Home Sales Rise, Investor Purchases Shrink

Dave:
Our home sales. Finally on the rise, our agent commission’s going to change again. And what does declining trends in investor home purchases mean for you? That and more on today’s show. Hey everyone, it’s Dave. Welcome to On the Market, the Real Estate News and Economic Show where we like to have a little fun while keeping you informed. Today is our headline show, which means I am joined by my colleagues James Dainard and Kathy Fettke. Kathy, welcome. Good to see you.

James:
So good to see you,

Dave:
James. Good to see you as well.

James:
I’m excited to be here.

Dave:
So the way this works, if you haven’t watched this format before, is that each of the panelists, myself, James, and Kathy, each brought a headline that we think is particularly interesting or important for the greater real estate investing community to be paying attention to. And then we are going to break down each of these stories to help you make informed investing decisions. So let’s just jump right into this. James, what was the headline you brought for today’s episode?

James:
First headline I brought just because I feel like it’s been really relative to what we’re feeling since the election’s over which I’m thoroughly happy it’s over because as a flipper developer, for us it’s all about timing. It’s all about market confidence. And leading up to the election we saw a slowdown. There was a very minimal activity going on in the market and it was starting to get kind of concerning. Our days on market were stretching, our inventory was stretching, and then after the election, it’s like the confidence came back. And so Redfin reported pending home sales rise after post-election surge in home tours. And according to Redfin, the US pending home sales Rose 12.1% year over year during the four weeks ending November 24.
Wow.
In addition to, we saw mortgage applications rise 12% week over week, and refinance index increased 119%.

Dave:
Whoa, really?

James:
Right here it says the refinance decreased 3% from the previous week, but was 119% higher than the same week one year ago today.

Dave:
Whoa. Wow. That’s the most surprising to me because rates aren’t even down then. I guess a year ago they were probably closer to eight. They were really high at the end of last year, but

Kathy:
Maybe people locked in when they went down for a moment and they finally got the refinance through.

Dave:
Oh yeah, that’s a good point. They locked in September and then they closed on the refinance or

Kathy:
Something. There were some smart people who were like, maybe this is a low, I’m going to go ahead and refinance. Others were like, I’m just going to wait a little bit longer and see how much lower it goes. And boom goes up to almost 7%. But

Dave:
Yeah, I was thinking about financing some properties back in September and I waited and I definitely regret it. So hopefully they’ll come back down a little bit. But James, this is a really interesting story and I just want to recap because we went off on a little tangent there, but basically there is a really big slowdown leading up to the election. There’s just not a lot of activity going on, and I think actually maybe the last version of this show, and we did headlines, we had talked about there was a survey and 25% of people who said that they were interested in buying a home, were going to wait until after the election. So that in itself tells you that there is what was going on. But I’m curious, James, do you think now after the election that this is start of the trend or is this sort of the pendulum just swinging back in the other direction? Because if people were waiting after the election, maybe this is just kind of like a catch-up period where all the people that didn’t buy in October and November are buying now. Or do you think we’re genuinely on a different trajectory now where there might be a trend of more home sales going forward?

James:
I think this market for the last 18 months has been so sergy where it runs hot, runs cold, runs hot, runs cold. So right now, I think I kind of have to just go with what we’ve been seeing the last 18 months, which is a little bit of a surge market, but if we see another month, then we could start to maybe see consumer confidence trending up because it has nothing to do with rates. Rates are not that great right now.

Dave:
Nope,

James:
They’re really not. But we did see these rates around the same time for the last 24 months. I mean these rates have kind of stayed in the same range and we’ve seen appreciation nationwide and we saw a buyer still buying. And then it seemed like with the election there was just a lot of uncertainty. And what I think people do kind of believe is that the economy was doing fairly well when this administration was in office prior. They think that the economy could come back and get a little bit less stale than what we’re seeing right now. And that’s why people are getting fomo and they want to lock in a house if they think that pricing’s going up. There’s kind of two things that buyers are thinking about. Our rates going to go down, they overthink it and they want to wait out rates and they missed a big chance about 30 days ago, me. Or they think that the market’s going to get FOMO and it’s going to be too expensive for ’em. And I feel like that’s what’s happening. We had homes sitting that were sitting home on market 45, 60 days with an average of one to two showings a week at most. And we sold every one of those houses.

Dave:
That’s

James:
Crazy. After the election,

Dave:
Was it like the day the week after just all of a sudden things just got picked up a lot

James:
The week after. It was that weekend going in, it was instantly we started seeing things getting absorbed. And it was funny, the buyers, they were writing lower offers and we were staying firm with our numbers, maybe giving a little bit of a credit, maybe 1%, 0%, very little. And they were just going, yep, okay, we’re good to go. And they would lock in.

Dave:
Wow.

James:
And I felt like there was this negotiation change at the time and we’ve sold a ton of houses. The only stuff we’re not moving is kind of the stuff on the more expensive side. I would say the more premium luxury side that’s above the median home price. But we are definitely seeing more activity in our showings in all different price points. And the cool thing about what we do is we sell homes anywhere between 400 grand at 4 million, 5 million. And so we can see the real time buyer activity and what we’ve seen is the amount of showings have increased tenfold since the election. I’m looking at a house right here and we had a house listed not that long ago in the same area and we were getting one showing a week and we sold it for like 25 grand off list.

Dave:
Wow.

James:
Since the 22nd we’ve been listed, we’ve had 16 showings on this house, same price point, same neighborhood. Wow. Same exact type of product. And so that’s how much more buyers we’ve seen in the market.

Dave:
That’s so interesting. Yeah, I guess it goes to show that it’s really just so much about sentiment because nothing materially has changed in terms of actual math of buying a house. Rates are still relatively high. They’ve come down a little bit in the last week, but they were still close to seven. And although there’s enthusiasm about a bunch of policies that Trump has articulated, no one knows exactly how those are going to take effect when they’re going to take effect. So that hasn’t really even happened yet. Do you think it’s just people getting excited about the prospect of new policy?

Kathy:
I feel like a lot of times people look at Trump, at least last time he was president, it’s like, Hey, this is a real estate guy.

Speaker 3:
He’s

Kathy:
Probably going to want to keep real estate elevated. How he does that, who knows. But it’s just kind this thought he gets real estate, he’s not going to let it crash.

Dave:
Yeah, I mean that makes sense. That definitely tracks

James:
And we’re seeing, I mean there has been some change though, not in rates, but bitcoin’s up, stock market’s up, people have more cash.

Dave:
That’s true.

James:
And I think some people are going, Hey, let’s sell this and transfer over here and lock in that house now. But it has been mind blowing how many more people have came to the market.

Dave:
Yeah, Bitcoin’s up. Did you see that guy bought that banana duct tape art installation for $12 to 12 million. It’s just a roll of duck tape, an eighth of

Kathy:
Banana.

Dave:
An eighth banana. Yeah. That’s how there’s too much money in Bitcoin at any given point when people are buying like that. Yeah. Anyway, sorry, digression, but alright, cool. Well thank you for bringing this James. It’s a really interesting story and I think this is one that we definitely need to all keep an eye on. Can you just sum it up for us? What is the main takeaway from this article that you brought?

James:
I think the main takeaway is we are seeing consumer confidence, but it’s just one month and we got to watch for a trend and it’s been hard to establish trends the last 12 to 18 months in what we do. But the thing is, as a flipper or developer, just remember, don’t get trigger happy with cutting price. Don’t just take one little article and make a reaction. Check the data, how many showings are you getting? What’s selling around you? What’s the average time that it takes to sell those things? And don’t cut price too quickly because there’s plenty of homes that we were thinking about cutting price on, but we kept checking the data, we stayed where we were at and we sold those houses for list price and that would’ve been a huge difference in profit and income if we would’ve got too nervous. Don’t be a nervous Nelly.

Kathy:
I would’ve slashed all the prices.

Dave:
James has Diamond hands. Kathy and I were just talking before the show about that movie Dumb Money where that guy, the GameStop story. You’re a perfect example James. Just keep holding, just hold.

Speaker 3:
Hold.

Dave:
All right. We’ve got to take a quick break to hear from our sponsors, but stick with us. We’ll talk about the latest changes in commission fees and the latest trends in investor activity right after this. Hey investors, welcome back to On the Market. Alright, well let’s move on to another story. Kathy, what headline did you bring?

Kathy:
Well, because I’m an overachiever, I brought two, but they’re at least related

Dave:
Great,

Kathy:
But they’re not going to be as cheery and joyful and a diamond fingers as this first one is from CNN and it’s the battle against 6% broker fees isn’t over after a surprise 11th hour court filing.
So realtors have just been hit hard this past year. They’re just being very much attacked and a lot of realtors are saying, Hey, our fees were always negotiable. Even though I’m not sure that’s really the case. I mean it was pretty much like, hey, it’s five or 6% and the seller pays it. That’s just kind of how it’s been. But the truth is you could fight that if you wanted to. Anyway, we all know that that was challenged and the lawsuit happened, but then right when it was all to be settled, the Department of Justice came in and brought some more uncertainty to this world basically. Now the Department of Justice is saying, we don’t know if we like the settlement agreement, which is that you have to negotiate fees in advance and be in contract, have a broker agreement before showing houses. This was kind of what came out of the settlement and now the Department of Justice is saying, we think that might not be okay either, but the settlement still went through. So basically what now realtors are saying is, is there another lawsuit coming?
They didn’t see the first one coming. Is there another one saying now we can’t have these broker agreements that tell you what the fee is. So there’s just a lot of confusion out there. I think it’s a good story to read if you’re a real estate agent, but really it’s the National Association of Realtors settlement. And so much has to do with the fact that many of these brokerages were members of the National Association of Realtors that kind of set these rules or agreements up to begin with and people pay money to be apart of NAR and to have them represent them. So my second article, it’s paul zure daily listings.com. So this is an agent perspective and his article is Zillow’s Takeover of the Real Estate Industry, the Path to Monopoly. So he’s looking like do agents really feel like they need the National Association of Realtors to represent them anymore because it hasn’t gone so well this year for them and it might not next year following their new rules is maybe going to backfire. So maybe Zillow’s the new nar, who knows? You can put your listings there, you can try to sell it there. I don’t know. Lot is obviously in flux right now.

Dave:
Yeah, it’s super interesting. And in the next couple of weeks we’re actually speaking with a reporter from the New York Times. She has some more reporting about what’s been going on behind the scenes at NAR. We actually don’t know exactly what the story is. They told us they’d give us the scoop, which we’re super excited about, so make sure to keep an eye on your feed for that. But this is interesting, Kathy, but I’m also, I guess I’m not surprised because the way these things work tends to be listen, they challenged NIR and the court struck it down and said that the NIR couldn’t do what they’re doing, but it’s not the court’s job to tell them what they can do. Instead, the industry sort of has to work through this. And it sounds like some of the ideas that they’re coming through to work through it aren’t actually any better, at least according to the Department of Justice. So maybe it just takes some iterations of people trying to figure out the right new format. They’re really upending what 40 years of precedent that the NAR has been operating in a specific way.

Kathy:
Absolutely. So it is tough to be a real estate agent anyway with listings down so much and with sales down volume down, I mean the industry’s getting hit so hard and then to add this to it, I have a lot of compassion for real estate agents out there and Paul Zebra’s article is like, is this the end of the agent? And this is obviously something we bring up here all the time, and I don’t think anyone here, I don’t think it’s the end of the agent. People still want representation. It’s like you can go buy stocks on your own, right? Or you can get a financial planner to help you pick better stocks and I think that’s maybe how it’s going to move forward in real estate is sure. Maybe you just do it all digitally in the future or you get someone to help you with it. We have traditionally, I don’t know, James, what are your thoughts? Do you think that the way of the realtor is in the past?

James:
No, I don’t. I think this gets so hyped up because people do, they’re like, Hey, why do brokers get paid so much? And sometimes I think they are overpaid for what they’re offering on the services and that’s up to the consumer to pick what service you want. Just like anything, there’s luxury cars and not luxury car. There’s a luxury experience that people want at the end of the day. It depends on what you’re looking for, what you’re shopping for. Because I had a really weird recent experience, the weirdest phone call, not the weirdest phone call. I definitely have weirder phone calls, but I had a strange phone call.

Dave:
I’m so curious. I feel like you must get the weirdest phone calls all the time. Every morning we just

Kathy:
Need to do a show on James.

Dave:
We just need to listen in to James’s phone calls and give it day.

James:
Maybe we need to do a YouTube series called. Of course that happened because every time it’s like, yeah, why wouldn’t that happened? It’s something weird. A tree fell through a house of ours that was closed in four days. No, just recently. And that was a new thing for us. But so we were selling a house in a very highly desirable neighborhood. We did a massive renovation on it, which was a killer deal, and we listed the property for 2.1 million and we had multiple offers. Three offers came in on that, that all went above except for one, and one was using a discount broker or was looking for a deal. And those buyers, they wrote in a competitive situation wrote a below offer price and we did not even respond to them. We had two really qualified buyers that were ready to go and we focused on the people that wanted the house because as a seller, I want to sell to someone that really wants it and someone that’s running under lists doesn’t make any sense.
They don’t really want it. So they call us panicked as we’re reviewing offers with each other two, and they change their offer and they increase it dramatically by hundreds of thousands of dollars and they still had some other contingencies in there. We ended up just going, I was like, you know what? I don’t take these people serious. I’m going to go with the other buyers based on the brokers and what the buyers are saying. We signed mutual. I get a phone call the next day from these potential buyers that missed out. I’ve never had a buyer call me directly as a seller like this. And they go, why didn’t you take our offer? And I was like, do you want my honest opinion? I didn’t take you serious.

Speaker 3:
They

James:
Came in under it. I did not take, and they were so mad, I’ve never had people yell at me this before and they’re like, you should have countered us. You owed us a counter, you owed us a counter. And I’m like, what? I don’t owe you anything. And at the end of the day, if they weren’t trying to be thrifty and they were focused on getting the house rather than trying to get it a little bit off, they would’ve maybe got the house and this experience. And this is a house that’s hard to get. These things get sold twice a year at most, and they’re going to keep going up in price. And so that mistake probably cost them hundreds of thousands of dollars when the next one comes up and those stories will stick. And when people want something that they want, they want to close on it and they better hire the right professional, get that deal done. And I think no matter what, there’s always going to be a need for that.

Dave:
Yeah, I agree. That’s a perfect example. I mean people always question whether agents are worth it. I’ve always used one and I think James just shows exactly the implications of potentially cutting corners. It’s like anything, you cut corners, there’s going to be consequences. There’s no way to cut corners without having some sort of repercussions for that decision and for some people that might be worth it For others. It’s definitely not. One thing I did want to touch on this though, Kathy, before we left though, is this article by Paul Zure talks about the path to monopoly and that Zillow might become a monopoly and I’m just curious what you make of this because to me it just seems like it’s like potato, potato NAR is a monopoly, let’s be honest, right? It’s just like moving from one organization to another. At least that’s how I see it is the whole reason we’re in this situation is because NAR was accused and deemed guilty of anti-competitive practices. And so I’m just curious if you think Zillow really will become sort of a monopoly and if so, will that change anything maybe for agents, but will that change anything for a buyer or seller?

Kathy:
Well, I think that DOJ is going to probably go after Zillow too if they deem it to be anti-competitive, but other people can start a Zillow. Everybody’s talking about the idea that with this NAR lawsuit that some company, probably a tech company, is going to come out with a simpler way to buy and sell real estate, and Zillow’s got a headstart, so it certainly could be Zillow, but it could be some other company just like you’ve got Lyft and Uber. I remember Lyft came out right after, and it’s good to have that competition. I do talk to Uber drivers and Lyft drivers and say, which one’s better for you? And then because there’s two of them, they have better employee programs and stuff competing.

Dave:
Such a good example. Yeah,

Kathy:
I think there’ll be another platform. They’ll probably be five 10. There’s probably a hundred platforms right now trying to be created to who’s going to win that battle?

Dave:
And it’s not like NIR is going to disappear. It might be lessened in power, but the fact that it just won’t exist seems a little maybe, but I think we’re still a few steps away from assuming that’s going to happen.

Kathy:
Well, I just think NAR is losing power by the moment and I cannot wait for your interview. Oh my God. Breaking news here on the market.

Dave:
It’s so fun. I have no idea what it is they just said it’s breaking news.

Kathy:
Yeah, they’ve been the guer in the room for a long time and for real estate agents, they have had that lobby. It’s very, very, very strong lobby, which what would happen to real estate without that lobby? I don’t know. I don’t know. We shall see. There’s a lot. All we can agree on is there’s a lot of change in the real estate industry today.

James:
You know what a good change because I think sometimes these groups get so powerful they forget about that we have to provide service and maybe Nourish should focus more on the customer experience

Speaker 3:
And

James:
Providing good service and how they can enhance a seller or buyer’s experience rather than just going, this is the way we do it. And if they focus on that, they’ll actually probably be fine.

Dave:
I love that, James. That’s such a good point. It’s kind of like going back to Kathy’s ride sharing example. It’s kind of like when Uber and Lyft started coming out, rather than the taxis services trying to adopt new technology, they were just fighting it tooth and nail, and if they had just figured out a way to make their own apps or technology to use taxis, it might’ve worked out pretty differently.

Speaker 3:
I

Dave:
Think it kind of feels the same way with NIR where they’re just like, Nope, this is how it’s done, where people are still going to keep buying selling houses and people are still going to be making money off of those transactions. Just the format for doing that might need to be modernized a little bit. All right, time for one last short break, but we’ll get into investor activity and our advice to current investors on the other side. Hey friends, welcome back to the show. Well, let’s move on to our third headline, which I brought for us today. It’s another Redfin article. Shout out Redfin. They’ve got great reporting, so we use this a lot. So talking a lot about Zillow, but thank you Redfin for all your great reporting. They put out an article that said that investor home purchases plateau after a pandemic era roller coaster ride.
You should check this out. We’ll put a link in the show note, but these charts are pretty crazy. If you just look at how investor activity has peaked during the pandemic. Normally in normal times, I guess let’s say that’s the 2010s, we had like 14, 15% of all home purchases were for investors that shot up to above 20% during the pandemic. Now it’s come back down to about 16%, and so this isn’t surprising because it’s basically fallen proportionately with all the other activity that’s going on. We’ve just talked about how there hasn’t been a lot of buying and selling over the last few years, but I’m curious, James and Kathy, if you think we’ll get back to that era where there was 16, 18, 20% investor purchases, or do you think we’re going to go back to a more historical norm where about 15% of all home purchasers are from investors? I’ll just start there because I have a lot of questions about if and why that happens. So Kathy, what do you think?

Kathy:
Well, something has to improve for more investors to want to be buying investments. If it’s negative cashflow, that’s a tough bill to swallow,

Dave:
Tough sell,

Kathy:
And if insurance rates keep going up and property taxes and mortgage rates, it’s hard to make the numbers work in a lot of markets. So I could see why people are like, oh, why be negative cashflow? We don’t even know if we’re going to get appreciation. Negative cashflow is actually a strategy in California for many years. People do it because they know and it

Dave:
Worked

Kathy:
Money in the long run, but if you don’t know and a lot of people are suggesting that maybe prices aren’t going to rise as quickly in the coming years, then negative cashflow isn’t as interesting and really, I don’t recommend it in general, but in the same with flipping, unless you’re diamond fingers over here, it’s hard. I mean, I would be kind of terrified to, although again, I know people are very successful. We don’t have Henry here today, but he’s pulling it off, but it’s not easier, I wouldn’t think. I mean, James, let me ask you that. Has it been relatively the same for you as a flipper now compared to earlier years or harder or are you just adapting? I mean, how are you still so busy?

James:
It has to do with switching the model and what you’re buying and as investors, there’s always inventory to buy
And you just have to create the business plan that works with what you’re seeing. And so right now we’re seeing a lot of opportunities in heavy value add where there’s a lot of construction where people are kind of avoiding when you’re doing bigger projects, you got longer debt, you got more expensive debt and you’re going into a longer market cycle. Average month supply right now is getting to about a balanced market, so you have to hang on to these houses longer, and so we’re still purchasing a lot of homes. I bought more homes the last nine months than I did 12 months prior before that because the math works and

Kathy:
Incredible

James:
And you just have to go where the opportunity is. I think it really comes down to are investors going to continue to buy? Well, it depends on what products in the market. We still are not seeing a lot of homes that are fully renovated from a homeowner that are selling ’em right now. There’s low inventory across the board. The reason I think we’re busy in Seattle is there’s just a lot of junk in the market. There’s a lot of beat up homes that are for sale where people need a cash transaction, and that’s a lot of the inventory that’s sitting right now. It’s overpriced, big fixers, and typically you weight those numbers down, you can buy those. So if we continue to see this kind of inventory where a lot of it’s not fixed up, then I think investor transactions could increase even more over the next 12 months. It really just depends on does the inventory lock up or are we going to see more houses come to market?

Dave:
I think there’s an argument here both ways, right? You could say that things are so unaffordable for the average American that the percentage of homes bought by investors will go up because they’ll have the capital and maybe the patients to buy these things, whereas the other argument is like it’s so expensive, stock markets doing well, there’s other places to put money. Maybe institutional investors will pull back a little bit, going to put their money elsewhere.

Kathy:
One thing about that is again, on your strategy. So at real wealth, my people basically are Californians and God bless you all, love you Californians, but they don’t understand how to invest in real estate because all they’ve seen is, oh, you buy this thing and after 10 years you’re going to be a millionaire. But I’ll give you an example. I’ve said this before, but I’m renting a place for my sister while she’s going through chemotherapy and the house is like a $3 million house. We’re paying $5,000 a month. So it’s really high rent if you look at it that way, but not for the San Francisco Bay area. But that’s not cashflow. So this is my person. I would want to sit down with the owner of that property and say, you have a $3 million asset, what else could we do with this?
We could take that, sell it 10 31 exchange into other markets where they’re going to go from 5,000 to 20,000 a month easily. They’re going to go from whatever situation they’re in to retirement that that’s been our thing is just kind of educating people that equity sitting, that debt equity in the property is worth something and just repurpose it into a different kind of property somewhere else. You can double, triple, quadruple your cashflow. So while for somebody starting out, it might not make sense to go buy a property that’s only cashflowing 5% or whatever for this particular person’s going to be a life changer.

Dave:
Yeah, that though Ka, I guess this sort of brings back to my point though, if you already have money and are looking to enjoy the many benefits of real estate, I still think it totally makes sense, right?

Speaker 3:
Yeah.

Dave:
I’m just curious if we’re going to see a bounce back in newbies and people who are in their twenties and trying to save and just trying to buy rental properties. It’s hard. I do this thing every year, the state of real estate investing. I’ve been writing it the last few weeks and I’m kind of just curious like lemme just test my theory on you and maybe you guys can tell me your opinions. I just don’t know if we’re going back to this time from 2015 to 2022 where it was pretty easy to get into real estate prior to the great financial crisis. It was kind of this niche thing and it got a lot easier, but that time when it was easy might actually be the anomaly. That was an unusually good time and what we’re entering in now I think is still a good time to invest in real estate. I’m still going to keep doing it, but I think it’s more just the hysteria and hype is not going to be there and it’s just going to be more about grinding out the kinds of deals that have worked for generations. It just might not be as obvious to people who are just getting into it.

Kathy:
Well, you want to talk about easy investing was 2003 to thousand six because anyone could get an unlimited number of loans, investor loans with absolutely no credit check. Unbelievable.

Dave:
Too easy.

Kathy:
In

Dave:
Retrospect,

Kathy:
There has been too easy and that’s because of policy. It was government policy saying it needs to be easier to get into real estate. Well, to buy a two, three, $400,000 asset, should it really be that easy or should you have to work for this? There’s been this sentiment that everybody should be able to own a home, and that’s just not true. You have to have two years at least to get a mortgage, two years income, proof of income. So there’s steps before that, but the government still makes it somewhat easy to get your first home, not investment property, but it can be an investment property with a 3% FHA loan 3% down, and too many people still don’t understand that you don’t need a 20% down payment. 3% will get you in the market. It shouldn’t be too easy, but I think if you’ve got the education, you can always make it work. You can always make it work.

Dave:
Totally. I totally agree. I think it’s just like we’re getting a little off topic, but I think it’s a mentality shift. I think it’s this idea that was true that for a brief period of time you could invest for three to five years with a decent job and maybe cover your living expenses and that was awesome. I just don’t know if that’s true anymore. The math is really tough and I still think that’s okay For me, when I started, I never was like, oh, I’m going to retire in three years from real estate. I was like, I’m going to take 10 to 20 years and this is going to work because it’s worked for a century. If you just follow the same approach, and I think we’re still in that case, you still can make tons of money in real estate. You could still shorten your career by 30 years if you want to. I just don’t know if it’s like, Hey, jump in right now, quit your job in two years and you’ll be fine.

James:
No, but it comes down to grit. There is always going to be harder times, really easy times, flat times and harder times, right? In 2008, pricing was really low and it was hard to get investing done. I would say it was harder than it was today because not only was it hard to get access to money, which was the most important thing in real estate, but it was also the numbers didn’t work either. Rents were flat, rents were low, America was broke, and it was hard and you were not making cashflow and you had to get creative to be able to buy real estate, 2008, nine and 10,

Speaker 3:
And

James:
If you got creative, the reward, you are feeling it today. And so just like then we’re in a harder time. So you have to look at what do you want to do to create the income? You can short-term rental, you’re going to have to operate more short-term rental. You will make cashflow. It is a lot of work. I don’t do it. I’m about ready to do my first one to make a deal pencil. Well, it’s my first short-term rental. We’ll see how this goes, but you have to get thrifty, and if you want to get in the game, get thrifty, get some grit, put the plan on it, put the work in, then you get the reward. Getting rich in real estate in two to three years, that’s unrealistic.

Kathy:
Yeah, I mean that was kind of a cool BiggerPockets time, just a pocket and time for BiggerPockets where I’d hear these shows of people retiring in a year, and you know what? It still would be possible really if you dove in and you did it right, you had people like James to mentor you and all these bigger, you could still maybe do it, but I never taught that. I was like, Hey, we’ve got a 12 to 15 year plan here.

Dave:
Yeah, it’s either like full-time work or patients. Those are your options. Both are good. You can either dive in, do it all, be a full-time investor like Henry does, right? He operates a business. I think Henry would tell you he has a job, or you can take the Kathy or me approach, which is like, I’m fine if it takes 10 years, I expect it to take that long because low risk and it’s not a lot of effort and I’m totally fine with that, and I just think we’re entering back into this period where that’s available and that’s the normal thing. That’s what has always been the case for the right people to get into real estate for decades, and that’s good. I think that’s a good thing. Alright, well, this has been a very fun conversation. James and Kathy. Thank you both so much. If you want to connect with any of us and learn more about our thinking about real estate, we’ll of course put our contact information in the show notes below and just two things for our listeners to look out for.
One, we are going to have this conversation with Deborah Cayman who’s going to tell us all about what’s going on behind the scenes at NAR. So make sure to check your feeds for that in the next couple of weeks. And I sort of hinted at this thing that I do every year, which is the state of real estate investing. It’s sort of a summary of what happened over the previous year, some questions to consider for the following year and some advice on how to get into the market, operate your portfolios in the coming year. We’ll be doing a show about that or you can download that for free when it comes out in January on biggerpockets.com. James and Kathy, thanks again and thank you all so much for listening to this episode of On The Market. We’ll see you next time.