest rate and so if interest rates go up if they go up too high that’s going to affect

the housing market it’s a go up to five and a half percent I predicted that it’s not going to impact it very much and five and a half percent Square we kind of see it settling out maybe in the next 6 to 12 months.

[53:14] Number 7 overall economic conditions if you have a strong economy low unemployment you have buyers.

If you have a weak or uncertain economy the markets going to slow down.

That’s just kind of common sense so one of the things that we stay on top of his with what’s happening with the economy and interesting Lee right now.

[53:34] The economy is about as strong as it’s been in my adult life time I can remember sometimes during the Reagan Administration when it seemed to be the strong at the super conferences was

was this high but even then unemployment was higher than it is now this may be the best economy I’ve seen in my entire adult life and I say that with a

a degree of caution but my goodness I don’t know how I can get much better than it is right now it is

it’s amazing really to see what’s happening yes I realize the tariffs are out there and the tears are having a short-term

negative impact but I do believe that there is a grand plan involved here and that the future trade deals may work out even better for the benefit of the United States

that’s just a theory that I’m kind of holding onto but you know we’ll see so overall economic conditions and then lastly Point number 8 is.

[54:28] Construction cost these affect our rehab and holding cost and impact our initial offer you see all of the costs and all of the time that we hold a house all of that we need to know

so we can go back to the beginning and offer on the property right and that’s the point of all of this remember I said that you can be in

investing in real estate regardless of market conditions so you just need to know what the conditions are this is why you need to know the conditions so you make the right offer if you buy the property right you were going to be okay

it’s going to get really tough to screw this up but if you buy it wrong it doesn’t matter how smart you are you’re not going to make money.

[55:13] You might even lose money.

So in order to buy it right you need to study all of these data points you need to know about the market you need to know interest rate you need to know what you’re competing with new housing you need to know what is really going to cost you to fix the property you need to stay on top of your construction cost you need to monitor all of these things so you

buy the property right okay this is all part of being a responsible business owner.

[55:42] And this is the difference between being a true professional and someone who just took a seminar and it’s buying properties with hope optimism and crossed fingers.

And this is why I say on nearly every show it’s not for everyone so what should you do with all of this.

[56:01] If you’re in the real estate business these Trends affect your business whether you are paying attention or not the difference is.

Your awareness of the situation and this is the difference between being able to plan for the future are simply reacting to it when it gets here.

[56:20] The choice is up to you.

[56:24] It’s very possible that this may sound overly complicated and I want to have a final word encouraging you to relax.

If you decide that you want to stay on top of this yourself you can do so and it with an hour a week.

[56:40] If you just give yourself an hour week to dig in and look at the data and start interpreting it then you can you can just

remember the outline of the eight datapoints we given you on the show and start googling these things and maybe at first it will take him a little bit longer than an hour but eventually in an hour a week you’ll have a sense of where the market is end

during that hour make a few phone calls to realtors in your target market and just ask them what’s going on that’s the main thing folks just to exert the effort now.

One of the things you can do is you can count on Flipping America the show to give you a glimpse of what’s going on nationally from Kalispell Montana to Ocala Florida and all points in between from Long Beach.

[57:28] California to New York City New York and from Portland Oregon to Portland Maine we are going to be looking at the big trends and the pictures for you but.

We probably can’t drill down to your neighborhood your area and your place of business you’re going to do a little bit of this yourself

that’s why we’ve given you the broad outline and some of the tools just a few of the things that we do to stay on top of the market.

So you can stay on top of your Market why so you can do better so you can do this well.

So you can succeed and so your business is not based on.

These romantic Notions of the yacht that you’re going to own or your private plane when you kill it in real estate but instead is grounded in a realistic assessment of what is truly possible in your area.

Show my friends take this information and go make some money with it.

[58:25] Music.

[58:50] Brian Tracy said your true success in life begins only when you make the commitment to become excellent at what you do.

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[59:19] Music.