5 Tips for Investing in Uncertain Times

how do the sharpest real-estate investors invest during uncertain times right now with the coronavirus there's a lot of uncertainty so how are people like myself and my apprentices how are we investing right now well I'm gonna share with you 5 powerful tips on investing in uncertain times you see I got started in a recession in 2001 the dot-com bubble had burst and the 9/11 terrorist attacks had just occurred and that's where I got my start so I've been through that one and of course real estate is what dragged us out of there and then by the time we got to 2008 in the great recession which was created by real estate I was actually beginning to mentor others by that time so I have been through several of these in both of those events by the way they said were unprecedented because they were and this one is too they're always unprecedented but there are many similarities so I'm going to share with you wisdom that comes from the real world of experience and now one quick disclaimer - I'm not gonna touch on the health side of this that is a very very sad side effect of what's going on right now and and my thoughts and prayers go out to any of y'all who have been negatively impacted people you know loved ones that of this awful virus and I I pray that everybody practices extreme social distancing self-isolation stays discipline so we can put this thing to bed as quickly as humanly possible we're already seen where China where that Ground Zero were supposedly it all began they're beginning to lift some of their lockdown so we're seeing that it can be done with enough isolation alright y'all well let's dive into the five tips for investing in uncertain times tip number one is the sage wisdom of the greatest investor of all time Warren Buffett and this contrarian investing credo goes something like this be fearful when others are greedy which is where we were for the last several years and then be greedy when others are fearful and others are fearful right now and to provide a little bit of context he's not talking about you taking advantage of other people who are down and out what he's saying is that from a mindset perspective instead of running away you should be focused on looking for opportunities I would go on to say that the mindset is the difference between a consumer mindset and an investor mindset in fact I've got a great video on that subject and that is the majority of people think like consumers and such they're the ones that are fearful now so they're running away if you have an investor mindset though you look at this situation with a little bit of anticipation and in this this look of okay where the opportunity is going to because these are when the best opportunities arise and to give you in a separate analogy so if you've ever watched car racing you've probably seen where they have accidents and these cars are going hundreds of miles an hour around these tracks and they're they're really confined tracks so what happens when there's an accident and there's a bunch of smoke that all comes up into a ball and there's cars right behind the accident lined up well these car race drivers are taught not to do what they their human inclination would be which is to run away from the problem either on the outside of the inside no they're taught to go straight at the smoke why because typically whatever this accident is has already moved on to the either in this direction in this direction and the safest place is right down the middle and so that's my analogy for you here to meet this head-on be greedy when others are fearful now is the time for you to focus on looking for opportunities and we're gonna talk about some other tips here too I'm not talking about being irresponsible but now is the time to be focused as opposed to now being the time to run away like a consumer would be be an investor be greedy tip number two is to separate signal from noise I mentioned this on other videos before but if you're new to my channel signal and the noise that is a book written by his Nathan silver absolutely brilliant and it discusses among other things the fact that humans are terrible at predicting the future and oftentimes they allow emotions to push them way too far in one direction or the other and so right now is not a good time for you to get overly emotional instead it's a time for you to focus on signal which is facts things that you can verify that give you a bit of a glare into where things might be going not that you have to be great predictors of the future but you can you can you could have a foundation on what is factual and what is gonna be the case I want to give you a couple of examples of this so noise example would be the idea that everyone's gonna lose their jobs that's noise let's talk about signal signal is this that even during the depths of the deepest of the Great Recession in 2009 our job unemployment rate it never hit above 10 percent which is still a large number but but when you consider that over ninety percent had a job during the Great Recession or that's a humongous number of people that's nine out of ten people right and then we have to go back almost a hundred years to the Great Depression in the early 30s to even get to a point where we had an unemployment rate that was near 20 percent so let's take the worst case scenario Great Depression we hit to the point where there are literally twenty percent of people out of work okay that means that eight out of ten still have a job and are functioning or four out of five now as real estate investors if we're trying to flip houses all we need is one buyer right we don't need thousands of them and so we have a four out of five chance right and typically it's out of that group that is looking to buy houses anyways so when it comes to this idea that everyone's gonna lose jobs when you look at the truth in the facts of the matter even in the worst of the worst there's still so many people that have jobs and now I'm gonna take another step further I'm gonna say we're in a different world than we used to be so many people are working really hard right now including me I mean I'm as busy as ever I mean everything I do with the mentoring is done with distance learning anyways so it's it's business as usual if you will for me if not more busy than ever before there's a lot of people like that there are a lot of different companies that are able to do a lot of work where their employees are at home so a lot of people are gainfully employed and those industries that are impacted in a major way it turns out that there's about to be a huge federal bailout bill that will probably help them too so the idea that everyone's gonna lose their jobs is complete noise the signal is that they're still going to be an enormous amount of employed people that are still going to be able to buy houses or pay rent and all those things in between the second example of signal versus noise real estate values are gonna plummet just like the stock market okay first and foremost we need to talk about the fact that the real estate market is very different from the stock market it doesn't absolutely drop in a matter of minutes based on public panic real estate is different than that right it's the process of people putting houses up for sale and other properties up for sale than other people looking to buy those properties and if there's an interest to buy those properties and what we call supply and demand okay what's really happening out there is what was happening a month ago and in previous video I shared with you about that some the idea that there is there is such an affordable housing crisis in America right now there's so few houses for the people that can truly afford them the balance was so huge that even this is not gonna make a dent in the problem and that is the fact that so many people want to become homeowners but they're not able to afford them because of what they earn versus what the houses are selling for and what we're seeing and I kid you not right now as I shoot this video today right now I'm getting multiple offer situations for some of my apprentices deals we're seeing that in the areas that of course don't have a complete lockdown because there's still such demand for affordable houses that's what we've always focused our energies we focus on those price ranges for houses because that's where all the demand is and again I I can't completely tell the future but my argument is gonna be the signal is that there's such a huge disparagement between supply and demand of affordable housing the the idea that that would lose value is slim to none now on the other side of the coin there are other price ranges and other property classes that could be in trouble of potentially experiencing a problem but my argument would be they are already down that road a month ago we were already seeing problems where an example would be a nine hundred thousand dollar home in the suburbia of Atlanta that was a tough sell that's a tough sell because there's so much more supply Builders can build those houses and still make a profit versus demand and right now if this really does continue to be a pretty prolonged recession those are the kind of houses people are going to be buying but I I have I've been through these recessions before in 2009 at the depths of the depths of the bottom there was still a ton of people buying houses there were and these are the kinds of people that had just gotten married they had just had a baby and they were moving out of their apartment complex and wanted to become a homeowner and not that they were oblivious to the market conditions but they weren't completely focused on it they were buying a home because I wanted a place to live and if you look at what's happening right now and the fact that with the the concern over so many people being so close together there's probably going to be a huge demand for people to move out of apartments and get their own home so one could argue that the other the opposite could happen again we can't predict the future but actually the prices of real estate may go up and those affordable price point ranges so this idea that real estate values are going to plummet to me that's noise signal is that when you look at supply and demand you look at the basics and the fundamentals of how real estate pricing is is done and how it goes up and down it would appear that not only could it go stable it can actually go up for certain price ranges and another example of signal versus noise would be this is gonna be the worst recession ever it's gonna be a global depression uh okay let's talk about this from a signal versus noise perspective this is not something that has to do with our economic machine it's not a system error like it was in 2008 that was an error of the system where people were getting loans for homes that they should have never bought and there's this huge that's massive extra supply of houses being built for people that were buying a second and third and fourth homes that they were never going to move into that was a systemic problem and that created that recession this is more like what happened with 911 what I'm saying here is also being echoed by many of the economic pundits with with the 9/11 terrorist attack that was an external to the economic machine and and it ended up not being a prolonged recession so this would be the worst recession that we're obviously we don't know for sure but when you really look at the facts here the signal this looks to be something quite temporary and there's something that is very akin to what happened in 911 versus what happened in 2008 oh and one more example timey I'm hearing some people that are using noise such as their say no now's a bad time let's wait a year wait a you're a dump in a jump into real estate well let me talk to you about some real signal here on the subject of timing number one I buyers across the country talk about the big guys from my open door offer pad Zillow offers Redfin now they're all dropping out completely dropping the existing offers they had in the pipeline and not buying any houses right now they've left a bunch of homeowners high and dry and work written a lot of leads right now in those markets where they're really active our apprentices are getting a lot of different calls from people saying hey look open door just dropped me like a bad habit I need to sell this house than enough so we're picking up and helping homeowners that were screwed by those big traditional real estate investors see their business model couldn't handle these kind of changes you know these pivots in the market place where as a creative real estate investor can so the next thing that we're also seeing is that because a lot of competitors are dropping out not only hi buyers we're seeing others are as well our marketing costs the cost to generate the best leads that has dropped dramatically so we're getting two more leads better than ever before and that means we're gaining market share my apprentice and I are gaining market share rapidly day by day right now and so it's actually a great time if you can swing it I know some of you all have other financial obligations and you've got to prepare for but me personally I'm still funding a lot of deals right now I've got a lot reserves and I got a lot left for funding deals and deals are coming up rapid-fire right now and we're just we're all hands on deck and then also in maybe it's a month of now two months from now three months from now new opportunities are going to arise because some people will need to sell unfortunately it's not something that we look forward to right but that that's going to happen as well some have been talking about a foreclosure tsunami I disagree with that because we have the lowest foreclosure rates and recorded history just a month ago and it takes seven eight months a year to foreclose and because of the the postponements that most these mortgage companies are allowing for borrowers I don't predict a foreclosure occurring at all but I do see where some people want to sell me we're already seeing it right now we're getting calls from sellers that are saying hey look this is a rental property I'd like to sell it we had a guy the other day you want to sell his property so he could take the money and go buy stocks cuz the stocks are low so I mean there's gonna be opportunities that are gonna arise from this we don't always know exactly where that what that's gonna look like today but as far as timing it would be nonsense to say now is a bad time in fact signal would prove that now is a great time tip number three of investing in uncertain times is you've got to be creative an example would be when you're working with a seller and you don't want to go physically to the property have them FaceTime you with their with their phone if they've got an iPhone or maybe in the zoo happens if it's an Android you could have them take pictures and email them to you there are ways in which you can accomplish things that doesn't require you to be in person right you can fulfill these obligations of complete social distancing and in self isolation while still being productive be creative - I mean fix things like many hard money lenders right now are tightening up but not all of them so get out there get get on the phones call some different hard money lenders some are looking to grab market share right now and they're still very aggressive in their lending practices mortgage lenders for the the typical retail buyer some of that is slowed down because not only was there this rush on refinance requests I I'm probably you know hashtag part of the problem here because I told everybody okay go get a refinance right in my last video but the the number of people that flooded the mortgage market at the same time with their interest rates dropped like listen was the short-term interest rates and then you add to that that in certain instances some smaller mortgage companies their credit lines froze and they can't even originate loans right now it means that the mortgage process is slowed down but you know what some of these bigger banks they're very well capitalized right now and they're operating at peak performance and they're they they have systems in place to be able to handle the underwriting and all those other aspects at a distance now sure if it's a lock down than maybe the appraiser can't go out but maybe they can do some desktop appraisals so again there are ways in which to be creative and how you reach out to the right organizations title companies right now are still closing especially in those areas where the the recorders offices have shut off because title insurers know how to handle this they understand the idea there could be a gap from the day that their recorders office closes to the day of it reopens and they've priced in that risk in their title insurance policies so you can you can navigate around some of these things with some creativity we're closing deals every day we have several closings today by the way so this thing is happening even during uncertain times but you've got to be a little creative you got to get outside the box a little bit you can't stay focused on what you have been doing you may have to go to different lenders you may have to go to different mortgage brokers different closing companies to get some of these deals done tip number four is you do need to still be practical right in a time when the holding costs might increase because you might buy a property in the next couple of weeks and then have to sit on it for a little bit longer because of a lockdown and those sorts of things you need a price that in you might have to offer a slightly lower price or maybe the hard money lenders you're working with or charging a little bit more you got a price that into your offer you got to be practical there and then you also have to be a bit selective what if there's a tenant in the property who hasn't paid rent in three months and because of these eviction postponements it could be months and months later before they get out of there you might have to be practical there either you skip on deals that are already occupied or you price in the risk of knowing that it might take several months to get that tenant out before you even start your rehab right so you've got to be practical here another thing would be if you're going to look at a house right now you're not on a state that's in complete lockdown be respectful of the fact that you don't even know if you're carrying the virus because obviously it in key baits for some time we had an apprentice that went to look at a deal for a homeowner that was in her late 60's and he said hey look how about you walk outside I've got gloves on I'll go walk through the house we'll keep a safe distance here I'll take a look and then and then I'll call you when I'm done I'd be practical here be wise about the situation knowing that there could be delays and another thing when you're getting a property under contract right now put into the contract that the coronavirus could delay things and you and extend the the length in the case that happens in fact I wrote up a specific clause with my legal team and give it to my apprentices for them to use for their contracts so you need them you need to make sure you're practical here that closings might get extended a little bit but that's one of the things that's nice about real estate if you start a deal today it typically takes 45 to 60 days anyways so starting one today I mean by the time we get 60 days from now Lord willing a lot of this will be behind us I mean not not every bit of the the fallout but hopefully the virus will call down all right so be practical tip number five is to be productive so many people tell me how they don't have enough time to get through some of the trainings and things that I provide and I give away for free well for many of you you've got the time right now use it wisely be productive for example if you haven't already make sure you download and read my book how to be a real estate investor it is it is fundamental to understanding how to be productive as a real estate investor I also have a separate book real estate investing gone bad this was not free you have to go over to Amazon to get it but this teaches you what not to do all the mistakes that others have made that you have to go through yourself and also I put together a video course that I'm constantly adding to that I recommend if you haven't been through and make sure you go through it it's right here it's absolutely free I don't know it's 12 13 more hours long at this point and even if you've been through you may want to jump through it again because you'll hear things you didn't hear the first time now is the time to sharpen your skills be productive with the extra time you have you're at home you've got some extra time many of you now's the time to sharpen your skills that way you can take full economic advantage of any opportunities that will present themselves as a result of this and hopefully it gives you an opportunity to stay well as well alright you all well I'm sure you have a lot of questions and comments so please put them down below here I'd love to hear them and I'll try carve out time to answer those I'm Phil poo style ski with freedom Entercom again I've been in real estate investing since 2001 I've been mentoring since about 2007 and I have been a part of training some of the sharpest and most successful real estate investors all across North America if you want to work directly with me and my team I want to encourage you to apply for my apprentice program where my team and I we work with people one-on-one we turn the money making machines also if you haven't already check out my video on on the the impacts of the coronavirus on real estate investing that was shot a couple of weeks ago so there's a couple of things in this video probably update to that but there's still a lot of wisdom in there all right I'll see you the next video

Channel: Phil Pustejovsky

Views: 25,119

Keywords: Phil Pustejovsky, CoronaVirus, Freedom Mentor, Warren Buffett, Contrarian Investing, Uncertainty

Id: rltIKUElLZY

Length: 20min 4sec (1204 seconds)

Published: Wed Mar 25 2020