Real Estate Real Fast: Recent Episodes
ListingSpark
If you’re looking for home selling tips, expert advice from brokers, inspections, appraisers, or ways to maximize your sale price, this podcast was built for you. Our host, ListingSpark co-founder Aaron Jistel, talks with real estate professionals and real estate investors to deliver actionable advice and tips to help you get the most out of your home or investment property. Aaron has over 15 years of experience and has successfully closed 1000s of transactions. He's also one of the most active agents in the Texas area. Aaron is passionate about providing people with the tools and knowledge they need to successfully sell their home.. Perfect for home owners, real estate investors, and for sale by owners. Real Estate Real Fast is brought to you by ListingSpark, automated home software that guides you through the complete home selling process, and sells your home faster, safer, and at a fraction of the cost.
In this episode of Real Estate Real Fast, Aaron Jistel, the co-founder of ListingSpark and an experienced real estate broker, provides a comprehensive overview of the current state of the Texas real estate market.
Focusing on major Texas metro areas like Austin, DFW, Houston, and San Antonio, Aaron discusses important trends and developments that homeowners, investors, and anyone interested in real estate should be aware of.
From changing median home prices to increasing days on market and shifting interest rates, Aaron covers a wide range of topics and insights in this episode.
Listen to the full episode for Spring 2023 trends in the Texas Real Estate Market.
- Current state of the Texas real estate market
- Market trends in Austin, Houston, DFW, and San Antonio
- Impact of interest rates on the market
- Changes in fee structure for loans based on credit scores
- Relationship between commercial and residential real estate markets
- State of the commercial real estate market in Houston, Dallas, San Antonio, and Austin
- Potential recession and market conditions
Episode Summary
In this episode, Aaron Jistel interviews Lori Carlisle, the president of Model Property Brands, discussing the importance of home staging for selling properties, decluttering, depersonalizing the property, current trends in home staging, and the ideal customers and projects for their staging and design business.
They also discuss the benefits of virtual staging, open concept living spaces, and the importance of staging awkward spaces in real estate.
About Lori Carlisle
Lori Carlisle is the President of Model Property Brands, a company specializing in home staging, design, and short-term rental setups. With over 20 years of experience in the industry, Lori is an expert in creating visually appealing spaces that appeal to potential home buyers.
She works closely with homeowners, real estate agents, investors, and builders to understand their specific needs and create a customized look and feel for each property.
Lori's team at Model Property Brands is known for their creativity, attention to detail, and ability to showcase a home's unique features. She believes that staging is an essential part of the home selling process and can help properties sell faster and for more money. When she's not working with clients, Lori enjoys keeping up with the latest design trends and exploring new ways to enhance the home buying and selling experience.
About Model Property Brands
Model Property Brands is a company that specializes in making homes visually appealing to potential buyers through the process of home staging. With a focus on decluttering, depersonalizing, and rearranging furniture, Model Property Brands aims to highlight a home's best features and help potential buyers envision themselves living in the space. Their services can help homes sell faster and for more money, making it a worthwhile investment for sellers.
Episode Highlights
- Importance of staging a property for sale to visualize the space
- Current trends and styles in home staging gaining popularity
- Timeline and notifications required for a smooth closing after staging
- Considerations when staging occupied properties
- Recommendations for the most important rooms to stage on a tight budget
- Ideal customers and projects for staging and design business
- Emphasizing key features, maximizing space and creativity in staging
- Staging awkward spaces to enhance functionality and maximize potential
- Benefits of virtual staging compared to traditional home staging
- Importance of spatial awareness when creating flow in open concept living spaces
The Impact of the Banking Industry on Commercial and Residential Real Estate Markets
Episode Summary
How will the current state of the banking industry impact the commercial real estate market?
Silicon Valley Bank's recent failure had a significant effect on the startup community that relied on the bank for funding, while the commercial real estate market is facing a crisis as local banks hold over $2.3 trillion in commercial real estate debt.
A potential collapse in the commercial real estate market could have significant negative effects on the economy, leading to job loss, market turmoil, and uncertainty that could trickle down to the residential markets.
However, the need to invest money somewhere could lead more investment dollars to funnel over into the housing sector as real estate is still considered a safe asset class to invest in.
Tune into this episode of Real Estate Real Fast to learn more about where things are headed in the commercial real estate market.
Episode Highlights
- The failure of Silicon Valley Bank and its impact on the startup community
- The current state of the banking industry and how it is affecting the commercial real estate market
- The looming crisis in the commercial real estate market, with many loans maturing and tightening lending options
- The potential effects of a collapse in the commercial real estate market on the economy and the residential market
- The interconnectedness of the commercial and residential real estate markets
- The impact of economic downturns on the real estate market
- Tips for navigating real estate investments during turbulent times
Real Estate Investing: Understanding Market Trends with James LiptonSummaryIn this episode of Real Estate Real Fast, James Lipton from Entera talks about scaling in real estate, working with investors, understanding market trends, and negotiating rentals. He emphasizes the importance of focusing on tenant needs first when buying rental properties, using internal rate of return to evaluate investments, building rapport with listing agents, and having multiple targets when investing. Aaron, the host, also interviews James about Entera’s use of AI and machine learning to analyze data and provide insights into markets.
About James LiptonJames Lipton is the Head of Negotiations at Entera, a PropTech company specializing in multi-family investments. With over 10 years of experience in the proptech space, James began his career at Qualia helping to build out the industry-leading title and escrow software. ListingSpark’s brokerage arm - SparkTitle - uses Qualia as their Title and Escrow Arm.
James is passionate about helping smaller investors operate at scale and believes that the traditional methods of assessing a rental property investment such as cap rate can be improved. He also advises buyers to focus on finding the right customer for the property rather than finding a property and hoping customers come along.
Highlights1. Scaling in single family renting investments 2. Understanding market trends to be more successful in investing 3. Focusing on tenants rather than buying properties just to buy 4. Calculating cap rates 5. Using internal rate of return (IRR) 6. Negotiating strategies 7. How to making competitive offers 8. Partnering with Realtors to find success 9. Analyzing real estate data using AI and machine learning 10. How to set realistic expectations 11. How to developing a plan before investing
Highlights
Q1 2023 Texas Real Estate Market updateEpisode SummaryAaron Jistel gives an update on the Texas Real Estate Market in Q1 2023 and recaps the 2022 market noting that it had been affected by a sudden increase in mortgage rates, with sales and home values declining. He provides advice on pricing homes and how to negotiate, as well as what to expect for the rest of 2023.
Episode Highlights1. Overview of the Texas Real Estate market in Q1 2023 2. Commonality among unsuccessful property sellers 3. Why the luxury market is not as affected by downturns 4. Uptick in showings, offers, and executed contracts in February 2023 5. Home values may remain flat in 2023 6. Why summer of 2024 could see an uptick in demand from buyers and sellers 7. Tips for pricing homes competitively and why to help buyers cover closing costs now
Episode SummaryAaron Jistel interviews real estate investor Derek Williams about his experience in the business and strategies for success. They discuss topics such as flipping houses, finding partners, bank financing, lead generation and motivated seller tactics, a tight buy box, and listing on the MLS.
About Derek WilliamsDerek Williams is an experienced real estate investor who has completed over 100 deals in the past decade. He started out investing in foreclosures and soon realized he had a knack for finding underpriced properties. Derek was willing to take risks and put his chips in the middle in order to increase value, which led him to great success. He now focuses on the first-time home buyer market for real estate deals.
Episode Highlights1. Strategies for real estate investing 2. Maximizing profits when selling a home 3. Flipping a first home with no prior knowledge of the market 4. Managing properties and time management—how to grow your business 5. Importance of knowing the cost of home projects 6. Why building good partnerships in real estate investing is important 7. Utilizing bank financing to invest in real estate 8. Lead generation strategies and motivated seller tactics 9. Why you need to have a tight buy box
Episode Links* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Maximizing Returns with Real Estate Investment: An Interview with Ryan JonesSummaryAaron Jistel and Ryan Jones discuss the current real estate market, loan products for investors, cash out rule changes from Fannie Mae, debt service coverage ratio loans, interest rates, and home equity lines of credit. They also talk about how to buy and sell real estate during the current housing market for investors and Ryan's unique dome property in Texas.
About Ryan JonesRyan Jones is an experienced real estate investor and mortgage specialist. He has been in the mortgage industry for nearly a decade, starting at Quicken Loans in 2015 before relocating to Texas and working side jobs while managing his business. He's currently a branch manager for Security National Mortgage Company and has built a successful portfolio of investment projects.
Ryan has a unique property - a dome on an acre in Lago Vista - which he purchased in 2021 for $345,000 and rehabbed for $80,000. He used the 'BRRRR' method (buy, rehab, refinance, rent, repeat) and has recently focused on creative financing options such as subject to or owner financing. Ryan is also part of the Investor Underground networking group in Austin.
Highlights1. Ryan Jones’ real estate projects and how he finds, analyzes, and manages them. 2. Tips for finding real estate deals, such as joining Investor Underground and looking into subject to deals 3. Mortgage rate discussion and how they have been volatile recently. 4. Loan products for investors with the cash out rule change from Fannie Mae, how debt service coverage ratio loans (DSCR loans) can help. 5. Current state of interest rates and home equity lines of credit 6. Ryan Jones’ interesting dome property in Lago Vista.
How to master real estate investing and avoid mistakesEpisode SummaryJulie Daniels subs in for host Aaron Jistel and Rachael Holladay, VP of Lending at Stallion Funding. Julie and Rachael discuss the importance of access to capital and building relationships with lenders. They also talk about the different types of financing available and how to structure a successful real estate investment.
About Rachael HolladayRachael Holladay is the VP of Lending at Stallion Funding, a real estate and hard money lending firm. She has been with the company for 12 years and enjoys helping her clients be successful.
About Stallion FundingStallion Funding is a hard money lender offering creative financing solutions for real estate investments and projects. Stallion Funding has established relationships with builders, land developers, and investors in the Austin area. With an expert team of loan officers, Stallion Funding provides loans based on the project and experience rather than credit score.
Episode Highlights1. Tools to help homeowners maximize profits when selling their home 2. Requirements for qualifying for a loan with Diversified Lending Solutions 3. The importance of relationships with borrowers 4. Best practices when it comes to buying land and starting a project 5. Adapting to the changing market 6. Advice on what a borrower needs to provide in order for their property to be considered for funding 7. Best practices when dealing with contractors 8. Horror stories from other agents and advice on how to avoid similar pitfalls 9. Price points that are most successful for investors 10. Advice for new investors looking to grow their business 11. Different types of financing available and how to structure a successful real estate investment
Episode Links* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Texas Real Estate Contracts and Addendums: A Guide for Home Sellers and BuyersEpisode SummaryIn this episode, Aaron Jistel (Broker and Co-Founder at ListingSpark) focuses on how recent changes to Texas Real Estate Commission's contracts and documents may affect home sellers and buyers. He covers topics such as cash payments, mud, WCID and PID notices, Section 7D of the TREC contracts, HOA transfer fees, special provisions and third party financing addendums.
Episode Highlights1. Overview of changes to the Texas Real Estate Commission's primary contracts and documents 2. Definition of “cash” in the one to four contract 3. Requirement of MUD, WCID, or PID notices from sellers 4. Section 7D of the Texas Real Estate Commission's contracts 5. HOA transfer fees 6. Special provisions 7. Third party financing addendum 8. Buyer approval and property approval 9. Amendatory clause documents for FHA or VA Loans
Episode Links* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
SummaryIn this episode of Real Estate Real Fast, host Aaron Jistel interviews Kyle Christian, an experienced investor in private and hard money investments, flipping houses, and managing AirBnBs and hotels. Kyle explains his strategy for finding good AirBnB deals, including serving underserved markets, analyzing and validating numbers, providing clear instructions to guests, and looking for reviews when evaluating management companies. He also discusses the financing process and recommends resources like Roddy List and Skip Force. Finally, he emphasizes the importance of taking action and setting realistic expectations.
About Kyle ChristianKyle Christian is an experienced real estate investor who has been in the industry for over 10 years. He is well-versed in real estate investment,with experience ranging from private and hard money investments to flips, AirBnBs, hotels and more. Kyle is known for his ambitious projects, such as a multi-million dollar flip and a beautiful hotel in San Angelo. He also specializes in financing AirBnB properties and can provide guidance to both novice and experienced investors.
Highlights1. Kyle's background and experience in real estate 2. Strategies for finding a deal ideal for an AirBnB 3. Analyzing and validating numbers 4. Advice for running an AirBnB 5. Evaluating a management company 6. Financing an AirBnB 7. Using a channel manager to manage AirBnBs 8. Challenges with managing multiple houses 9. Setting realistic expectations and urgency for deals
Episode Links* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Episode OverviewIn this episode of Real Estate Real Fast, Aaron Jistel discussed the market trends of 2022 and 2023. Sales were down 25% in Austin, Texas compared to 2021, and values are likely to continue decreasing in 2023.
Price drops are becoming more normal, and we can expect home values to decrease by 10-15% on average across major markets.
AirBnB prices will likely drop and vacancies will increase. Builders will continue to target first-time home buyers with incentives.
Home sellers should focus on their local market and pull out all the stops when listing a house.
Listen to the full episode to learn more about factors impacting the real estate market in 2022, forecasting trends for 2023 real estate market, strategies for investing in the current real estate market, and more.
Episode Highlights1. 2022 Market Trends: Decrease in sales, values, and new listings in Austin, TX; median home value up 9.9% in Dallas year over year; closed sales down 30.4% in Houston year over year; closed sales down 33%, price up 4% in San Antonio year over year. 2. Price Drops: Prices have been falling in the market, with close to 50% of homes undergoing price drops. 3. Foreclosures: Foreclosures are likely to increase if unemployment continues to increase. 4. New Construction: Slowing down due to an increase in inventory and a declining market; builders targeting first-time home buyers. 5. AirBnB: Prices will likely drop and vacancies will increase; Dallas City Plan Commission may define short-term rentals as lodging, making them illegal in residential neighborhoods. 6. iBuyers: Collapse of iBuyers presents an opportunity for local investors. 7. Fed Rates: Likely to stay consistent for foreseeable future until inflation is under control; mortgage rates may fall in Q2 of 2023 if home values have dropped by 10-15%. 8. Listing Agents: Be careful when selecting listing agents who only charge 1% commission.
Episode Links* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Episode overviewMike Singletary is an investor who has been in the business for eight years.
He specializes in outbound marketing lead generation and believes that the “burn the ships” mentality is important when transitioning into investing.
Mike recommends telecommunication marketing (cold calling and texting) as the best way to generate leads, and suggests hiring and training people if necessary.
In this episode, we’ll learn more about investor lead generation with a focus on outbound marketing, creating an effective outbound sales team, using data for sales and marketing, and more.
Episode highlights* About Mike and Skip Force * How to build a strong pipeline as a real estate investor * How to create an effective outbound sales team as an investor * Why the list is the most important part to outbound sales success * What is the most effective way to introduce yourself on a cold call * What you can do as an investor to increase your chances of success * What is the importance of having a work phone in real estate * What are some example systems to put in place to ensure success as an investor * How Skip Force University is helping investors educate their inside sales agents * How to build out a strong sales team in real estate and how to compensate them * What software can increase the efficiency of an ISA team in real estate
Episode links:* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Connect with Michael Singletary on LinkedIn
Episode overviewInvesting in owner financing can be a great way to build wealth and generate passive income.
However, navigating the complicated process of finding and closing these deals isn't easy.
Brandon Smith, who has over 13 years of investing and lending experience, specializes in owner financing and has developed a successful system for sourcing deals and minimizing risk.
In this episode, we'll learn more about his approach, how he finds and closes deals, and best practices for working with banks and private investors.
Episode highlights* How owner financing typically works * How to qualify buyers so that you have a low default rate on owner financing deals * Why some buyers can't qualify for more traditional financing * What are the pitfalls and roadblocks you should avoid if you want to get into owner financing * What are the key paperwork and terms you need to be aware of to execute owner financing * What tools and services investors should use if they want to get into owner financing * How Brandon sources his owner financing deals * Why owner financing strategy is changing with the changing market * What to expect in the real estate market at the end of 2022 * What kind of banks should you use to execute owner financing deals * Where can you find good sources of lending * Where to learn about owner financing
Episode links:* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, TikTok and YouTube * Connect with Aaron Jistel on LinkedIn
Connect with Brandon Smith on LinkedIn
Episode overviewIf you want to sell your home during a down market, you’re going to need to be strategic about how you list your home.
There are lots of things you can do to get to a successful close but is everything that you spend money on worth it?
What can you focus on to maximize your success as a seller at the lowest price? What do you need to prepare before listing your home to be successful?
We’ll dive into how to make your listing more competitive and maximize your success as a seller with Julie Daniels, Director of Operations at ListingSpark.
Episode highlights* What are the things you must do to successfully market your home when selling * What data points are key to look at when listing a home in the current market * How you should approach buying property during a down real estate market * Why perspective is important in the current housing market when buying * How sellers can maximize their chances of success in the current market * What you should consider listing out when you sell your home * Why showings can make a big impact on the ability to sell your home * Why you need to be more accommodating as a seller in down real estate markets * Here's how to avoid sabotaging a deal as a home seller * Why you should take offers more seriously in this market as a seller * When can you expect the housing market to bounce back * What credits or concessions should sellers consider offering to buyers * What kind of inspections should you consider getting before listing your home on the market * What is the number one thing you can do to make your home more competitive
Episode links:* Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Julie Daniels on LinkedIn
Episode overview Many buyers are exiting the market because of higher rates. But is that the right decision in the current market?
Despite rising rates, there are a lot of advantages that are coming into the market for buyers. Sellers are also willing to offer concessions.
So if you’re a buyer, how do you buy in the current market? What mortgage options should you be looking out for? What can you expect in the market in 2023?
We’ll dive into everything you need to know about current rates and loan products, with Justin Hrabovsky, top 1% mortgage lender.
Episode highlights * What can historic mortgage rates teach us about expectations for current rates * What buyers can expect from mortgage rates based on the changing market * What are other mortgage options buyers can choose to make their payments more affordable * Here are different concessions sellers can offer to make their listing more competitive * Why it's still a good time to buy a home even as mortgage rates peak * What are the numbers saying about the short-term future of the housing market * How to look at the real estate market heading into 2023 * What advantages and leverage do buyers have in the current housing market * Why the 2008 housing crisis is different than what's going on in the market today
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Justin Hrabovsky on LinkedIn
Episode overview New construction builds are becoming more challenging in the current real estate market. With shortages, shifting demand, and more, there’s a lot to consider when building new homes.
What can you do to have better margins when it’s time to sell a new house? How can you better prepare for any cost and demand changes?
And if you’re feeling tight on budget, how do you balance cost vs quality?
We’ll dive into how newer builders and investors can navigate the changing market with Greg Naughton, Owner of Magnets REI with 22+ years experience in construction and 10 years experience as an investor and builder.
Episode highlights * What are the primary challenges of building new construction in Austin * How long does the process to build a new home in Austin typically take after you acquire land * Here's what you should be doing as an investor or builder in the current real estate market * What factors do you need to consider when balancing cost vs quality while building new construction * How to approach marketing new construction to get it sold * What should investors and builders focus on in new construction to appeal to buyers * What is the most challenging new construction Greg has faced in 10 years as a builder * What are some ways new builders can secure their construction sites against theft or vandalism * Why the acquisition part is most important to margins as a builder and how you should strategize acquisitions * Why home size can make a big difference on profits for new builds * What Greg is doing now as an investor and builder compared to his strategy when he first started 10 years ago * How Greg approaches and thinks about partner deals
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Greg Naughton on LinkedIn
Key takeaways [00:03:46] What are the primary challenges of building new construction in Austin In Austin, the biggest challenge for new construction builders is dealing with the land development process with the city of Austin. Even though there have been challenges with COVID, shutdowns, shortages, reduction in workforce, etc., the land process with the city is still the biggest challenge.
“First of all, there's the whole COVID era the last two years, which has added a level of challenges above and beyond what you would normally run into and face—shutdowns, factories, reduction in workforce, and so on.
But you know, I'd say all of the challenges here, could be rolled up into one major category. And that's navigating the process, the build process, the land development process with the city of Austin.”
[00:05:14] How long does the process to build a new home in Austin typically take after you acquire land The timeline for new builds can vary depending on the time it takes to acquire permits. To have the right expectations, go into new builds thinking it will take the process about one year. The two biggest hurdles are waiting for the demo permit and waiting for the building permit.
“Just trying to get a permit with the city can take anywhere from a few weeks to a few months. So if you're buying a property or you're going to scrape it, first, you have to go through a demo permit process. Once that's acquired and you get past that then you submit for your building permits and it's another wait time.
So I would say the normal expectation right now, I wouldn't plan on anything less than a year. From start to finish. If in that scenario where you're buying a property and you're gonna have to demo.”
[00:07:14] Here's what you should be doing as an investor or builder in the current real estate market Even if you’re a seasoned investor or builder, make sure you have a mentor. Things change in the real estate industry all the time including building code. You need to have strong mentors in your network, people like good architects, good engineers to help you keep up with constant changes.
“My recommendation would be to get a mentor, which is what I did in the beginning, even though I had the modeling experience. I hooked up with a couple of local builders and just kinda shadowed them around and got some of the inside baseball tricks with the city. Now, that's an ever evolving thing, so it's hard to keep up.
Even for seasoned builders, it's hard to keep up with the changes that happen with the city. The code is old, it's way overdue for a rewrite. You've probably seen some of that in the politics in the public sector—Code next. I'm sure you've heard of. So what we've got is a really old code that's very difficult to navigate.
Takes a lot of expertise and you need to have, you know, good architects to work with good engineers, people that live inside of that, that code and the city's processes on a daily basis that can help you.”
[00:09:27] What factors do you need to consider when balancing cost vs quality while building new construction Even if you’re trying to balance costs, you never want to cut corners. Focus on always delivering a quality product that you can sell. In terms of upgrades or high-end finishes, it depends on where you are building. You should look at the market you are building in and see what buyers are looking for there.
“I'm a firm believer in a quality product. I would never sacrifice that. So I would tend to stick with the high end finishes. Knowing what your buyer pool is looking for is important.
On the east side [of Austin], a lot of our homes get sold to younger people in the technology market. So, you know, having good wifi connectivity, you know,something simple like an outlet for your electric car is important. There's a lot of things that I do that I'm not going to change.”
[00:13:16] How to approach marketing new construction to get it sold Greg says that marketing a home before it’s built is a matter of preference but he likes to wait until the product is almost finished or finished. The issue with pre-marketing a home is that buyers may want to make a lot of changes. They don’t really know the difficulty of making changes and other external factors which could result in a lot of disconnection for buyers.
“That's a matter of preference. We mostly wait until the product is finished. We have on occasion done some pre-marketing before it's quite complete.
But it's mostly complete before we do. It's hard for a lot of people to see the finished product and if you show them something that's incomplete, it might raise some questions. That's a double edged sword as well with bringing a client on at the end of a project and having to manage the changes.
The wish list that all of sudden comes out of the blue is a little bit different than when you started.”
[00:17:24] What should investors and builders focus on in new construction to appeal to buyers There are no absolutes when it comes to what buyers want. Each buyer is going to be different. Some of the things buyers today are looking for are home office spaces, low maintenance yards, energy efficient homes, and smart home appliances among other things.
“That's a very personal decision for a lot of people. When you get to be a little longer in the tooth like I am, you learn along the way what you like and what you don't like.
And so it's easier to come up with the things that you wanna put in your own house. Good functional spaces are important to have just in general. Nowadays a home office is almost a requirement. Low maintenance, exterior items are always good. Nobody wants to spend their whole life out in their yard, fixing it up, keeping it maintained.
Good energy efficiency is important. That's not a very sexy thing to talk about but it can make a big difference throughout the time that you live in your home. So good insulation, good quality windows are really important.”
[00:20:24] What is the most challenging new construction Greg has faced in 10 years as a builder One of the biggest challenges Greg had to face for one of his construction projects was arson. The project was fully framed and one of the houses burned to the ground. After dealing with insurance, it ended up setting them back three months.
“I have an East Austin Infill project with two houses. We bought that property in June of last year. Went through the demo process and finally got a building permit in February. So that's six or seven months into it just to get to that point.
We were making good progress and unfortunately on July 11th, I had a fire at my site and both of my houses were fully framed and one of 'em burned to the ground.So that was a major setback to say the least. Going through fire and insurance investigations and whatnot. We have fully recovered now, but it's set us back for three months.”
[00:22:39] What are some ways new builders can secure their construction sites against theft or vandalism Security has become a more difficult issue for new builders over the last few years. If you’re a builder, consider adding in security cameras and a fence. Because the home is usually just sitting open, it makes it ripe for potential theft or vandalism.
“We have and that's always been a problem. It seems to have ramped up here in the last year or so. Because of that, we put construction, temporary construction fences around all of our projects and we do use the security cameras. You know, that can help. At least it can maybe catch a license plate,but it certainly helped in this case with the fire because it caught the face of the person.
I would do everything you can to secure your site. Cause if it's just left wide open, that's a crime of opportunity waiting to happen.”
[00:24:31] Why the acquisition part is most important to margins as a builder and how you should strategize acquisitions It’s tough to predict what homes will sell for after you finish building a new property. That’s why the price you buy at is most important. When the market was hot, it was easy to almost guarantee a return no matter what you bought. Now, it’s even more important to plan contingencies into your purchase because what you pay has a big impact on your margins.
“I do tend to be a little conservative. You never know what's gonna come up during the life cycle of a build project or any, even a remodel/fix and flip. So I like to say you can never see in a fix and flip. You can never see what's under the floor, behind the walls. You wanna build in some contingencies, certainly into your projections to allow for those unknowns.
You make money on the buy so over the last few years or the last eight years, whatever you paid, it didn't matter because the price just kept going up. But we we're entering a new era now. Things are leveling off at best.”
[00:30:44] Why home size can make a big difference on profits for new builds When building a new home, you need to pay attention to what the average home size is in the neighborhood. If you build a home that’s much bigger or much smaller than the average, it could sit on the market longer because that might not be what buyers in the area are looking for.
“The size of the house can make a big difference on what you're able to bring when you're ready to sell it. We've overbuilt in the past when we didn't need to. We found out really there was a sweet spot, maybe somewhere between, you know, 16,00-1800 square feet where we built a house that was 2200 and it really didn't need to be that big. And for that reason, it sat a little longer than we wanted it to.”
[00:33:43] What Greg is doing now as an investor and builder compared to his strategy when he first started 10 years ago Greg has a more extensive process when selecting sites for new builds than when he started. He pays more attention to the buildable area, what’s sitting on the lot, and what’s in the neighborhood. He also tries to understand what limitations might exist on the property. Having a strong process can save you frustrations and dollars down the road.
“I maybe do a little bit more planning and I'm a little more selective on the property that I buy. I pay attention to things like ‘What are the trees that are on the site? How large are those trees? How many trees? What's the buildable area?’
‘What's the access in and out of the neighborhood and onto that specific lot. What are the easements on the lot? What are the limitations?’
So there's a lot of things you can look at early on in the planning stages that might save you a lot of headaches and frustrations as you go through the process.”
[00:36:19] How Greg approaches and thinks about partner deals Greg will occasionally do partner deals but is selective about the deals he chooses. If you want to do more partner deals, try attending more networking events. That will increase your odds of finding a right partner for any partner deals you want to do.
“I think that's some of the advice that we always give to young investors—just get out there, find events. It was tough during COVID but if you go on meetup.com and just find investment meetups out there and start networking and, and meeting people like Greg and other people that have been in the business for a long time. If you've got a deal, somebody out there will fund it.
Somebody out there will probably partner with you. Somebody will find a way to make that deal work. That's the hardest part really is finding the deal. But everything else, if it's a good enough deal, everything else tends to fall in place.”
Episode overview The real estate market is ever changing for buyers, sellers, and investors. With pullback from everyone, you need to make sure you have the right strategy when approaching the current market.
Should you be offering concessions if you are a seller? Should buyers still be staying in with current interest rates?
What can you be doing to sell your house faster? And what can we expect from the Texas real estate market in 2023.
We’ll dive into how the current real estate market is affecting buyers, sellers, and investors with Ellen Steele, a Realtor with ListingSpark that has had over $10M in sales in the last 12 months.
Episode highlights * How buyers, sellers, and investors are adjusting to the current real estate market * Why buyers should be careful about pulling back because of rising interest rates * What should first-time home buyers be doing first when looking to buy a house * What we can expect to see in the 2023 real estate market in Texas * What the process is like today for business owners buying a home in Texas * What's the craziest story Ellen has seen after being a real estate agent for five years * Where to look for the best first-time home buyer perks * How sellers can make their listing more attractive in the current market * Here's the strategy sellers should consider when coming up with the right list price
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Ellen Steele on LinkedIn
Key takeaways [00:02:26] How buyers, sellers, and investors are adjusting to the current real estate market As the market shifts back to the buyers, sellers are having to make more concessions. Many buyers are adding up projects that need to be done and taking that off the list price. Sellers need to focus on taking care of any minus points to maximize their sale price. Even though there’s been pullback from buyers, sellers, and investors, first-time home buyers have found this market great to enter.
“What we've seen when buyers are coming in is that they are taking any projects that need to be done, anything that they see, and they're just subtracting that off of the list price. So pricing a house, if it's not perfect with amazing features, updated white kitchen, beautiful countertops, buyers have been offering less which is frustrating for sellers.
I'm recommending to my sellers to complete any projects that you have to do, painting, trim, kitchen, you know, light updates in the kitchen if you can. Bathrooms are also super important. Outdoor living is also a big area that people are looking at right now too.”
[00:08:11] Why buyers should be careful about pulling back because of rising interest rates It’s important to remember that no one knows exactly what rates will look like in the future. Backing out of the market because you expect a lower rate in the future is also a gamble. Rates might not go down for a while so if you have a rate that you are comfortable paying, consider it because rates might go even higher and never come down to your current rate offer.
“I look today and we're at like 7.16 or something like that. I sold a lot of houses at 7% in 2005 through 2007 or six and a half percent and that was fine.
Everybody was completely okay with that. Now, prices were a lot lower, but I mean, we're gonna get to a point where, you know, five and a half or even 6% is gonna start to look good. And we're gonna get out of that mode where everybody is still thinking about that three or three and a half percent rate that we had a year ago that's probably not coming back anytime soon.
So I think it takes a good kind of three to six months or even longer for everybody to adjust to a changing market.”
[00:11:42] What should first-time home buyers be doing first when looking to buy a house If you’re a first-time home buyer looking at the market, try and get in contact with a lender early. They can help you understand what you need to do to have the financial resources and get the most budget for buying your first home. You don’t need to purchase immediately but working with a lender can help you properly plan for what might be your biggest purchase to date.
“My first recommendation for anyone who even has in their mind at all to buy a house is to talk to a lender. Even if you think two years from now you wanna buy a house, talk to a lender. They will help you create a roadmap for yourself. You know, put this amount of money each month into a savings account, work on this part of your credit, it would be more beneficial to pay off your credit than to do something else.
Even things like setting your credit card monthly payment date to the 10th of the month or something. There's a day of the month that you can pay that helps boost your credit score. They know all of these tricks that can help get negative credit items off of your credit report.”
[00:16:26] What we can expect to see in the 2023 real estate market in Texas The Texas real estate market is still a strong market despite the current pullback. Lots of companies and people are still moving to Texas. Also, in general no matter the market, people’s lifestyles will always be changing which means their housing needs will change too. Expect a rebound in the market at some point but also know that people are still looking today.
“There are still people moving here. There are still jobs being created. These people need a place to live when they get here. So, I think that we're still gonna see steady buyers moving into the market for rentals.
People are still needing to find a place to rent. I was just out showing rental properties this morning to people moving from out of town. So people still need a place to live, so I don't think that it's necessarily gonna come to a stop.”
[00:21:53] What the process is like today for business owners buying a home in Texas The home buying process is more complex if you own your own business, especially if you are a first-time home buyer. You will need to present a strong business plan to lenders and show less losses to get approved. It’s actually a better market for business owners to buy today because more lenders are willing to work with them to fund loans.
“I just had a closing this month where the buyer was a business owner, which makes a complicated mortgage situation. He was able to get an FHA loan, which generally takes a little bit more time. But a year ago, you know, a business owner with a complicated mortgage and an FHA loan and it was on a manufactured home, like that just wouldn't have happened a year ago.”
[00:24:58] What's the craziest story Ellen has seen after being a real estate agent for five years Both Ellen and Aaron have seen a lot of crazy home buying stories. The key takeaway is to expect the unexpected. You never know what can happen during a home sale. Make sure you have all the information you can about the home you are buying to ensure the most smooth process.
“I was googling the address for a home about to close and the house pops up on this auction site like auction.com and it says it's up for foreclosure auction.
So I called the listing agent and called the title company. No one seems very concerned. So a couple days later I went back to the site and saw that the house was sold at a foreclosure auction.My buyer was supposed to close on it. And so I, again called the listing agent, called the title company.
Apparently the seller had stopped paying their mortgage payment and the house was sold at a foreclosure auction. So we had to go back on the house hunt and the buyers didn't get their house.”
[00:30:45] Where to look for the best first-time home buyer perks If you’re looking for any first-time home buyer incentives, talk to different lenders. Lenders are able to share any specials they are running. If you find any deals but want to use a different lender, don’t be afraid to ask another lender if they can match the deal. Smaller lenders might also be able to work harder for you.
“I talked to somebody from Rocket Mortgage a couple weeks ago and they seem like they have some programs available for first time home buyers. But then I talked to a local lender and they said that they also have any program that Rocket has and they said they can match.
So I think that there are some things available out there.”
[00:36:55] How sellers can make their listing more attractive in the current market Sellers can make updates or offer incentives to help their listing be more attractive in the market. Updating the kitchen is a big selling point. Even a light touch up with painting cabinets can be helpful. Also, consider offering incentives to closing costs or helping to buy the rate down to make your listing more attractive.
“Usually the kitchen is the number one thing. It’s the number one comment as soon as a buyer walks into a house. The kitchen is usually the first thing that they see. Painting the cabinets if they need painted, some light kitchen staging. Kitchen, I would think is the number one thing that I would recommend if you're getting your listing ready.
Also, putting in your listing that you are willing to offer buyer credits at closing or help with rate buy down. Putting those buzzwords in the listing will help you pop up in the search if somebody's looking for a seller who can offer that closing assistance.”
[00:44:20] Here's the strategy sellers should consider when coming up with the right list price You need to be looking at current market conditions and data when listing your house. What worked six months ago will probably not work today. You can try to list your home at the price you think it’s worth but if you don’t get many showings early, it might be time to reevaluate your price.
“I guess once it's listed and you see what happens you’ll have an answer. I mean, if you have a price that you wanna get, you list it at that price, and if you don't get any showings for the first two or three weeks, it's on the market, that's kind of your answer. I feel like I'm not good at telling people stuff about price.
I would rather they figure it out for themselves. You can show 'em, show people what's on the market, show them how long houses are taking to go under contract. You know, you can look at the data, but sometimes people just have to see it for themselves.”
Episode overview The Texas real estate market has come crashing down. Or has it?
Days on the market are up, home prices are down, but it’s not all doom and gloom. Is that the case for all major Texas housing markets? Or are some doing better than others?
What should buyers and sellers be doing right now? What should they expect in this housing market?
We’ll dive into the state of the Texas real estate market with Real Estate Real Fast host Aaron Jistel.
Episode highlights * Peaking into the Fall 2022 Austin housing market * What can we expect to see in the Austin housing market in the next five years * Overview of other major Texas housing markets in Fall 2022—DFW, Houston, San Antonio * What new listings can teach us about the state of the housing market * How mortgage rates impact the housing market and buyer preferences * What to expect if you're a buyer looking for a lower mortgage rate * Why the current housing market is different than what happened in 2008 * Here's how you should approach buying a home in 2022 * How the stock market affects real estate * Are homes still receiving multiple offers? * How the housing market affects the rest of the economy * How to approach the current housing market as a seller * Final advice for buyers in the current housing market * Are buyers pulling out of contracts at the last minute? * How to vet real estate agents as a seller
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn
Key takeaways [00:02:50] Peaking into the Fall 2022 Austin housing market The Austin market has cooled down significantly since 2021 and early 2022. There is more inventory available and home sales are down. Even though the market has adjusted it’s still a high demand market with 2.9 months of inventory, well below a balanced market of 6 months of inventory. And housing prices are still up!
“In August, the median home value in the greater Austin metropolitan area was $496,000 and that's up 5%. New listings are down 6%, so there are less homes coming onto the market than there were this time last year.
And for a lot of reasons, that's actually a good thing.”
[00:07:11] What can we expect to see in the Austin housing market in the next five years If you’re an Austin home buyer, there is a lot of good news. Even though there is a market correction going on, the current rate of new homes does not match the growth in Austin. Combine that with the fact that the cost to build homes in Austin is still high and you get a market that’s still worth investing in.
“From simple economic terms, our demand is still. Higher than what our supply is going to be able to accommodate. That's a good thing if you're going into a recession to know that you are going to have this surge of demand that's gonna continue, that is gonna help our housing market. In 2008, Austin and a lot of parts of Texas came out relatively unscathed.”
💬🖼[00:08:58] Overview of other major Texas housing markets in Fall 2022—DFW, Houston, San Antonio Austin is not the only market that’s behaving relatively well compared to how the housing market is trending. Dallas-Fort Worth, Houston, and San Antonio are also doing relatively well. While houses are not selling as fast, it’s still below a balanced market. And prices are still going up a bit.
“It's kind of wild how similar every market is behaving. The major markets around Texas were some of the strongest housing markets in the country for the last decade. And so it's not too crazy that they're all seeing similar numbers and similar data points because they've all been so strong lately.
So everybody's feeling the effects of what's going on right now, but again, it's still positive to see that home values have still climbed this year. Nationally active listings are up 26.9%. So what we're seeing in Texas is pretty much what we're seeing nationwide.”
💬[00:11:25] What new listings can teach us about the state of the housing market New home listings have dropped by 10% nationally. Even though some are concerned that home listings dropping means a drop in prices, it hasn’t really translated. Home prices are still up nationally so there is still some positive news in the housing market.
“It's pretty evident the market has cooled down a lot quicker than a lot of people expected. But like I mentioned before, that doesn't mean that the values have cratered.
The data shows homes are still worth more than they were last year. We can't guarantee that that won't change. I think a lot of people will tell you that will change and that everybody should expect a housing bubble or a recession that's gonna pull the housing market down and values will eventually fall.
I think it's very possible and even likely that that's gonna happen, but it just hasn't happened yet.”
🖼[00:12:48] How mortgage rates impact the housing market and buyer preferences Just because mortgage rates rise, doesn’t mean buyers expect homes to drop by a similar amount to keep payments close to equal. When rates rise, buyers who still want to buy will sacrifice some of their wants in order to get into a new home.
“What ends up happening a lot of times is that a $500,000 house doesn't just become worth $375k or $400,000. The buyer of that $500,000 house starts looking at a $400,000 house or a $450,000.
They start to curb where they're spending and they start to loosen up a little bit on what they're looking for. They start to sacrifice on their wishlist. So maybe they don't get as big of a house, maybe they don't get it in the same neighborhood, at the same school zone, but it doesn't automatically just mean that a $500,000 house is gonna be $375,000. That's just not how it works.”
📹🖼[00:17:45] What to expect if you're a buyer looking for a lower mortgage rate While rates are expected to go down, it’s important to remember that they might not. If you’re a buyer, don’t buy a home you can’t afford because you expect the rates to go down. That can put you in a tough financial position if rates don’t drop to where you need them to be for what you bought.
“You've heard the term, you marry the house, you date the rate. I hear that get thrown around all the time. That's actually a very dangerous comment because I think it can be used very flippantly sometimes, and it can make buyers feel like they're being talked into a decision that maybe they shouldn't.
So my disclaimer is you should never buy a house you can't afford. We cannot guarantee rates will come down or come down as fast as we might think they will. So you should never buy something you can't afford.”
📹[00:19:04] Why the current housing market is different than what happened in 2008 The last time there was a housing market crash in 2008, lenders played a big role. They were giving out a ton of loans. This time, we’re seeing pullback from both buyers and sellers which is helping to keep the housing market from crashing in the same way it did in 2008.
“If you look back in 2008, we had this absolutely massive amount of inventory. There were so many homes on the market, and then the bubble burst. The bubble burst last time because we had crazy lending. Anybody could get a house if they wanted. It was crazy. It was the wild west.
So you had tons and tons and tons of people buying houses that they shouldn't have. We had tons of people trying to sell their house with little to no equity, because we weren't seeing homes appreciating the way they are now. And that was just a recipe for disaster. It was a tidal wave of foreclosures and we just aren't seeing that right now.
So what we're seeing is, homeowners and builders alike are pulling back and they're just saying, ‘Hey, now's not the time to sell, so I'm gonna sit on the sidelines.’ And that's actually keeping inventory a little bit lower than it was the last time we had a housing correction.”
📹[00:21:56] Here's how you should approach buying a home in 2022 If you’re buying a home in 2022, you need to know you’ll have to hold it for a few years potentially for it to gain value and survive a market downturn. You shouldn’t expect that you can just flip a home next year for a big profit. Unless you’re a seasoned investor, stay away from buy and immediate sells in this market.
“If I'm just your average homeowner, and I think I'm gonna hold onto this house for at least three to five years, if not seven to 10 years, you're probably gonna be fine. History will show you're probably gonna be fine. Even if we have a housing correction that lasts two years you're still gonna be able to withstand that and you'll probably be fine.
So if you think you're gonna be in and out within a year, I'd probably rent.”
[00:23:58] How the stock market affects real estate The stock market and real estate market don’t correlate 100% directly but there is some similarity. People who have lost money as the market has gone down may be less confident in making a big purchase like a home.
“Two years of market gains in the DOW have been wiped out. NASDAQ's down about 30% from the beginning of the year. S&Ps down about 25%. Here's how that correlates to the housing market. People look at their overall net worth, they look at their financial healthiness in all of their assets.
And when their 401k or their mutual funds or whatever they have invested in the stock market comes down, their confidence as a buyer might drop. Now, whether or not they're using those funds for buying homes or not, it's affecting their psyche. It's affecting how they're looking at their overall financial health.”
🖼[00:25:14] Are homes still receiving multiple offers? Multiple offers are not as common in the current housing market. Since days on market have increased, some sellers are dropping their home prices. Even though you may have to wait longer to sell a home, it’s still relatively not that long.
“It is clearly getting a little bit more challenging to sell a home, which is something that we just haven't been used to seeing in forever.
So the data, again, it's still not all doom and gloom. 30 days on the market is not that big of a deal. 60 days on the market really is not that big of a deal in the grand scheme of things. When we talk about the housing market and a recession, there are correlations. A lot of times the housing market is a leading indicator, not a lagging indicator.”
💬[00:27:13] How the housing market affects the rest of the economy The real estate market has deep impacts on not only buyers and sellers. Realtors, lenders, title companies, insurance providers, builders, inspectors, plumbers, electricians, appraisers, and the lumber industry are all affected as a result. Watch out for those trends to see how the market plays out.
“Housing is a leading indicator to the future effects of a recession. So look at everybody that's involved in real estate. So when housing starts to come down, ‘What happens to realtors, lenders, title companies, insurance providers, builders, inspectors, plumbers, electricians, appraisers, the lumber industry?’
So we're just now starting to feel the effects of the correlation with the housing market and the economy.”
🖼[00:28:31] How to approach the current housing market as a seller If you’re a seller, you need to be paying much more close attention to the market. Understand that you might not be able to sell your home as fast. You also need to keep an eye on similar homes in your neighborhood and around your home. Keep an eye on that data and use it to influence your own list price. Also, don’t be surprised if you need to offer concessions to close.
“We're already seeing builders now offering a 3% and a massive bonus. They're offering huge incentives for the design studio. Free upgrades, help with closing costs, things like that. Builders are doing whatever they can to sell their inventory right now.
The resale market can do the same thing. You can offer a bonus to a buyer's agent to bring you a. You can offer a credit to go towards the buyer's closing cost. There's all kinds of things you can do to incentivize both buyers and their agents.
Price drops are not only good to help you sell your price and get within the price range you should be.
It's also incredible for your visibility. And so what I mean by that is every time you do a price drop, you've got this pool of buyers that has a safe search set up, or the realtor has a safe search set up, and every time you do a price drop, an email hits that buyer's inbox and says, ‘This house just did a price improvement or a price drop.’”
[00:34:23] Final advice for buyers in the current housing market Don’t be afraid to buy just because rates are going up. If you find a great deal, consider going for it. Just make sure you’re planning on playing the long game with the property. Many lenders are also offering great deals to get people into homes now. Just make sure that whatever you get though, you can still afford it even if rates don’t change.
“If you're gonna be a homeowner and you're gonna make this investment in yourself, which by the way, for a lot of people, their home is the number one way for them accumulating long term wealth, you need to be informed. You should understand what it's gonna take to be effective and successful for selling your home.
You should understand what your different options are and you need to find good people and surround yourself with good information and good data so you can make calculated decisions.”
[00:38:51] Are buyers pulling out of contracts at the last minute? Buyers have pulled out before closing in the current market. If you’re a seller, consider offering an extension in exchange for additional funds that go in earnest money. Still, people are willing to forgo their earnest money because of the market.
“You want to be careful of being too strong. You don't wanna push a buyer away, so you don't wanna be so aggressive that it kind of pushes them off the deal completely. But you wanna look at it and explain to them why you're doing it and say, Look, I want to give you extra time.
I wanna make this deal work, but ‘I can’t continue to push the closing date out without making sure that I have something to make sure that my costs are taken care of.’”
[00:43:25] How to vet real estate agents as a seller In this market, it’s even more important to vet your real estate agent. You need to ask them about their experience, what they’ve done recently, and more. The agent you pick could have a big impact on your final sales price and days on the market.
“You'd be amazed how many people don't ask any questions at all. Questions like, ‘How long have you been in the business? How many houses do you sell a month or a year? What are some of the things that make your services, uh, beneficial to me? What are your fees?’
We're gonna have a large volume of agents that haven't gone through this. So what you wanna make sure is, do they have the right mentors? Do they have the right team behind them?”
Episode overview Home inspections are a critical part of real estate. They impact both buyers and sellers and are key in negotiations and identifying any problem areas in homes.
Even if you’re buying new construction, you should be using a home inspector.
For most buyers and sellers though, they don’t know what they should be looking for in a home inspection. What kind of issues will an inspector be looking for?
And if the inspector finds issues, what needs to actually be fixed? Is there anything you can do to better prepare for future home inspections?
We’ll dive into home inspections and walk you through everything you need to know with Clayton Bailey, Owner of Green Scene Home Inspections.
Episode highlights * What Clayton and Green Scene Home Inspections do * What's the value of getting a good home inspector for buyers * Why the little details are becoming more important to follow in home inspections * What an example of a well-maintained home looks like to an inspector * Here are the type of home issues are inspectors looking for * What are some of the craziest home inspection stories Clayton and Aaron have been a part of * Why it's important to use a home inspector for new construction * What a good home inspector should be looking for in new construction * Why sellers should always be ahead of home inspections when selling a property * What home issues can arise in areas with a drought * Here's what Austin buyers and sellers should be looking at when it comes home inspections
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, YouTube, and TikTok * Connect with Aaron Jistel on LinkedIn * Connect with Clayton Bailey on LinkedIn
Key takeaways [00:01:08] What Clayton and Green Scene Home Inspections do Clayton is a third-generation home inspector. His business, Green Scene Home Inspections, has been in business for over 15 years and has inspected 10,000+ homes. Not only does Clayton have a home inspection business, he also creates courses for buyers, sellers, and realtors around home inspections.
“We're coming up on almost 10,000 houses that we've done as a company, in the 14, 15 years that we've been in business. We've got 13 inspectors spread throughout Dallas-Fort Worth, Austin, San Antonio. We do a fair amount of houses a month and absolutely love it. I also teach for American Home Inspector Training. So I teach for a national home inspections school that teaches home inspectors. And then I also teach CE classes to real estate agents as well. So they have to have that state continuing education to maintain their license.
So I travel quite a bit across the state of Texas going to different places to train home inspectors.”
[00:02:34] What's the value of getting a good home inspector for buyers A good inspector can take that 30-40 page document and coach you on what you should really get fixed and what’s worth negotiating with a seller. Getting a home inspector first is important because they can identify big issues where you might need an expert to come in and take a look.
“Typically we get contacted right after the contract is executed and they say, "Hey, you're, you know, we're in our option period and you got to go." So we're usually the first ones to get in. The benefits of having that first is so that if we find something going on in plumbing or electrical or HVAC or whatever, then you've got time to get those people in there to look at that.”
[00:04:12] Why the little details are becoming more important to follow in home inspections When the market was high, most buyers were only interested in the big issues. Now they are interested in the details too. The smart buyers are looking at the small details because they want to make sure they aren’t overpaying on a home that might require more investment soon.
“Now the market is starting to shift and people are starting to pay attention to those home inspection reports and, you know, it's one of those things where we're going in to look at a house in a snapshot of time where we're turning on everything that could possibly be turned on.
We're running all the appliances, running the AC as low as we can get it. Running the heat really hot. We're getting on the roof. We're going under the house. Checking all the outlets.
We're really turning everything on all at the same time to try to see if there's any weak spots or if there's anything broken that's going on. That way that buyer knows, hey, here's what's going on with this house whether it’s been not maintained very well, or the owners have lived here and they've upgraded some things. So it's just kind of to see that through a different set of eyes.”
[00:06:46] What an example of a well-maintained home looks like to an inspector Clayton says the best homes to inspect are the ones with great paper trails. If a homeowner has receipts from anything they’ve checked on the exterior, interior, structure, HVAC, etc., it’s generally a good sign that the owners have taken care of the property.
“One of the ultimate examples of a house that I had that I walked through the door—beautiful house, probably, 3800 square feet, slab house from the '90s.
But as I walked through the front door on the table right there in the entry, there's a box that says, "Exterior receipts." And then there's another box that says, "Interior receipts." And then there was a structural engineer report sitting there that they had just had done. There were receipts from the HVAC company that just came out and had everything serviced.
And you kind of sit back and you go, "Okay. I like this house. I haven't even looked at it yet but there are great homeowners. This is exactly who I would want to buy a house from. Somebody that really maintains it. They can show all the paper trail of everything that's been done. It's not just some we don't know person that's just doing everything."
So that would be the main, like, ultimate scenario for us to walk into.”
[00:09:54] Here are the type of home issues are inspectors looking for Good home inspectors will be looking for 3 types of potential issues—things that are broken, things that are causing damage, and things that are unsafe. Even if something is working but it’s not up to code, a good home inspector will say you need to get it fixed because it’s a safety thing.
“We have to go by today's current building code and standards. And if the house was built in the '70s, well, there's gonna be a lot of stuff that doesn't meet that code, right? We no longer use the word grandfathered. So that is something that we no longer say or do. But it's kind of like if it's broken, if it's causing damage to the house, or if it's unsafe.
If it's one of those three, we need to be talking about it or, or negotiating for it. So if it's broken, you know, it needs to be fixed. If it's causing damage to the property... so you have to kind of look at it from an insurance standpoint to say well, if it's causing damage, we need to get on that so it doesn't cause more damage, right?
Then if it's a safety issue, that's just a clear given. You know, we want to keep people safe. That's, that's the whole goal of the home inspector is to make sure that nothing bad ever happens to someone in that house.”
[00:12:27] What are some of the craziest home inspection stories Clayton and Aaron have been a part of Since his company has worked on over 10,000 inspections, Clayton has had a lot of crazy home inspection stories. Things like finding body-sized holes, people not keeping their home doors locked, issues with finding drugs, etc. The key if you’re getting a home inspection is to be prepared!
“I personally have probably run into six different situations, like, grow rooms whether they live, in use at the time or you could see all the outlets everywhere where they had a bunch of stuff plugged in. My former instructor had a situation where the house that he inspected, the parents were sent to jail and their kid was put into Child Protective Services. Their new born baby crawling around the house had been sick. And when they took the baby to the doctor, it tested positive for methamphetamines.
And, instantly they flagged the parents and went through all this stuff. And come to find out, the previous people that lived in the house were cooking meth in the living room and it spilled over into the concrete.
And since the little baby was, like, learning how to crawl in the living room floor, even though there was new carpet there, the fumes and everything came out and, you know, did bad things to the baby.”
[00:19:10] Why it's important to use a home inspector for new construction If you’re buying new construction, it doesn’t mean you should skip out on a home inspector. With the way building is going right now, many builders are starting to cut corners. They have a high volume of houses to complete so new tradespeople are constantly coming in and there is risk of something not being done correctly.
“I feel like this market that the builders are being put in right now, it's starting to head that same way where they've been kind of snobby and snooty with buyers about, you know, you got to use our lender. You got to use our title company. You got to... and now, they're, they're starting to dump inventory.
And so you're starting to see they're going to start cutting corners and techniques and that kind of fun stuff. But, you know, I will give it to builders. All of them, they mean to do a good job.
It's not that they intentionally go out to screw somebody over or build a house poorly. But inevitably what happens is is that they're trying to build the volume of houses that they're building and, and you have your A team and your B team and your C team in different developments and you always have a new guy, you always have a new trades person in there and that they might not know what they're doing.”
[00:20:32] What a good home inspector should be looking for in new construction Clayton says if you’re buying new construction you should try and bring in your own home inspector in as early as possible. Even before concrete is poured, sometimes inspectors can find issues with plumbing and framing. By using an inspector early and often, you can minimize potential problems in new construction.
“There's nothing worse than a house that's built poorly from the beginning because it's hard to go back and undo that from the, from that phase inspection standpoint. But usually there's one of the trades peoples that, you know, either the plumber or the framer or the roofer, you know, most everybody does a decent job. It's just that there's one of those trades that's not gonna be so good.
And, down in Austin we've got one of my inspectors, he's just killing all these builders with the windows and, and windows are hard to get right now anyway. But you're not supposed to use air guns and shoot the nails into the window frame. You're supposed to hand hammer those in so that way when the heat moves the windows and the bricks and stuff that it's got that natural settlement and that they're not there. Well, we're finding windows that they've just, you know, boom, boom, boom, boom, they're shooting nails in and they're breaking all the little fins all around the windows so they're gonna leak.”
[00:23:31] Why sellers should always be ahead of home inspections when selling a property Most homeowners aren’t constantly checking everything out in their house over the course of living in it. You might never go on the roof, you might not have checked the attic, you might not have checked the electric panel. That’s why it’s important to bring in a home inspector before selling.
“There's a lot of inherent value if sellers are concerned about the condition of their house. They've lived there 20 years or 15 years and they don't know what they don't know, and a lot of times there's absolutely nothing malicious at all.
They just haven't gone up on the roof. They haven't been in their attic. They haven't opened up their electrical panel. And so, there is some value in being able to get ahead of things.
And then, that makes a buyer feel a whole lot better too knowing, like you said, there's a stack of receipts. It is clear that there was some sophisticated home ownership going on where they were taking care of the house. That makes buyers feel a whole lot better.”
[00:25:47] What home issues can arise in areas with a drought Homeowners in drought areas need to look out for potential foundation issues. In areas with lots of droughts, the soil drying out can cause the foundation to move. It’s a problem for homes built in the Houston area.
“We're in a pretty bad drought. What a lot of people don't realize is when you go this long without getting a sustained amount of rain, that really can be tough on the foundation. If the soil makeup is changing or drying out, it, you know, can cause gaps underneath the house and cause some foundation movement.
So we are seeing more and more foundation issues happening right now, which, again, makes inspections even more important when you're buying or selling a house so you know what you're working with.”
[00:28:00] Here's what Austin buyers and sellers should be looking at when it comes home inspections In Austin, there can be home issues depending on where you live. The further West you go the better because you have limestone which is good to build on. For other homes, you may have issues with sewer pipes because the land is more clay than rock.
“That's probably the most expensive problem to have in real estate is having to do with the sewer lines underneath and that it's caused that foundation movement.
But Austin and, East Austin you run into Orangeburg, which is the original sewer pipe that's just tar paper and sawdust, like, rolled up and it gets crushed or it just doesn't stay together and it's bad.
And then, yes, we went into cast iron and that's, you know, some tough stuff to deal with. You, you get into having to do sewer tests.
And so, I would say for sellers out there if you're suspicious like you've got maybe something going on, some cracks inside your house outside of a bathroom or a kitchen or something like that, might want to look at having a sewer test done just to make sure that everything is good because that could be a big whammy that could come back in the middle of a contract and hit you and that's one that you don't want to, uh, have to, it's not fun to dodge that one. You gotta deal with it.”
Episode overview Building a real estate investor business is tough. You need to have the right people, the right processes, and the right tech to scale.
Even if you build everything right, things will still go wrong. The market isn’t always constant and you need to be prepared for shifts.
What should you do if the market goes down? How can you stay ahead as a real estate investor?
We’ll dive into how to source below market real estate deals, how you can grow and scale your real estate investing business, and how you can adjust to the shifting market with Dustin Ellis, CEO of Tallbridge Investments.
Episode highlights * How Tallbridge works for real estate buyers and sellers * What you should be doing if you're a real estate investor looking to grow and scale your business * How you should be thinking about investing in talent as a real estate investor * Why mindset plays an important role in scaling a real estate business * Why the technology you choose can have a big impact on your real estate business as an investor * Here's how you should approach the real estate market when the supply outpacing demand * What the best real estate investors look to buy in down trending market * What the average real estate investor should be looking to buy during a market correction * What to focus on if you want to better a better real estate investor
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Dustin Ellis on LinkedIn
Key takeaways 2:33 - How Tallbridge works for real estate buyers and sellers Tallbridge works as an intermediary between buyers and sellers. If you’re a seller looking to quickly sell a property, Tallbridge can work with you to cash out that property. If you’re a buyer looking to get a property at a reduced price, Tallbridge can help you connect with the right properties.
“We provide a personalized service to help owners sell their property to a vetted network of cash buyers. So from a seller's perspective, if you prefer not to use a traditional method through a real estate agent, perhaps because the property's in a rough shape and you don't have the cash or time to fix it up before you list it or perhaps there's some sort of financial distress or perhaps you're seeing an increase in foreclosures and are in need of quick cash.
If you're a buyer or investor and you're looking for an investment property at a reduced price and you want to get on our buyer's list, let us know what your buy box is and we'll definitely be willing to have that conversation and help sell you something as well.”
5:51 - What you should be doing if you're a real estate investor looking to grow and scale your business If you want to scale your business as a real estate investor, you need to be aware of your spending. Make sure you’re not spending on things you don’t need right now. You also need to get serious about forecasting and budget if you want to scale well.
“To scale a business, you need cash. I think two ways to do that and that is to increase your revenue and to, and to stop spending as much of what you're making. Right.
I would say for us, part of our success was a strong focus on marketing because that fuels your sales and then getting our heads wrapped around the finances.
Have a little bit more serious conversations around your budget and your forecast and control what needs to be spent and what can wait. I would say our success probably fueled from our people, our process and, leveraging technology.”
6:53 - How you should be thinking about investing in talent as a real estate investor To build a successful real estate business, you need to work with the right people. Most large successful real estate businesses aren’t one-person operations. Make sure you’re building a strong culture so you can hire and retain top talent. Investing in great vs good talent might be more expensive but it will put you ahead in the long run.
“When I think of people, our culture, and the communication within our culture is important.
As you scale things get lost in translation, assumptions happen, so it's important that you maintain clear lines of communication and that you create a culture where people wanna work because it's critically important to retain your quality people that you work so hard to find.
When I think of people, you know, coaches, mentors, I know my partners Steve and Josh, when they started out, I hear they wish they would've got mentors sooner.”
8:15 - Why mindset plays an important role in scaling a real estate business Things are going to go wrong eventually if you’re a real estate investor. That’s why having the right mindset is important. When things go wrong, you need to have that belief that you can push past it. It’s key to growing your business.
“It never goes perfect. So having that belief and that faith to push through those barriers and those challenges that are gonna surface especially when you're in the valley. You gotta believe in yourself, you gotta believe in what you're doing.”
9:36 - Why the technology you choose can have a big impact on your real estate business as an investor Dustin says the tech you pick for your business can have a huge impact on revenue. If you have a frankenstein approach to tech, you probably won’t get as much productivity out of your business. Focus on building the right tech stack, automating repeatable processes, and identify the tools that can generate the most revenue per dollar spent.
“Have the right internal tech stack. Something that fuels staff productivity throughout the entire deal progression and something where you can leverage automation.
There's a lot of Frankenstein tech stacks out there. So if you can get one that's integrated and seamless for your staff, their productivity is gonna go through the roof. I think the other piece with that is leveraging all that tech to pull accurate data. If you don't have accurate data it’s really hard to make strategic decisions.
And then the last piece of tech are those external tech platforms that you can leverage. Whether it's comping tools, private investor platforms, JV platforms. We use several and it has really helped us.
You're trying to do as much as you can with as little expense as possible. We ask ourselves, is this gonna help drive revenue? And do we really need to spend this right now?”
16:12 - Here's how you should approach the real estate market when the supply outpacing demand When there are more people selling than buying, the market can tighten up fast. If you’re a real estate investor, you may have the opportunity soon to lock up a property at a reduced price. If you’re selling, make sure you have the right exit strategy to avoid losing money on a deal.
“I think we're calling it the market correction. A lot of sellers still haven't accepted that there's a shift happening so they still are expecting those prices where they were getting over ask.
The flip side is the investors are going to pump the brakes here. We're gonna wait till this market drops because we think we're gonna be able to pick up this property 20% cheaper.
Buyers now are a little hesitant. You got some hedge funds, the bigger investors, institutional investors some of them are still waiting. And then we've got other ones that are aggressive, the retail buyer. There's not as many retail buyers out there.
So they're capitalizing and obviously when they are looking to acquire the property, they're looking to get it at a more reduced rate.”
22:35 - What the best real estate investors look to buy in down trending market Smart investors are looking less at fix and flips and more at properties where they can put in less but still maximize profits. That means investors are looking more into properties they can rent. 3x2s have also become a lot more popular.
“Before they were just buying up everything. Now, you see less fix and flippers and you see more buy and holds.
When you think of the buy and holds, the investors want the wholesale deal or they want a hotel deal, they wanna be able to put in as little money as possible to get maximum.
They're looking for strong rental opportunities. They're looking for three twos. They're looking for stuff that needs very little work.”
29:28 - What the average real estate investor should be looking to buy during a market correction Dustin says newer real estate investors should look in the 100-200k range instead of high-value properties that you try to sell for a big margin. You might have more available buyers if you go the first route. You should also talk to buyers and see what they are looking for.
“I wouldn't be playing in the 700k to 1M space. If I was new, I'd try to get down into the 100k to 200k. Just simply on the cost of money and the risk.
I would be going out and I would be speaking to buyers first and ask, what are you looking for? Because that's gonna improve my conversion.
If I can bring them something that they're looking for versus locking something up and then having to scramble, that’s going to be better.”
31:01 - What to focus on if you want to better a better real estate investor To become a better real estate investor, you need to invest in yourself. Focus on building a strong network that you can lean on for advice. Having a mentor is helpful when situations go bad and you need to figure out what to do next.
“I would invest in yourself. I would be getting close with an industry expert, a mentor, or getting a part of a networking group.
We're a part of a group called Collective Genius.
With so much uncertainty it would be great to have somebody that's been through this before and can just reassure you. And that ties back into the mindset that talks into process.”
Episode overview If you’re looking to do some serious real estate investing, you might be interested in using a hard money lender. While most homeowners go with conventional financing, a hard money lender can be more useful for buying and selling properties.
For those that haven’t been a real estate investor before, hard money lending may be confusing. Why is a hard money lender useful? And how do you identify good lenders?
Even if you’ve used a hard money lender before, how do you know you’re getting the most out of your hard money lender? Can they provide insight into today’s housing market
We’ll dive into hard money lending with Romney Navarro, CEO of Streamline Funding which is a Texas-based private lending company.
Episode highlights * The hard money lending process and the difference between that and conventional financing * Why having the right partner is important if you want to get into investing or building new construction with hard money lending * What you can do as an investor or builder in the 2022 housing market to be set up for success * Why it's better sometimes to get in and out of a deal vs staying in it to try to maximize profit * Where you should go for market advice if you're an up and coming builder or developer * What Romney looks for when it comes to collateral to deal and what his typical term length is for most deals * How Streamline Funding is appraising deals * How you should think about investing in the housing market in 2022 * What you should do to correctly vet a lender
Episode links: * Follow ListingSpark on LinkedIn, Twitter, Instagram, Facebook, and YouTube * Connect with Aaron Jistel on LinkedIn * Connect with Romney Navarro on LinkedIn
Key takeaways 4:20 - The hard money lending process and the difference between that and conventional financing If you want to work with a hard money lender, you need to be prepared to be vetted. Hard money lenders will evaluate you on 5 Cs—character, capacity, capital, collateral and conditions. Using a hard money lender is sometimes a better option than conventional financing when you’re doing an investment property because of the requirements needed to get approved.
“Collateral is the very first thing that we place weight on. It's either a good deal or a bad deal just on its face, real estate only. Second thing that we're looking at is credentials.
Have they done this? Do they have a proven track record? And then cash. Do they have enough money to float this thing? So we're looking at those things. You know, notice, I didn't even talk about credit. Didn't even talk about character. I don't care what a credit score is.
I don't care what the background is. Those are so minimal. They don’t move the needle that much. Collateral moves the needle a lot, experience or credentials moves the needle a lot, and cash.”
10:33 - Why having the right partner is important if you want to get into investing or building new construction with hard money lending Romney says that if you’re a first time investor or new builder, you need to find a partner. Credentials are hard to gauge when a hard money lender is working with a first time investor or builder. That’s why having a partner who has done it before can help establish the initial trust needed.
“Winners are a lot of different things. Winners are people with strong backgrounds, strong cash, strong credentials. We can make an exception and say, look, this person's got all of the tools, but maybe they've not done this.
However, the degree of difficulty on a fix and flip is lower than difficulty on a new construction. That means there’s a lot more that could go wrong in this project. So when we get somebody, a new builder, that's a very difficult deal to structure. The only way to structure it in this changing market is with a partner.”
14:22 - What you can do as an investor or builder in the 2022 housing market to be set up for success The housing market in 2022 is more volatile. It’s not as easy to buy and sell a house for a profit. Because of the market, you need to have multiple exit strategies set up. You might need to rent your property to wait to get the price you want. You might need to use something like VRBO in the interim. Make sure you know all of your exit strategies.
“What I'm hearing from my clients is it’s important to have multiple exit strategies. So if I can't sell, maybe I'll rent and wait till I can get the price that I want.
Even with high inflationary numbers, the interest rates are still lower than inflation, so it's a good investment in the grand scheme of things. So multiple exit strategies, rent or something else like VRBO. I would say if you're in a tight market, that might be a good option, but if you're out in the burbs, maybe that's something to reconsider.”
19:56 - Who you need to listen to for staying ahead of the current market There’s a lot of people giving out advice in today’s real estate market. If you’re a new investor, you need to be following the advice of experts. The people who have done this before. Just because a friend is telling you something they did doesn’t mean it will work for you. Sometimes it’s better to just take a deal and walk away.
“The most sage advice you could get here is ‘don't necessarily listen to your buddies.’ You might know somebody that just acts on intuition and is wonderful at it.
Your buddy might be telling you the last deal that he did six months ago. I could throw anything on the market and sell it six months ago. Can't do that today. Your buddy might be just encouraging you because he's like it's time to just take a shot.
A new investor really should be listening to the expert's interpretation of the data to form their opinion.”
23:25 - Where you should go for market advice if you're an up and coming builder or developer Expert advice is so important during this market. Romney says if you’re an up and coming builder or developer, you need to have experienced people on your team. Streamline Funding has an experienced team they use to help make decisions and its important for any real estate investor.
“Getting advice from those that have been around the block is gonna help. At a lender level, we could tell you, if we think it's profitable or not.
At a real estate level, we could tell you, these are what the deals are looking like right now. At the mortgage level, we could tell you, this is what the price looks like to refinance.
There's so many things—what your debt service is, how much you're going to pay the bank, how much you're gonna earn. All of those expert tips and just kind of having those advisors in your pocket are important.”
31:07 - What Romney looks for when it comes to collateral to deal and what his typical term length is for most deals Romney says that looking at collateral is either you have it or you don’t. There’s no gray area for this. As the market changes, Romney and his team are changing what they are looking at when it comes to collateral to deal and length for deals.
“Going back to data, currently my portfolio consists of 67% loan to after repair value. That means I have some at 75%. That means I have some at 60%. 67% is my average.
Then there's the other ratio and that is the loan to cost. So if a property costs you $100,000 to buy and $100,000 to renovate, that's 200 grand and I were to lend $200,000 that would mean a 100% loan to cost.
I'm currently operating at about 90% loan to cost ratio. The new market is trending that down. Just a notch about two and a half points on the loan to after repair value and about two and a half points to loan to cost.”
34:08 - How Streamline Funding is appraising deals Streamline Funding looks at what their clients say and they come up with their own appraisal value. In this market, it can be easy to fall into a trap where properties are overvalued. Even big institutions are being careful with appraisals so they don’t carry too much risk.
“We don't know appreciation. We're underwriting to today's value. I've heard of larger institutions saying that they're underwriting at a 10% discount. So if it's worth 200 today, they're gonna see how it goes at 180. And I'm thinking that says a lot of things. It says that big money's scared, right? It might even just say this particular money is incredibly conservative, you know, it’s something to think about here. Speak to somebody that's gonna tell you ‘How much do you think the property's worth?’ $200,000. And then over here they're like it's actually 180.”
40:05 - How you should think about investing in the housing market in 2022 You need to treat investing like a business. In the 2022 market, it’s easy to get lured into a deal that might not work out. There are investors out there who overpaid for property and are now having a tough time getting their investment back.
“Opportunities are starting to surface now. The carnage in our market is in the process of occurring for those investors that maybe bought for too much.
Homeowners are gonna be safe because the interest rates are so low.
But those investors that bought for too much might have to go to option B. And option B might be rent. Option C might be a partner.”
41:47 - What you should do to correctly vet a lender Because of COVID, there have been a lot of people disguised as lenders. If you’re not following the right steps to vetting a lender, you may end up in a bad situation. Make sure you’re asking for things like a balance sheet, past clients, etc.
“Be weary of brokers. I would say, look for lenders that have a balance sheet. Balance sheet lenders are very important in this market. Those are the ones that are gonna stick around. We stuck around in 2008 because we had a little balance sheet. Now we have a big balance sheet. um, balance sheet lenders, get to make their own rules and get to service your loan.
You should also ask for clients and they should give you their best clients. I'll give you my best clients.
If you're looking to build 40 houses, ask for somebody that's built 40 houses.
If you're looking to flip your first home, ask for somebody that flipped their first home, something like that.”