This week in Summary
Investing Tip of the week
Q: When investing in Real Estate what is considered a good return on investment?
A: A good return of course is relative compared to the entire world of things that you can get a return on. The number I’m about to give you is not going to sound big and sexy, but hear me out. If, after all of your expenses you’re getting around 7 or 8%, you’re doing okay. Is it possible to do better? Yes, it’s possible and there are things that do better.
For example, if you were in the Index Fund in the stock market in 2010 when the market was down, all of 2017 you did better, but there is nothing consistent about stock. The thing about stock is it doesn’t have an absolute value, in other words, they don’t have intrinsic value. The thing I really like about real estate is the value of it never goes to zero.
There are folks out there with a bunch of money deciding that they are okay with a 3% return. I would regard that as a disaster because there are so many things that you can do with your money to get a return higher than 3%. This is not investment advice, we just give information based on our research and experience. So 3% is not good, but a 7 or 8% return is solid.
Next time we will talk about how the power of leverage gives real estate a distinct advantage.
Joke of the Week
Because sometimes, one isn’t enough…
What do you call a joke that isn’t funny? A sentence.
What did the full glass say to the empty glass? “You look drunk.”
What band was better than The Cure? Prevention!
My teachers told me I’d never amount to much because I procrastinate so much. I told them, “Just you wait!”
Why does Snoop Dogg use an umbrella? Fo drizzle.
Blessing of the week
As you slide down the banister of life,
May the splinters never point the wrong way.
This week's Video: Get 100 rental houses in three years?
Cost Segregation can save you thousands of dollars in taxes. Hear my interview with David Weiner on this topic.
The Flipping America Show
Only two shows this week – we had issues related to Hurricane Ian. Please keep the affected people of Florida and South Carolina in your prayers.
Episode 561 Market Report Q3 2022
October 14, 2022
The real estate market is starting to slow down. Are the alarm bells ringing in your head? If not, should they be? You won’t know until you know the facts. And if you want the facts, I’m going to give them to you in this Market Report for the Third Quarter, 2022.
I’m tired of hearing people claim a crash like 2008 is coming. I’ve been hearing it since 2018. I didn’t believe it then because of the data. Turns out I was right. Same for 2019, 2020, 2021, and now also 2022. Anyone who tells you the real estate market is going to crash again like 2008 is just trying to scare you and definitely not looking at the data. I’m going to do my best not to bore you with it, but in the minutes ahead I’m going to share with you the data we watch and where that data is. We are definitely seeing the first signs of the slowdown that I have been predicting.
Remember when we are talking about averages across the nation, this is going to be an average of a lot of local real estate markets. Although the national data is true, it may not be reflective of your local experience. This doesn’t mean the data is flawed, it just means that somewhere some other market is trending the other direction and the data is averaging them out.
Flipping America REIA News
One person has indicated that the lunchtime meeting is more desirable. So far, everyone else has suggested Thursday evenings. This is the way we are now leaning, but we will give it one more week for you to weigh in.
We need your input. With the addition of Albuquerque and Honolulu (welcome y’all!), the lunchtime virtual meeting is increasingly challenging with logistics. We are considering moving the weekly meeting to Thursday evenings at 6:30pm eastern. 3:30 Pacific, 12:30 Hawaii time. But we want to hear from you. There may be no practical way to fully accommodate everyone’s schedule, but we want to reach as many as possible. Send email to firstname.lastname@example.org with your thoughts
Flipping America News
The Buyers Club is expanding into wholesaling properties. We are finding multiple opportunities for quick flips in the 30-50k range. Join the club and get the full scoop and access to the properties. Your membership fee is credited back to you with your first purchase. We do this so we are admitting serious buyers to the club.
Submit your deals for review, your jokes, and your real estate stories to email@example.com.
Real Estate News
Last week I reported that construction costs were up and we had revised our official cost/sf of additions to $125/sf. Our surveys with people we know around the country are suggesting that NEW construction will cost $145-$175/sf for entry level. This does not include the cost of the lot.
Additions remain slightly less expensive than new construction, but we may be revising our internal number again next quarter.
Think about this. You build an entry level home with three bedrooms, two bathrooms and just 1000 square feet. Your cost is $145,000. Add $20,000 for the lot and you are at $160,000. This is why entry level homes in the lowest price areas of the country are selling in the mid 200k range. No one is building 1000 sf houses, even for entry level.