Yesterday, a Multifamily Launchpad student asked:
“Why are the buyers so vocal when they close a deal, but sellers are not?”
My guess? Buyers want to get reassurance from the crowd that they’re doing the right thing.
Sellers know they got away with something and they don’t want to draw attention to themselves, lest the buyers get wise.
(At least that’s how I feel, having sold a portfolio I assembled for $17,000,000 just four years ago for $25,500,000 this year. I still can’t believe the buyers were willing to pay that much for those deals.)
We’ve been in a real estate bull market for ten years, the longest in memory… It’s fueled by cheap money.
Not just because low interest rates have caused rental property prices to rise. It’s also because low interest rates have caused home prices to skyrocket, pricing so many people out of the market. So they must rent.
Most multifamily investors look at the home-price problem and think this is a reason to keep buying.
Most of the sellers have been around longer than the buyers and they know better.
They know one of two things will happen:
1. A recession will happen, making vacancy rise and making buyers more skittish
2. Interest rates will either rise or low interest rates will stop driving prices higher, including the prices for homes
They want to sell now, because chances are, they won’t see these crazy prices again for a long while. Although the real estate gurus tell you otherwise, the business cycle hasn’t ended.
Free-market economics are still in play.
The way to make money in real estate is still to buy low and sell high — not to buy high and hope the market won’t drop. The latter is what most buyers are doing now.
They can give you tons of reasons why the market won’t drop out from under them. When they do that, they are really just trying to convince themselves.
So, if you are trying to get started in real estate now, what do you do?
We all know what’s coming. We just don’t know exactly when.
The buyers today are hoping the market top holds long enough for them to find a “greater fool” to sell to.
They are the ones who are not preparing… The smart money is in the preparation.
So, how do you prepare?
~You study the markets and find ones with good fundamentals. So you can jump in immediately when prices are better.
~You make relationships with brokers and REO officers at banks, before you actually need them.
~You learn to underwrite deals, so you can tell a good one from a bad one.
~You figure out if your personality is best suited to networking and raising money or grinding out the data and the spreadsheets – and, whatever you decide, you focus on finding partners who like the things you don’t.
~You and your partners build relationships with people with money, who want to do deals when prices make more sense.
~You put all the pieces in place so you’re ready to run when the time is right. While the others are caught flat-footed.
You spend that time studying the playbooks and getting in shape, so that when the coach sends you in, you’re ready to impress him.
That’s where Multifamily Launchpad comes in. For a reasonable price, you get my personal advice whenever you need it in our Facebook group and on our monthly calls.
As a free bonus, you get my brand-new, revised 11-module program on multifamily investing.
It teaches you:
- What an attractive market looks like, where to get the data to evaluate it, and how to tell a growing market from one that just appears to be growing (Module 2 – Videos 4 and 5)
- How even a newbie can get top brokers to show them deals right away, using basic human psychology you already use every day – and why the way you’ve been taught to approach brokers is exactly why they ignore you. (Module 3 – Video 3)
- How to underwrite deals like a pro – even if you are bad at math and hate spreadsheets – so you can finally tell a good deal from an overpriced one (Module 4 – Videos 2 through 9)
- How to determine the best role in the business for you, depending on your personality type, so you don’t waste time on tasks that slow down your progress toward real estate wealth (Module 11 – Videos 4 through 6)
- How to build relationships with affluent people who will not only fund your deals, but pay you fees to manage them too (Otherwise known as syndication, I teach you the way that the billion-dollar private equity players structure their deals) (Module 8)
- How to win bids in any market – even without increasing your offer price (Module 5)
- What the gurus never teach you – why the transition to new ownership can be the most dangerous time for your property, and how to avoid tanking your deal at the very start (Module 10 – Video 3)
- How to hire a property manager who will actually do the job right and make you money (Module 1 – Video 7)
Are there other free bonuses with my program? Absolutely! They include:
- A professional underwriting model that makes analyzing deals simple and fun, even if you hate math and spreadsheets
- The actual Letter of Intent I use in my deals, which you can copy and paste onto your own letterhead
- My due diligence checklist, to ensure a seller doesn’t hoodwink you by holding back bad information
- An actual deal room showing you every single step in the process of raising money from investors in a syndication deal, including marketing materials, private placement memo materials, projections, etc.
Plus, two chances a year to mastermind with me and network with your peers, in person, absolutely free for MFL members — which opens for new membership in September.
If you join the waiting list right now, you will be eligible for an exclusive “waiting list only” discount on your membership.
Here’s the link! www.mflwaitlist.com
Why Multifamily Buyers Gloat, but Sellers Don’t
by Jonathan Twombly
Last Updated: July 24, 2019