COVID brought new challenges to real estate investing over the last 18-months. Aaron Ivey sits down with real estate investor, Chris, to reflect & chat about his investor group, property investment strategy, relationships, and the need for professional property management services.

Find out more about this real estate investing podcast at:

https://epmrealestate.com/podcast/real-estate-investor-groups-real-estate-investment-strategy

 

Aaron: Here with me today, I have a 2-year partner in the adventures of property management. His name is Chris, and he’s a member of a larger partnership that he is in with other investors, known as Round Oak. Round Oak partnership, if you will. Chris is here with me today to talk about operating real estate during the COVID era, the last 2-years of doing property management and real estate investing inside of COVID. So, Chris, I want to thank you for joining us today.

 

Chris: Yeah, Aaron, thanks for having me. I’m excited to join and talk about our relationship and our dealings over the last 2-years.

 

Aaron: Fantastic! Chris, just to start us off, I would like for our listeners to know I’ve laughed with you over the last couple of years, telling you that I often speak to you more than I’ve spoken to my own wife, on a daily basis.

 

Chris: That is a good point. I think you and I, on average, have talked once a day for the last year and a half. Certainly, more than I talk on the phone to almost anybody else.

 

Aaron: Yeah. I actually find it quite endearing that I know when we text during the day, that it’s probably going to lead to a conversation, and I think that, hopefully, our listeners will be able to pick up on just the natural chemistry that you and I have. And there’s a reason why we have chemistry. I believe it’s because you are one of four partners in a real estate investment partnership, and the partner that you are in that partnership is the operating partner. So, when you and I initially met, I understood you as being a decision-maker and an analyst for your partnership, and that you and I were going to be making a lot of decisions together throughout the course of our relationship. So, I was wondering if you could tell us just a little bit about yourself, about how you came to be interested in real estate investing, and how this partnership came about?

 

Chris: Sure, so a little bit about myself. My background is more of an accounting background, I’m a CPA by trade. I worked for a real estate company that manages and owns apartment real estate, and so I’ve always kind of been interested in that and just through friendships, the people I knew from college as well as other people I’ve met within the Memphis area, really started talking about getting and owning some real estate. There was actually a group of guys, again that I went to school with, they started a small organization where they were buying and renting properties. They had a need where another partner was getting out and they needed to bring someone else on, and it was at a time where I was able to jump feet first and I was able to hook up with them. Kind of my role in it, as you mentioned, was because of my background in real estate I agreed that I would work on the day-to-day operations along with another one of our partners, Adam. While our other partners would be more on the backend recruiting investors or looking for deals in the market, that sort of thing, and so that’s kind of how our roles are defined within the partnership.

 

Aaron: Got it, and so it sounds like the partnership came together in a very organic way. You know, if you don’t have good chemistry with the other people you are partnering with in a long-term investment, like real estate investment, then it’s going to be a very challenging partnership. I think it's really cool that you got into this partnership with people that you knew or that you knew of through your personal relationships. And so, when would investors do come to me and they s

Tenant screening has many parts and in this episode, Aaron discusses how to properly vet tenants before allowing them to rent a home. He covers criminal background checks, rental history, the credit report, income verification, and he reveals the tricks to identify inconsistencies in the information provided by a rental applicant.

Learn more about our real estate podcast at:

https://epmrealestate.com/podcast/screening-tenants-rental-investments-applicants-criminal-background-checks

 

Aaron: One of the things that we've talked about, and actually I had an investor yesterday evening ask me about he said, Aaron, I've got one last question for you and I said, oh, great, what's that question?  He's said, well, it's a professional question and it's kind of a two-parter. He said, how long have you been in business? Like, how long have you been in property management and in real estate? and I said, well more or less 20 years. He said, okay great. He said, so how do you vet tenants? What is your application process and how do you employ it in order to make sure that the tenant you put into my property is going to be the best suited with the least amount of uncertainty? You know, I want a certain tenant that's going to be there for a long time, and so we discussed that. Would you like to know what I told him?

 

Richard: Yeah, I'm curious about that because I've seen the tenant process as we've worked on it together and we've published things on the website. It's a very complex and nuanced process, but yet you've managed to create a process that is probably as simplified as it can be. So, I'm curious to hear exactly what you told him, and see how that lines up with what I've seen.

 

Aaron: Sure. Well, he wanted the elevator pitch length of the discussion. So I'll tell you what I told him and then we can kind of break it down if you want. He said, so how do you make sure that the tenant you put in my property is going to take care of my property, they're going to pay their rent every month, they're going to communicate with you properly, and it's going to be an overall good experience? And I said, well, here's how our application process works. I said we have a minimum credit score of 625, we go back and check the rental history through a collections agency, which has the capacity to perform a skip trace on all of our applicants. This isn’t just simple plug-in information and get a report back, that we then have to decode. This collection agency, and we pay for this application, goes deep into these people's background, their credit background, their criminal background, that they look at everything. They also often suggest information to us, right? What are you smiling about

 

Richard: Well I’m smiling because now I want to know what you've seen. You know, what are some of the rejects, so to speak, that have come back and you've been like, yeah, I can't rent to that person. 

 

Aaron: Well, okay, so the No.1 red flag for us as a sex offender. I’ll just get right to it. Sex offenders, they're are required, if they are prosecuted and found to be guilty and they serve prison time, once they become a sex offender... and by the way you guys, I'm telling you this as a Realtor. I'm not saying this to you as somebody who is an expert in this field. I'm not a criminal justice expert, okay? But what I do know is that it's my right as a realtor and it's your right as an investor, not to rent to sex offenders. So, if you are a registered sex offender, or have a felony due to a sexually related crime, then you are immediately rejected as a tenant for Enterprise Property Management. Just the easiest way that I can put it, we have had registered sex offenders apply. There are some sad stories, you know. There are some that I won't get into because I don't want to trigger anybody. But there are situations where people were prosecuted, they feel that the judgment against them was unjust, but we can't bend that rule. That is an Enterprise Prope

Whether you are new to real estate investing or you're a seasoned investor, it’s likely that you’ve heard the predictions of a looming housing market crash. In this episode, Brett and Aaron discuss the likelihood of a housing crash and they present some other factors that other industry experts have potentially overlooked.

Find out more about this real estate investing podcast at:

https://epmrealestate.com/podcast/is-a-housing-market-crash-coming-memphis-california-national-2022

 

Brett: Housing crash! Number one, Richard said expert. There's no housing or real estate expert. In order to be an expert, you've got to be able to tell me tomorrow what's going to happen. Just like a doctor who's an expert heart surgeon can tell me the symptoms, the problem, and how to correct it. So experts are doing the same thing we did, they're giving their opinion based on what they see in the market. While I hear people talk about a crash, yes, I said many times, this next year we're going to see a dip, we're going to see a slowdown maybe 5, 8 or 10%, but these guys that are running around talking about the housing market crash of 2008, all over again, where the housing market is going to just collapse and you'll be able to buy houses for pennies on the dollar and people will be homeless. We're not heading that direction and that’s what I get a little aggravated when I hear these “so-called” experts talk about the crash because what they're doing is they're actually taking people that would be investing today, it's people that should be investing today, and causing them to doubt and to sit and to wait, and then what ends up happening is, the crash doesn't happen and you are now paying more for a property than you could at this year. So, here's my theory. Come January, we're still gonna be rocking and rolling. I think things will have leveled off, coold off. Maybe can get some stuff, a little under market. It'll be more of a buyers’ market. As we get into April 2022 it's gonna pick back up again and it's gonna kick right into insanity where we're buying stuff at $8,000, $10,000,  $12,000 of asking. So if you're gonna be an investor do your investing between October and April 1st. Buy then and then soon as the summer craziness hits, take whatever cash you got left, put it in the bank, and sit and wait. Just take your time and take it easy, because as we get through next summer, and a lot of these current policies begin to take place, and inflation hits that record high and ends up creating a small recession and we start getting into harder times and companies start downsizing and people are losing their jobs. Yes, we're gonna have a housing issue but it's not going to be a crash. It's going to be a correction. It's going to be getting us back to the days of sanity of 2017 and 2018, when a house sat on the market for week before you had offers on it, and you didn't pay way over asking. So my opinion is there is no housing market crash coming. There's a correction coming and that's going to be this time next year and, if you're long-term hold investors, who cares? You lose 5% or you lose 10%. Next year you gain 15. Who cares about the correction? We are not headed for a crash. Now, I didn't see COVID coming, nor did I see Joe Biden getting elected, so I could be wrong.

Aaron: You know, Brett, obviously you and I have read several articles that opposed the notion of a housing crash, you know. So, for our listeners, we're not just shooting from the hip here, like we read. We read every day, articles from, I've talked earlier about, oh gosh, I'm gonna have to look this up to verify this, it's either housingwire or homewire.com. I like them a lot. I like marketwatch.com.

Brett: Well, there's a lot of good articles you can read and if you read into the information they're giving you, you don't have to be a real estate genius to realize we're not headed for some Niagara Falls type of real estate crash. We're heading for a little bit of rapid

In this episode, Aaron and Brett chat about their experiences day-to-day in investment real estate and provide their analysis of how the housing market is changing, and they also offer up their opinion on the statistics and projections for how the property market will progress throughout the remainder of 2021 and beyond into 2022.

More about this Real Estate Podcast at:

https://epmrealestate.com/podcast/housing-market-value-vs-dow-tax-changes--property-investing-for-the-remainder-of-2021

 

Richard: So day-to-day, what are you guys seeing in terms of market shift? Are you seeing any difference in what it takes to win offers on behalf of investors and what’s your latest assessment for how this year will play out?

Brett: Nothing's changed. The market is still riding pretty high. I think deals are getting a little bit better and we're finding more and more inventory, versus the amount of buyers we have. I've got quite a few buyers, but the inventory’s got a little easier to get your hands on, especially out in areas like Raleigh and Whitehaven where 3-months ago you threw a bid on a house eight grand over asking, and you weren't even close. I'm hopeful that now that we're getting to the end of summer and close to Fall, the investment market which typically slows down, we've set our investors up to rock-and-roll between Halloween and Valentine's Day. So we have a lot of investors sitting tight with their cash, just waiting for the fall to come, the holidays to hit, and inventory to be exceptionally, much better than it is today. Hopefully, that's what I'm dealing with - writing offers left and right.

Aaron: That's great news. You know, I think I saw a note that you sent the other day, or maybe I was listening to a previous podcast episode, and you were talking about how the ratio of the number of offers that you've been writing versus the number of offers accepted has narrowed. The margin has narrowed. 

Brett: So the win-loss ratio is turning finally

Aaron: That's really cool. That’s great news.

Brett: I went back, you know, because when you go on Authentisign, and you're running a new offer, it tells you what number that offer is.

Aaron: Oh, wow.

Brett: So this year, I've written 162 offers.

Aaron: Wow Brett! 

Brett: Now obviously I didn’t win that much, but I think my win-loss ratio was probably 30:70. But this month [Aug 2021] I’ve submitted about 12 offers and it looks like we'll end up with about half of those accepted. So, yeah, the ratio is changing and none of my offers are over asking  now. Before they were cash, $10k over asking, and we still weren't getting them. Now we're throwing $1k over asking, cash, and we're getting them accepted.

Aaron: One of the things that we're going to talk about today is how the fundamentals are changing in the marketplace. I'm not a huge Jim Kramer fan, but for most people who watch, I think he's on MSNBC. Jim Cramer's out there and he is... he's sort of a bear when it comes to the stock market. He wants to caution people. He's hilarious. He's over the top. Sometimes I think he's drunk! But regardless.

Brett: Probably all of those. 

[Laughter]

Aaron: So, the other day he was really slurring his words. It was pretty funny. But he said something really amazing, 2-days ago on MSNBC. He said, maybe we should just trust this market and see where it goes.

Brett: Think about, every time we've had a serious financial crisis in the stock market, even the housing market. It was when people got warm and fuzzy, thinking that the rail car goes up only and never comes back down and, I'm gonna get on it and ride it. As soon as you hit the point where you have guys that drive a forklift with FedEx now getting a stash out and putting money in the stock market. That tells you that the general public has become comfortable with the volatility of the stock market, enough to where people think well, it's at... What's it at now?

Aaron: Are you talking about the Dow?

Forbearance, Foreclosures, & Property Availability Into 2022

Forbearance: What is forbearance? How is forbearance impacting the housing market?

As the forbearance program comes to an end and foreclosures begin, how will it affect the availability of property into 2022? In another segment, we will be talking about construction costs in the United States. Why has the cost of lumber gone up and what are the long-term effects on its overall cost? We also discuss ways in which construction in the United States may need to change. 

 

More details about real estate investing and this episode may be found at:

https://epmrealestate.com/podcast/forbearance-foreclosures-property-availability-into-2022

 

 

Brett: In this segment, we're going to be talking about the forbearance program. The foreclosure crisis that is inevitably facing Americans is that it's going to be beginning here, actually, in two days, when the foreclosure moratorium ends on federally backed mortgages. Let’s be clear about that. Federally backed mortgages. If you've got a conventional mortgage with a lender, you probably didn't receive any benefit from the government's moratorium, because those conventional loans from lenders can do whatever they want to do. But if you're loan is backed by the US government and the taxpayers and we say U.S. government as if they are the taxpayers. Actually, your loans are insured by Me, Glenn, Richard, and everybody else in America that pays taxes. If it is underneath that program, then you have a moratorium where they cannot foreclose on you for any circumstance. It doesn't matter why, until after July 31st. Then after September 30th, the forbearance programs end, and we're going to get into that talk about forbearances and what those are, and how that will impact the foreclosure crisis that's coming. I say crisis. This is not 2008. I believe at the end of the day you're going to have about 3% of mortgage holders, maybe 3.5% facing foreclosure, and the majority of those will be able to pull themselves out of it. Back in the crash of '08, you had tens of millions of people in foreclosure and their homes were upside down in values. So we're nowhere near 2008, 2009. So, anybody listening here: Don’t panic.

 

Glenn: Not only that, but the banks learned a lot about how to handle these situations with loan modifications, short sales, etc. They learned a lot about that back in 2008, 2009 up through, 2012 and 2013. So, those programs are going to be a lot smoother than they were.  You and I used to fight that battle every day.

 

Brett: Yeah. For those investors are listening, and your mouth’s watering because you're thinking, oh, here we go, we're gonna have a closure crisis and we're gonna be buying houses for pennies on a dollar. Remember, the housing market is up 20 almost 24%, right? They expected a crash this year. Everybody expected a crash. I remember one specific genius real estate agent locally here in Memphis who said, no, it's not gonna crash, it's gonna go the opposite direction, and it did. It did exactly what I thought it would do.

 

Glenn: It must have been me.

 

Richard: I don't know anybody like that.

 

Brett: It’s because you're from Britain. There are no people like that in Britain. But yes, it went the opposite direction. There's a varying list of factors that cause that issue caused the growth, and there are different opinions about it, but at the end of the day, it went up 24%. So, when the foreclosure process begins on a lot of these homeowners, there's the argument that they're just going to put it on the market, they've got an increase of 24%, if you have a $200,000 house that you bought and have a mortgage on, and your house is worth $240k to $250 now. So, you’ve got equity. So let's throw it on the market and sell it for $235k quickly, to get out of it, and pay the bank off to stave off all foreclosure. Because listen, when the foreclosure clock starts ticking, the bank doesn't care if you have a buyer

Real estate investor, Ted Huntington, describes himself as a novice investor. Aaron Ivey sits down to ask Ted about his take on the current housing market and if he thinks we'll see a 2021 housing crash, and Ted shares what he’s learned through his purchase of 6 single-family rental homes in Memphis, TN.

Listen and subscribe at: https://epmrealestate.com/podcast/2021-housing-crash-chat-with-memphis-real-estate-investor-ted-huntington

Aaron: So on today's show, we have a special guest. This is somebody who I would consider to be a friend, and he came into investment real estate... How many months ago was it Ted?

Ted: I would say, you know, it's been a year at least, so pretty recently.

Aaron: Yeah. And the cool thing, you know, hopefully for the listener about Ted as you enjoy our conversation, is that Ted is really smart. Early on in our conversation, Ted called me or we were connected through the realtor that was working with Ted that you've heard on this podcast and he said, hey, you've got to talk to this guy and I'm not going to give away to the listener hat it is that you do for a living, but I find what your line of work just really interesting and our initial conversation, I think lasted at least an hour. And then there was probably a follow-up 30 minute conversation after that and we just immediately clicked, I felt. So this is Ted Huntington. Could you tell the listeners what it is you do for a living?

Ted: Yeah, I basically have a bachelor's degree in computer engineering and I work at the University of California, Irvine, in the library’s I.T. department. So I do I.T.

Aaron: But it's so much more than that, because, to me at least, I've had a lot of friends that worked in IT but they weren't I don't think managing access to the diverse range of information that you are managing. I feel like working inside of the live library information system is completely different than, say, working at a courthouse or working for a corporation. Am I wrong in that?

Ted: No, that's accurate. I think the University, I love working in the University setting. There's a lot of intellectuals, a lot of people interested in learning and then in the library, there's just a ton of information and we help people to access that information. I mean, more and more of it is now in the electronic realm, but we still do have actual physical books and journals there. But yeah, we just seem really a massive transition from physical information books and so on to ebooks and electronic information. Everything now is electronic. It's just really an amazing change.

Aaron: It has been a tremendous transition. I am married to a bibliophile, I think that is the word. Is that right? And we have several built-in bookcases all over our house and she is constantly acquiring more physical books for her to read, for the children to have access to, and to put down and pick back up again whenever she likes. So we're one of the rare families out there that I think are still purchasing actual, written books from Amazon or Barnes & Noble or whatever.

Ted: I don't think you're alone in that. I am also kind of a book collector myself. I especially love old books that are important to the history of science in particular. To me I think that not only are they incredibly good reads and they only are in print, I mean some of them I suppose are now in Ebook, but some of them have been out of print for a long time, but also I think they will be collectors’ items that some point because it's a bit of history. 

The book and a lot of these more famous books and so some of them are lesser known but important. At least in my thinking.

Aaron: Right, and I would agree. It's interesting to watch what it is that my wife will download on an e-reader or on a Kindle. It's almost always fiction or she likes a lot of mystery, like older mysteries, and she's very interested in certain histories. But the books she purchases for us to own are usually about earl

How do you achieve your ROI goals in today's property investment market? Hear our projections for the housing market for the rest of 2021, and Glenn speaks with Amy, a Memphis-based investor, who describes her experiences of managing tenants for her own real estate investments.

2021 Housing Market Projections & Achieving ROI in Today's Real Estate Market

Richard: So in this segment, we're going to talk about 2021 and where we are now nearing the end of the second quarter. How do you think things are going to go for the rest of the year guys? And how do you see mortgage rates changing and the demand for property?

Brett: Personally, I think that what we are now seeing is a cooling. Not a major cooling, but a little bit of a dip. In the first quarter, we would write 40 offers and get 3 accepted. Now, we are writing 20 offers and getting 8 accepted, so we are starting to see a better advantage for our investors. I still believe the best time to buy is going to be October, November, December, and January.

Aaron: It's been such an odd year for us. I've seen in my own neighborhood recently, in Germantown, an increase in the number of days on market. In my neighborhood in particular, which we would consider a move-up neighborhood, a move-up neighborhood would be your next step up from an entry-level house. Where we live would be like a very nice house. I'd say that we live in a very modest home in Germantown, in one of the more affluent communities in the Shelby County and Memphis area. There are more houses on the market right now. There are for sale signs that don't have those little sliders across the top that say contract pending or sold, or under contract, and those houses have been out there for several weeks.

Brett: The reason being is because almost everybody tried to get their property purchased and get it closed. They get settled in and have two or three weeks for the kids before they are back to school. So the good news for homeowners that are looking for a home, is that there's a lot of inventory now. Not a lot, but there's more inventory than there has been in 6-months for real estate investors. As the owner-occupant market cools, the investor market will cool. I don't know why investors do this, but many property investors, not good investors, but some of these investors follow the leader too much. In other words, they follow them right off of a cliff. 

Richard: So, like lemmings?

Brett: Right. Exactly. So, why wouldn't you wait until the property market takes a little dip and wait to buy in October, November, December, and buy a better deal. I'm hoping these so-called experts that just put out their discussion about how property values are gonna continue to increase, and they predict the next five years is gonna be a substantial increase. I tend to think they're wrong. After all, what drives the market up? It is demand. The demand is eventually going to stop. I believe that the hedge fund groups are the ones that drove the demand for property. Once that took off, then homeowners panicked, they started buying, and they ended up overshooting prices, and real estate prices snowballed. But now all that's coming to an end. So I predict we're going to see some normalcy back in the housing market. I think the so-called experts, who probably have never held a real job, are wrong in my opinion. 

Glenn: Well, and keep in mind that when they talk about the market in general, they're not really talking about real estate investors, as that’s a totally different game. I would never dissuade one of my investors from buying, but I told several of them to wait, until Q4. Wait until the winter or once thanksgiving hits. That's our time to start looking through the end of the year because then you're gonna have more opportunity because fewer owner-occupants are going to be buying.

Brett: When the market is hot as soon as wintertime gets here, what do investors do? They just go silent and cool off. It's the holidays they are go

Aaron Ivey & Brett Bernard discuss the expectations for the level of service you should expect from a property management company, as it compares to what you became accustomed to from your sales team. They provide real-world examples where trying to save 2-3% in management fees, has cost a home owner dearly. During the conversation, Joe Viramontez's name came up, so following this conversation we have given you an opportunity to hear our interview with Joe from Episode 0009.

Joe Viramontez joins us to talk about his real estate investment experiences, his bad property management experiences, and he shares how he sought expert property management and hired Enterprise Property Management, Inc. for the past 10 years. Joe also shares stories about his entrepreneurship outside of the real estate industry.

Find out more about our Real Estate Investing Podcast: https://epmrealestate.com/podcast

Brett Bernard and Glenn Greene share their Top 8 Real Estate Investment Tips. If you are a seasoned investor or someone just starting out on your real estate investing journey, these tips will help you succeed with investment properties.

Top 8 Real Estate Investment Tips

Understand The Local Market’s Trajectory

Maximize Use Of Proper Technology

Plan For Cycles In The Market

What Is YOUR Idea Of Property Value: Pricing Relative To ROI

Become Aware Of Local & State Regulations

Be Sure You Have Enough Capital

Consider Risk Management: Investment Risk Mitigation

Have Patience. Structure Your Investments For The Future

 

If you'd like to learn more about real estate investor services from EPM Real Estate, Enterprise Property Management’s real estate division, please visit us at epmrealestate.com.

Subscribe to this investment property podcast at: http://BehindTheCurtainPodcast.com

Facebook: https://facebook.com/EPMRealEstate

Twitter: @EPMRealEstate

Is the HOT real estate market cooling? Asking price vs ROI: ways to buy rental investments to maximize ROI. How will foreclosures impact real estate market inventory? We chat to an experienced property investor with investments across the U.S., about his long-term buy and hold approach to real estate investing.

If you'd like to learn more about real estate investor services from EPM Real Estate, Enterprise Property Management’s real estate division, please visit us at epmrealestate.com.

Call EPM Real Estate at 901.671.1015

Subscribe to this investment property podcast at: http://BehindTheCurtainPodcast.com

Facebook: https://facebook.com/EPMRealEstate

Twitter: @EPMRealEstate