Finding the Right Real Estate Leads and Deals in Any Economy, Regardless of Interest Rates and House Prices

Real estate investing has long been one of the most reliable ways to build wealth. But with constant shifts in the economy—whether rising interest rates, fluctuating house prices, or changing market conditions—it can sometimes feel like a challenge to find the right deals. The good news is that it’s possible to succeed in any economy, and you don’t need to let interest rates or housing market trends throw you off track.

Whether you’re just starting out or have years of experience under your belt, there are proven strategies you can use to consistently find the right leads and deals. In this blog, we’ll explore how to find deals in any economy and how you can adapt your approach to continue profiting from real estate, no matter what the market throws at you.

1. Focus on the Fundamentals: Motivated Sellers Don’t Care About Interest Rates

While interest rates and house prices often make the headlines, motivated sellers are the heart of any real estate deal—and they don’t care about the current economic trends. Motivated sellers are people who need to sell their property for reasons beyond market conditions. They might be facing financial hardship, going through a divorce, relocating, or dealing with a di
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Fannie Mae and Freddie Mac: Cornerstones of the U.S. Housing Finance System

Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are pivotal entities in the American housing finance system. Created by Congress, these government-sponsored enterprises (GSEs) ensure liquidity, stability, and affordability in the mortgage market. Let’s delve into their roles, functions, and impact on housing finance.

Key Functions of Fannie Mae and Freddie Mac

1. Providing Liquidity to Mortgage Markets

Fannie Mae and Freddie Mac purchase mortgages from banks, savings institutions, and mortgage companies. By doing so, they provide these lenders with cash, which can then be used to issue new loans. This cycle ensures that lenders have the resources to meet the ongoing demand for home loans.

2. Packaging Mortgages into Mortgage-Backed Securities (MBS)

The GSEs package the purchased mortgages into mortgage-backed securities (MBS), which are sold to investors. By guaranteeing the principal payment and interest on these securities, Fannie Mae and Freddie Mac attract investors who might not traditionally invest in mortgages. This process:

• Expands the pool of funds available for housing.
• Makes the secondary mortgage market more liquid.
• Lowers interest rates for borrowers.

3. Stabilizing the Ho
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How Sweat Equity Can Boost Your Property’s Market Value

Introduction

When it comes to determining a property’s market value, factors like location, size, features, and age come into play. While you can’t change some of these aspects, others are within your control – and that’s where sweat equity comes in. Instead of paying for costly upgrades, you can increase your property’s value through hard work and hands-on improvements. In this post, we’ll explore what sweat equity is, how it works, and how you can leverage it to build real estate value.

What Is Sweat Equity in Real Estate?

Sweat equity is the increase in property value generated by your own physical labor and improvements. Unlike hiring contractors, sweat equity involves taking on tasks yourself, from small fixes to major renovations. Not only does this approach save money, but it also creates a tangible investment in the property’s overall worth.

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That is the question every rehabber asks himself/herself.  Many cities and states don’t legally require that all contractors be licensed (though most require that plumbers, electricians, HVAC contractors, and the like are). But even in places where a license IS required, there are plenty of unlicensed folks who are happy to do jobs ‘under the table’.

The natural thinking among real estate investors is that we can save money by not using licensed folks: that if I use a licensed contractor the job is going to cost me more money.  

Yes, I have asked that question myself.  And I have tried to cut corners by hiring the “handyman” who is not licensed.  Here are a few of the results I have seen.

1. On an early project I discovered the contractor who was doing excellent work, had a cooler on the job.  I didn’t think much about that until I noticed beer cans on the job site.  So, I dropped in one day unexpectedly and discovered my contractor was drinking beer on the job.  When questioned, he replied, “I’m doing fine.  I am perfectly OK to do the job while drinking.  To prove it, I can trim my thumb nail with this power miter saw and will not cut myself.  Here, let me show you.&rdqu
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When it comes to making offers, most investors only know how to make one offer at a time.  They usually make an all cash offer, also known as the MAO (Maximum Allowable Offer) or they get a loan from a bank, hard money lender or a private investor.  This strategy has worked fine for investors and if you are only making offers on bank REOs on through the MLS, then a cash/MAO offer is really all you will be able to make.

The average number offers to get one accepted with this approach is 20-40 offers to get one accepted in today’s market for most of the country.  Some more experienced investors have been able to reduce that number down to about 5-10 offers to one acceptance by being very selective on what properties to make offers on.  In other words, they know from experience that certain properties from certain banks or listing agents simply will not accept their offers so they don’t even make the offers. 

The secret to success in the real estate business is making offers.  The problem is that most investors use the same offer process when dealing with sellers directly and they are missing some huge opportunities if they just knew how to create alternative offers that don’t require cashing out the seller.

Ask yourself these two questions:
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Ok, so it’s been a while since I have been able to post any updates to the blog.  This spring we were busy buying, selling and rehabbing houses.  Plus I spent a lot of time building and improving our website and member management and event registrations system call PROS – Professional REIA Operating System for REIA’s (Real Estate Investors Association).  And now we are spending our time creating new marketing campaigns and chasing down anything that might smell like a lead.

So what’s going on in the markets right now?  There are several issues we are dealing with lately.  Most recently, Interest rates have started to climb and there is a huge lack of inventory.  The lack of inventory can be explained by the rise of hedge funds buying billions of dollars worth of inventory directly off the market and from the banks, pulling most of the Shadow Inventory, out of the shadows. 

That is one of the primary reasons for the lack of inventory, but not the only one.  The banks stopped filing foreclosures, or at least slowed way down last year to deal with other issues, including packaging up shadow inventory for the hedge funds.  The banks are back on track now, but all that inventory that would have been hitting the market right now, is just now going through the foreclosure process and is expected to hit the markets later this year.

I have been hearing from fairly reliable sources, that the amount of expected foreclosures over the next few years is equal to the amount of foreclosures that have already happened over the past few years.  It should be an interesting next few years.

“Get Off Your Butt and go Buy a House.”  This is a statement I had heard years ago from an old friend when I was complaining about being a broke struggling want to be investor, so I listened to her and did it. That was back in the late 90’s and it was a good ride for many years.  But the last few years have been tough on a lot of real estate investors, me included.  Many of us had to hunker down, retrench and then recover from our battle wounds.  The length of recover was/is directly proportional to the magnitude of your original symptoms.  Some people unfortunately didn’t have the financial or emotional strength to weather the storm which I completely understand as I was almost one of them.  But now it is time to look forward and plan for the future rather than having to deal with repercussions from the past. 

I understand that there will still be a few things we all need to deal with from the past few years as we move forward, but move forward we must, and this is the year to do it.  Even though last year was a relatively good year for real estate investing, it was still a tough year for many investors because of all the competition and the lack of inventory on the market.  I personally struggled finding rehabs as well.  Between my partner and me, we looked at over 400 properties, make close to 200 offers and only got one MLS offer accepted.  Looking back, off all the properties that we made offers on that sold, they were all in multiple offer situations.  Even though we had plenty of cash to buy and always offered quick closings without contingencies, we were always out bid with very similar offers.  Many of those other properties that didn’t sell are still on the market and still overpriced. 
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Beginning on January 1, 2013, a new real estate capital gains tax will take effect to pay for Obama Care. When Obama Care was passed back on March 23, 2010, one of the funding measures was to take from Medicare.

“Bet you didn’t know that, did you?”

So how are they going to recover those costs for Medicare that they stole for Obama Care? Simply increase taxes on real estate and other interest and dividends. This new 3.8% tax is expected to raise $210 billion over the next 10 years.

The new 3.8% Tax Rate applies to:

• Individuals with adjusted gross income (AGI) above $200,000
• Couples filing a joint return with more than $250,000 AGI

Types of Income:

• • Interest, dividends, rents (less expenses), capital gains (less capital losses)

The new tax applies to the LESSER of:

• Investment income amount
• Excess of AGI over the $200,000 or $250,000 amount
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When I first started real estate investing back in the early 1990’s, it was a struggle to find good training for beginners.  So I eventually got my real estate license and through marketing, I found a few local and successful investors who took me under their wings and that is where I got most of my training, but it was still very limited, because those investors only did one thing, but they were good at it.  However, for me to get out on my own and do things their way would require me to have a rich uncle who died and left me a fortune to invest with.  But I didn’t have a rich uncle so I had to learn something different.

That is when I started looking for alternative training sources, and in my state, there was no local resource.  That is when I started seeing a rise in infomercials and I started buying their training courses, and I got upsold to their seminar, and then their coaching programs.  And slowly, I started to do a few deals that I never even knew could be done before I bought those courses.  I started creating seller carry back notes, selling those notes to raise the down payments.  We did substitutions of collateral, wrap around mortgages and then I learned how to buy pre-foreclosures.  I was doing short sales for years before the term short sale was first used outside of the loss mitigation departments.  I was rehabbing and then I learned how to Wholesale, which I said couldn’t be done, until I bought a course on wholesaling and I made it work J

I learned all that because of infomercials.  However, these days, our inbox is loaded with infomercials.  And finding resources to learn real estate investing is easier than ever before, thanks to the internet, emails and webinars.  It seems like no matter where you turn, there is another infomercial in your inbox, on your smart phone, on the TV and everywhere you look.
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