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The Housing Market: Taking The Pandemic In Stride

Mitch Stephen|By April 30, 2020

Episode 370: The Housing Market: Taking The Pandemic In Stride

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REIS 370 | Housing Market

Any time a crisis strikes the world, the economy tends to follow suit and take a huge hit, but that’s no reason for you to panic. As a real estate investor, you have to keep a level head because what comes next could be a time for you to capitalize. Mitch Stephen talks about the changes to the housing market when the economy goes into a recession. For the most part, when you’re a real estate investor, this means big opportunities. Learn how to make the most of these blossoming opportunities with the guidance of Mitch.

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I’d like to talk to you about some of the silver linings of this pandemic. We have a lot of issues and the economy’s getting hard. A lot of people are getting hurt by this, but there’s a flip side to it. What I want to talk to you about is don’t mind screw yourself. Just because these are unsure times and difficult times for most people and a lot of businesses, doesn’t mean that it has to be that way for you. I’ve been talking to people all over the country and people are still selling houses. People are still buying houses. We expected to see this fall off, but we didn’t let off the gas. We kept going. We didn’t just give up because the word on the street was things were going to get bad.

We kept our foot on the gas and we kept going. People are still buying houses. That’s the big one. We’re still selling a couple of houses a week. That’s because for every person that’s down and out or their businesses are close or they’re hurting financially, there are people out there that this is their boom like truck drivers and all the essential businesses. Construction was considered an essential business. For once, a difficult time in an economy didn’t wipe out all the construction people. These people are booming. Plumbers, electricians, roofers, painters are all still getting checks. They’re still making money. Guess who’s buying our houses? These people that are breezing through this time. When I say breezing through, I mean they’re breezing through in the sense that their business hasn’t stopped.

In a recession, the real estate industry booms. Click To Tweet

I also want to bring up collections. We were expecting to see problems in our collections. As of April 20, 2020, people were due on the first, they had a grace period until the 15th. We wanted to wait until after the 15th to see how it’s panning out. For the most part, people are making their payments. This probably has a lot to do with the seller financing strategy because these people are not just tenants. They’re homeowners. They’ve put a substantial amount down. I averaged 12% down and also, a lot of them have done lots of improvements to their home and created a value that was more than when I sold them the house, even more than when I sold them the house.

They’re making their payments. People have to live somewhere and the owner mentality versus the renter mentality. I don’t have a lot of rent houses. I have fifteen rentals and they have all paid except for one. We did get some calls. We talked to them and said, “If your house is a value to you, you need to make payments. If you have a hard time or you’re been furloughed or you got terminated, we need a copy of the letter. We need the phone number where you can talk to your superior or HR and get a confirmation verbally.” We’ll work with the ones that work with us. I can say this right now. The collections are down so little that we’re not sure if it’s because of the pandemic or it’s one of those months when collections can fluctuate.

The other silver lining is competition. Competition in our industry, finding and buying and selling houses, it’s dropping off like crazy. You want to keep going. Don’t mind screw yourself. Don’t fall into the idea that just because there are a lot of people out there hurting that you need to hurt. It’s been my experience and it has been for a long time. In a recession, this business booms. This isn’t technically a recession. It’s something completely different. It might turn into a recession, but right now, it’s a freeze. We haven’t lived through anything like this in the United States. It’s completely new. It’s interesting to see how it works out. A whole bunch of the competition and the part-timers, they quit and walked off the job. For those of us that are still out there, it’s starting to feel a little bit more robust.

Housing Market: For everybody taking the crisis in stride, there’s also a pocket of doomsayers out there who think, “I better sell this property while the getting is good.”

We used to have to fight pretty hard for houses with all the competition. We’re seeing a lot of opportunities. We’re hedging our bets a little bit longer time to close. We can also wait and see if we think we need to. We’re asking for bigger margins. When we buy, we want to buy at a bigger discount and that’s working out good because there are certain number of doomsayers out there. For everybody who was taking this in stride or level headed, there’s also a pocket of doomsayers out there who was like, “I better sell this property while the getting is good.” Whether they’re right or wrong, I don’t know, but there are people ready to take whatever right now. They’re not on every street corner, but you’ll find them if you look hard enough. The other thing is land. Land will be the first thing that people will want to dump off. They’ve got their home and then they’ve got an extra piece of land or a little recreational acre out in the country or a piece that they were planning on doing something with someday, but it’s getting so tight at home that we need to sell this piece of land and get the money so we can survive. Let’s make sure that we don’t overlook the land side of it.

The last but not least, funding. There are people leaving the stock market. I know that in this time if you’re a stock market guy and that’s what you’ve done, the general rule of thumb is when prices drop, the way they have is buy. When it comes back up, you’ve capitalized on the situation. There are some people who are like, “I’m not going to do that. I just want to get my money into something that’s a little more safe with a tangible asset backing it up so I can’t get zeroed out.” Stocks can go to zero. The day that houses are worth zero, probably money is not worth anything either. I raised $450,000 from people who are not afraid. They’re concerned. They’re cautiously optimistic, but they also know they have to do something with this money. To them, having it sit in a 1.5%, 2% CD in the bank is not an option.

Housing Market: The silver lining of the pandemic is that afterward, there’s going to be a lot of properties available on the market.

Don’t let this pandemic lock you up in your mind. Keep trying new things. Meet with the people in your community. I met with the people in our community. We discussed how we’re going to talk to people who call us and tell us they’re having trouble making their payments. We discussed all the angles of that and we got a pretty good plan. There are silver linings in this pandemic, the least of which is when this washes out, there’s going to be a lot of properties on the market. A lot of the competition will have shut down and there’s going to be this lag time where there’s less competition and more houses available to make good deals on. You need to be prepared for that. I think part of being prepared is you can go to 1000Houses.com and buy a segment of the big course called Negotiating. While you’re sitting here, waiting for things to pan out, get an education. Get your negotiating skills ramped up or take this time and make something productive out of it.

There are silver linings coming from this pandemic. Some of them you’re going to have to prepare for. You could go out and be talking to people about funding. Even if they’re not ready to move now, you’ve got them to listen to you because of the situation we’re in. I wouldn’t cut out my marketing for houses. I might add more days to close if I’m worried and I will ask for bigger margins, but I’m not shutting down my advertising. I think this is the time I need to be out there because the problems are going to start popping up very soon. While I don’t wish for anyone to lose their property or anyone to be hurt by this, it’s simply going to happen and someone’s going to buy their house and I assumed it’d be you or I.

Don't let the pandemic lock you up in your mind. Click To Tweet

Please check out TaxFreeFuture.com. There’s something you can do. If you’ve been thinking about getting an IRA or a 401(k), some type of tax-deferred or tax-free retirement plan, now is a good time to get that done. A lot of us are sitting around the house being bored out of our minds, not being able to do a lot of things we used to do. Even people like me that are active, I still got plenty of time on my hands because there are things I used to do that I’m not able to do because of the pandemic. I wanted to chime in and tell you there are some silver linings out here. Don’t mind screw yourself. Shift, adapt, overcome, and learn how to show houses in a way that’s socially responsible. Learn how to sell your houses and get contracts signed in a way that’s socially responsible. It’s time to morph. It’s time to check out some different ways to advertise. Just keep morphing. Thank you very much for giving me your time.

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About Mitch Stephen

REIS 369 | Group Coaching Mitch Stephen has been a self-employed RE investor for 25+ years. His real estate investing career started at the age of 23 when he read “Nothing Down” by Robert Allen.

Mitch Stephen has purchased well over 2,000 houses in and around his hometown of San Antonio, TX. A high school graduate, who never stopped learning. Books, CDs, seminars and webinars were his classroom.

Today he specializes in owner financing properties to individuals left behind by traditional lending institutions and giving new life to properties that scar the neighborhoods.

He has perfected a method of achieving cash-flow without having to be a landlord and without having to rehab properties. He’s mastered the art of raising private money and the classic “Nothing Down” deal.

He has pioneered the idea that you don’t have to give discounts to sell your notes.

A passionate speaker who delivers the message of integrity first and profits second; an expert at keeping it simple and explaining, in plain English, the theories that made him financially independent. He is always an inspiration to those around him.

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