I had this very interesting conversation with one of my investor partners this morning that I wanted to share with you.
Tim is one of my investor partners that go way back to when I first started investing in commercial real estate. He's one of my guys from Texas. He has invested in more deals that I can count with both myself and with my students.
We were chatting on the phone yesterday. This is a super rare occurrence considering that he's had some on-again off-again health problems that has really put a damper on both his professional and personal life. (He's not a spring chicken anymore, let's just put it that way.)
He was telling me about the population explosion going on in Texas and had me read an article corroborating this information. There's a list of 10 cities in the United States where the population is growing exponentially. Texas claims 4 of those 10 cities or 40% of the list! (Utah claims 2 of those cities or 20% of the list. I know...weird.)
He was telling me that he's had major problems trying to find deals in his own backyard because investors have "taken over" the area and are swooping up on anything and everything. (They're even buying up low-cap properties left and right.) And he's had problems investing in cash flowing deals for about 18 months now. (I already knew all this but I politely listened anyway.)
Sadly, he told me that this is the end of his investing career. (He's not going to make it to our next recession where all the deals will crop back up again.) I think it was that moment of realization of knowing it was "the end" that really bothered him.
He asked me what was going on with my deals and how the market was unfolding for me since he knows I do a lot of stuff in Atlanta still. I told him that the competition hasn't gotten that fierce in Georgia yet but it's starting to build...and fast. Detroit is also getting fiercely competitive with all these investors coming out of nowhere for the last solid year.
And Florida is much like Texas now where it's difficult to get decent cash flowing properties in the larger metro areas. And, unfortunately, it's been that way for awhile now...I'd say coming up on a year.
And by this summer, a lot of these stabilized "hot" areas will no longer be a possibility for experienced investors to get in, let alone "newbies" who are just entering the field of investment real estate. For them, let's just say "fo-getta 'bout it!"
But one of the things I started telling Tim was about my apartment building flipping activities. That definitely piqued his interest.
Tim: "What's that about?"
Me: "Funny you asked, Tim..."
And I proceeded to tell him about how there still is opportunity...everywhere, actually.
But you have to put some work into it now.
(Of course, Tim isn't in the physical or mental space right now to partake in these types of deals. But I am. And so are you!)
You see, all of these investors that came running out of the woodwork are severely limited to investing in one thing and one thing only: stabilized performing properties with a cash flow. They do not have the luxury of buying a vacant REO, stopping everything they're doing to devote 100% of their time to rehab it then lease it up post-rehab. No, they don't have this luxury at all. They cannot stop the mad rush of grabbing up all of the performing properties they can.
What's this chaos like?
It's like being amongst a stampede of Kmart Blue Light shoppers on Christmas Eve, grabbing up everything in sight and leaving nothing left on the shelves (while many casualties end up dead on the floor).
If these investors aren't big heavy hitters who aren't quick and aggressive, they're going to lose out.
And they all know this!
It's a madhouse out there right now and you're about to profit big time because of one small little thing: their lack of ability to take on rehab and/or under-performing property projects.
For the first time ever, I'm going to be presenting a couple of highly profitable apartment building flipping strategies that I've never presented in full detail to any of my students before. It's a strategy that I've been using for the past year with my investor partners like Tim who have been frustrated with losing out on deal after deal because investors have gotten too aggressive.
And now it's your turn to use this strategy to make huge profits without using any of your own cash or credit to pull this off.
Anyway, Tim and I both ended up concluding that we have until about the end of summer to snap up any properties that are "reasonably performing" before all of us will be "locked out" of the good deals until the next recession hits...probably around 2020 or so.
And that's a long time to be waiting around.
I don't suggest you wait, especially since the deals you'll be getting in the next recession are not going to be as good as what you can still get right now as REO bank-owned properties! By the end of summer 2013, your opportunity for flipping houses will be virtually over in most areas of the country.