164 State of the RE Industry – House Sales Are Dropping | Hard Money For Real Estate Investors

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164 State of the RE Industry – House Sales Are Dropping | Hard Money For Real Estate Investors

Join the Carolina Capital Management team every Thursday at 12 pm ET LIVE! in Real Estate Investor Show – Hard Money for Real Estate Investors!

In today’s episode, Wendy Sweet & Bill Fairman talk about why house sales are dropping. What are the positive and possible negative implications of low mortgage applications to the real estate industry. And as hard money lenders themselves how are they affected by the slowing down of retail sales.

Timestamps:

0:01 – Introduction

1:18 – https://www.CarolinaHardMoney.com

4:09 – Wendy talks about the event that she participated in where they discuss short-term rentals.

9:41 – https://www.SweetShortTermRentals.com – check out this site to learn more about short-term rentals

13:22 – State of the Real Estate Industry – Housing Sales Are Down

14:36 – Redfin: The Housing Market Is Showing Some Cooling Trend

16:05 – Real Estate Is Still The Greatest Investment You Can Make

18:18 – Moratorium is being lifted therefore more housing flooding into the market

19:11 – Newmarket of lenders are opening up. – Non-Qualifying Lenders

19:45 – You should have more than one strategy when you are buying a property

20:46 – From a hard money lender perspective how are we affected by the slowing down of house sales.

Carolina Capital is a hard money lender serving the needs of the “Real Estate Investor” and the “Small Builder” borrower who is striving to build wealth and generate income for themselves and their families. We offer “hard money rehab loans” and “Ground-up Construction Loans” for investors only in NC, SC, GA, VA, and TN (some areas of FL, as well).

As part of our business practices, we also serve as consultants for investors guiding them to network with other investors and educating them in locating and structuring transactions. Rarely, if ever, will you find a hard money lender willing to invest in your success like Carolina Capital Management.

Listen to our Podcast: https://thealternativeinvestor.libsyn.com/

Visit our website: https://carolinahardmoney.com

YouTube Channel: https://www.youtube.com/channel/UCYzCFOvEt2n9TchgECLwpww/

Facebook: https://www.facebook.com/CarolinaHardMoney/

Bill Fairman (00:02):

Hi folks. It’s Bill and Wendy with Carolina Capital Management and Jonathan is actually doing work. So he has to drive that you go check it out on the property, but he will be back next week. So we decided that you guys need a little bit more in depth information about the industry in general and what’s happening. The click headline, clickable headline sales are dropping more after this

Bill Fairman (00:53):

Love that smile.

Wendy Sweet (00:54):

It’s a donkey face.

Bill Fairman (01:01):

Are you calling me a donkey face?

Wendy Sweet (01:01):

No, it was me.

Bill Fairman (01:01):

Sure.

Wendy Sweet (01:01):

No, you’re just, you’re the other end. I think that’s called the ass.

Bill Fairman (01:03):

Thanks for joining us on the Real Estate Investor Show, Hard Money for Real Estate Investors. We are Carolina Capital Management. We are lenders in the Southeast for real estate investors. If you are interested in borrowing money, just go to CarolinaHardmoney.com and click on the, apply now tab. If you’re a passive investor looking for passive returns, then click on the accredited investor tab and don’t forget to like share subscribe, hit the bell, lastly, but most importantly, don’t forget to sign up for Wednesday with Wendy. And Wendy is booked up in advance. So if you act now, you might be able to get in before Christmas.

Wendy Sweet (01:56):

That’s right. I am booked out through, I think September 22nd was the most recent date that I saw that was open. And I’m excited about it. I mean, I’ve talked to like six people every Wednesday.

Bill Fairman (02:07):

It’s awesome.

Wendy Sweet (02:07):

That’s pretty.

Bill Fairman (02:09):

By the way, we have a comment section on the right hand side of the screen or underneath if it, depending on your platform. So if you have any questions, don’t hesitate to shoot them in here. We’ll be happy to answer those. And also a link to Wendy’s calendar for the Wednesday events. Is there a few tracks, again, she devotes 30 minutes to each person that signs up zoom or FaceTime, or if you don’t want your face, then she’ll talk to you via via phone.

Wendy Sweet (02:42):

You can do it with no video. I don’t like that though. I like the face contact.

Bill Fairman (02:45):

The old fashioned way.

Wendy Sweet (02:47):

Yeah. And I started that, really cause I I’d call it typing my time. Cause so many people gave to me. I mean, I would not be anywhere near as awesome as we right now. If I didn’t have the people around me that were teaching me and encouraging me,

Bill Fairman (03:06):

I wouldn’t be anywhere near as awesome as we are,

Wendy Sweet (03:10):

Have to give credit elsewhere too. Right?

Bill Fairman (03:15):

That’s true, It’s a team effort. Even though I’m the smartest man alive!

Wendy Sweet (03:18):

And truly to be good at investing and even figuring out your career, the directions you want to go in and you know, it does take a village. It takes other people who have been through all kinds of things. And and I like to take advantage of my brain trust. I got a big one around me and I share them with the people we talk to.

Bill Fairman (03:38):

Speaking if team, thank you, Andrew, for that comment. Shout out the Melanie.

Wendy Sweet (03:41):

Shout out to Melanie Bell with Carolina Hard Money.

Bill Fairman (03:44):

As we speak.

Wendy Sweet (03:44):

Yeah. Melanie rocks. She rocks.

Bill Fairman (03:48):

So you’re listening and signing closing documents at the same time.

Wendy Sweet (03:51):

That’s what we liked. That’s right. That’s exactly right.

Bill Fairman (03:55):

So yeah, let’s talk about,

Wendy Sweet (03:57):

Where’s Waldo?

Bill Fairman (04:00):

Where would you like to start? There’s a lot going on.

Wendy Sweet (04:02):

Let’s, yeah, we can talk about the industry first and then we’ll talk about where I’ve been lately.

Bill Fairman (04:09):

You know what? Let’s talk about where you’ve been lately

Wendy Sweet (04:11):

Of course he’s gonna do the opposite. It’s blue, no it’s red.

Bill Fairman (04:15):

Got to keep it interesting.

Wendy Sweet (04:16):

That’s right.

Bill Fairman (04:18):

On the last show we talked about your short term thing you were doing and promoted it. We didn’t have any information on how to get any info

Wendy Sweet (04:27):

That’s right. So I did spend some time last weekend in Jackson, Mississippi, and I left there so excited, I just can’t wait to put all the things into place that I learned when I was there. I was one of the speakers.

Bill Fairman (04:42):

That happens a lot, probably. I mean, seriously. When you’re in a room when you’re in a group full of like-minded people, you learned this as much as you get

Wendy Sweet (04:51):

Yeah. It’s amazing. It’s amazing what everybody, what everybody was so free to share it, it’s not just the speakers that, that shared incredible information. The people that were in the audience are only about 20 there, cause it was a small venue, but they were all short-term rental people and what they were sharing too, it was just absolutely amazing. I’m just, I’m always blown away by all the automations that are out there and, and, you know, just the little things, handwritten cards, things that they do to make their homes even more, stand out even more so it was just absolutely, absolutely incredible. So we recorded it and the intention was to have 10 hours of recorded videos. But actually it turned out to me about, I don’t know, 13, 14? So we, everybody did two sessions, each speaker, each of the five speakers did two sessions. We also did panels, you know, short term. What you laughing at?

Bill Fairman (05:53):

Because most of the people that you do these things with are long winded, so there’s no way they can cut done it.

Wendy Sweet (05:58):

Well, I hate to admit this but my two sessions were the longest of all of them. But we covered financing. I mean, one of them’s an hour and six minutes. Actually, yeah, it was an hour and six minutes. Anyway, we talked about financing. I mean, I gave names of companies that are now doing short term rental financing and talked about what it takes to qualify, whether you’re doing short, short term rental or long short-term rental financing. So, and that’s just a little bit, the stuff that was in there was just incredible from all these folks, we got to see unique stuff like yurts and glamping and dome tent, you know, yurts are actually the number one requested item. When people go to book an Airbnb?

Bill Fairman (06:54):

Interesting.

Wendy Sweet (06:54):

That’s number one requested. Okay. Yurts are number one, dome tents was number two, tree houses was one of the top ones too. And there’s a lot of tree houses out there. And then tiny houses were like, number 10. I thought it would have been higher on there.

Bill Fairman (07:09):

I think they’re kind of losing their original appeal.

Wendy Sweet (07:14):

I don’t know. I don’t know. They’re still pretty popular. A lot of people are looking at them to live in now, but for a different purpose not, you know, the millennials or the, I should say just under millennials thinking it’s really cool to get on and drive around, but people really liked the small size. So one of the things that I really love that I walked away with that is, you know, you and I have recently purchased some property in Florida on a canal in Inglewood, Florida. Our trousers, I like to call it. Half trailer, half house, but it’s nice. It’s really nice. So we’re putting that on.

Bill Fairman (07:48):

It’s kind of my definition of a tiny house.

Wendy Sweet (07:51):

It is! It is. But it’s really cool. I just love it. And so we’re putting it on short term, short term rentals, but I’m going to not rent it for anything less than 30 days.

Bill Fairman (08:03):

And the one thing here’s a nugget that I just love from Al Williamson, which is, um, one of the, he’s just a guru in short-term rentals, especially the 30, 60, 90 days. He said, you know, if you put your house on short-term rental platforms, you make it so they can’t rent it for less than 30 days. And then you’ve eliminated a whole bunch of competition because what people who are looking for 30, 60, 90 days, they push that button for 30, 60, 90 days nd all that pops up are the people that are doing the long-term rent. So you’ve really, at the long-term short-term rent. So you’ve really eliminated a whole lot of competition by doing that. I thought, gosh, you know, that’s what we want in that Florida property anyway,

Bill Fairman (08:47):

Selfishly, that eliminates that extra week I can sneak down there

Wendy Sweet (08:50):

Well, that’s the other thing that’s so cool. So say somebody rent for 30 days and then there’s a week before somebody rent something for 60 days. So there’s another company that will come in called rented.com, R E N T E D, rented.com that will come in and look at all those gaps. They’ll do it for the short, shorter term stuff too, but they’ll look at all those gaps and they’ll get them fulfilled for that portion.

Bill Fairman (09:16):

I was talking about me filling it for you

Wendy Sweet (09:21):

I know, but I’d rather just make the money. Your happiness is unimportant, sleep on your boat.

Wendy Sweet (09:29):

Anyway, I was just like nugget after nugget, after nugget that, came out of that, it was just so incredible. So if you would like to buy that because it is available for sale, you can go to sweet. No, yes. SweetShortTermRentals.com. There it is. It’s on the screen there. SweetShortTermRentals.com. That’ll take you right to the order page. It’s $197. You’ll get all the videos, recording that we did. And then there are also some PDFs that have built in links to different companies that everybody was talking about. That was really good. So like rented.com and all these other, other companies that we talked about that were so awesome.

Bill Fairman (10:17):

Companies that provide software and stuff like that?

Wendy Sweet (10:17):

Software or any kind of services. It’s it’s really, really cool.

Bill Fairman (10:22):

Excellent. I think the main thing, people worry so much about the short-term rental is making sure they have a cleaning crew and a handyman, not so much the lawn maintenance and stuff. You can easily find those. It’s the, you know, the handyman to fix stuff. And then the cleaning crews.

Wendy Sweet (10:41):

Handymen are a little bit easier to find. It’s the, it’s the good cleaning crew. That’s the toughest thing. You kiss a lot of frogs to get to the right person, but once you do, and then there are a lot of people who know other people in their towns that have short term rentals. So we share

Bill Fairman (10:56):

It’s part of the thing too, is when you’re looking for a good cleaning crew, you want to be able to have them devoted, not just to you, but that be their only job.

Bill Fairman (11:08):

Right. Gotta keep them busy.

Wendy Sweet (11:09):

And if they don’t, they don’t have enough to do, then that’s not going to be their only job. So it’s helpful for you.

Bill Fairman (11:17):

To share them.

Wendy Sweet (11:17):

To bring other people in that can use them for the same things.

Bill Fairman (11:21):

And help them build their business.

Bill Fairman (11:22):

Right. And so we get back to that attitude of abundance scarcity. And what you’re looking for in a cleaning crew is someone that is part of this organization. And that is a critical thinker that can walk through the house and say, oh, there’s a plate missing, must have broken. We need to replace that. There’s, you know,

Wendy Sweet (11:45):

Getting low on sheets, getting low on pillows, getting low on towels. Cause after you’ve had it for a year, you know, you start missing wine glasses and things like, and it’s up to your cleaner to be able to pick that out

Bill Fairman (11:56):

It’s not a big deal. It’s just, you need, you want to make sure that your guests have what they need. It’s not costing you that much when you’re losing a little bit in this, but you need to make sure you have the tower supply.

Wendy Sweet (12:04):

That’s right. Exactly. Exactly. And that’s a, we’ve got one and I love her and I’m not telling anybody who she is.

Bill Fairman (12:15):

The other thing was the handyman part is that you need to go ahead and schedule that handyman to come in and, uh, change filters and that kind of stuff on a regular basis so that person can get in and look around and make sure there’s no other issues that need to be done.

Wendy Sweet (12:31):

That’s right. That’s right. That’s all, that’s all part of it. And it’s really, that’s another thing that I love so much about what we learned is we talked about all these things and talked about ways of keeping up with that. Whether you have one property or whether you have 20 properties, it’s really, it was awesome.

Bill Fairman (12:49):

I’m glad you enjoyed it. And I know you guys will enjoy the videos and get a lot of useful content out of them. If not, Wendy has a money back guarantee. Yeah.

Wendy Sweet (12:59):

You know, on the same day I was, I did a prerecording where I was speaking at one Nita Jackson. I see her, she made a comment saying, hello, spoke at her event as well. And that was awesome. She said it turned out to be terrific. And maybe when she does this again, we can get her on so she can talk about her event.

Bill Fairman (13:20):

Right. Absolutely. So, uh, let’s get to the industry stuff. And it’s not that bad.

Wendy Sweet (13:27):

No, it’s not bad.

Bill Fairman (13:28):

Sales are down because?

Wendy Sweet (13:31):

Well, because let’s see, I think people are done. There’s, gosh, there’s so many reasons. Why do you think they’re down?

Bill Fairman (13:41):

Mortgage applications are down because there’s limited inventory in the peak, there’s people that want to buy. They’re just getting frustrated because they can’t find it,

Wendy Sweet (13:49):

Can’t find out what they want.

Bill Fairman (13:49):

They don’t want to get into the bidding wars.

Wendy Sweet (13:51):

Well, and I think prices have gone up too high for people. They’re finally getting smart. They are, Bill. Because we’ve got houses that are, they’re out there, but they’re sitting on the market longer if they’re cooling. Well, that’s exactly right. So I think, I think, you know, everybody was seeing it, they’re buying like crazy. So they’re pushing the limits on what they’re putting out there. So, so it’s just cooling off a little.

Bill Fairman (14:13):

And again, it depends on location. Real estate is local and it just depends on where you are. I’ve got several neighbors that have been there for 20 years or more, and they sold their houses in a week. They’re all closing this week. That said, if you don’t have a place to go, you’re not putting your house up for sale.

Wendy Sweet (14:34):

Yeah, that’s true too. So I got this off of a housing market update. This, the sources from Redfin which many of you heard it. So the housing market is showing some cooling trends. It said hope sales with a price, with a price drop increased to 4% for the first time since September. So what that means is that houses that were on the market, they increased their price. The 44% of them are now decreasing their prices. Pending sales are down 11% from the 2021 peak. Asking prices have been flat since may. Now that’s not really happening around the Southeast. It’s because, you know, there were bigger cities that they take all this stuff from, and it’s really national that they do it, but we always follow suit. Don’t we?

Bill Fairman (15:25):

Here’s the thing.

Wendy Sweet (15:26):

Has to get normal at some point.

Bill Fairman (15:29):

Your bad news is that I’m asking prices are flat. That’s awful, isn’t it? You can go back a few years to the single digits, 2007, and then you get into 2010 to 2012. You’re happy to see this. It has to slow down a little bit because it’s got to normalize a bit, but the bad news is still goodness.

Wendy Sweet (16:01):

Yeah. It’s I mean, gosh, if the bad news is that bad, um, what’s the good news? I mean, there’s really, really, you know, real estate is still the greatest investment you can make. It’s still a great time to buy and sell property. It’s a great time to be an investor. One of the things that I think we all need to remember is that even in 2008, when everything was about as ugly as it could possibly get, people were still buying and selling property. So it’s all relative to what’s going on around now

Bill Fairman (16:40):

I’ll give you an example of the first home that I bought. Jimmy Carter was president right? FHA mortgage rate.

Wendy Sweet (16:48):

Dang, you’re old!

Bill Fairman (16:48):

I was 19, so I bought very young, but again, interest rates had gone up to 18% after that. So I still got it on the lower end. It wasn’t a peak then either. That said, I qualified for state bond money to help me with my purchase. Cause again, I was 19 years old. I was just out of school and working in my chosen at the time field. And they subsidized your interest rate on your down payment because rates are so low. Now they tried to subsidize your down payment back then rates were so high. They tried to subsidize your rate, which worked out great. So my actual rate was seven and a quarter and investors were still alive and well then, because I wasn’t in my house a week and I’m getting bombarded with mailers from all these investors wanting to buy my house. A non-qualifying FHA assumption, which meant all they had to do is give me cash down and they take over the payments and when I had a seven and a half or a seven and a quarter, and everybody else was at 14 and a half, it was just piling on. So there was plenty of people still investing. And then at the same time, there were plenty of sellers that were willing to do seller financing at a lower rate to sell their homes. Homes still were bought and sold even during

Wendy Sweet (18:18):

Well, you know, we’ve got the moratoriums being lifted to on evictions and foreclosures. So I think we’re going to see many more houses flooding into the market, trying to remember who it was that said, because that’s going to flood into the market, they believe that it won’t matter because all of these big hedge funds are going to buy him up anyway.

Bill Fairman (18:38):

That’s what I was going to say. It doesn’t, there’s not going to be a flood. And even if there is a flood, it’s not going to make a dent in prices because I know inventory is still going to be low because hedge funds are buying up these houses just like they had been before. And they’re paying more for them than they should until they’re going to bid up the prices at all.

Wendy Sweet (19:01):

Yeah. We’ll see what happens that your worked for them the last go around that they did that, it sure did.

Bill Fairman (19:08):

Okay, so do you have anything else to add?

Wendy Sweet (19:11):

The other thing too is the, um, Fannie Mae and Freddie Mac have decided that they’re going to drop again, the number of non-owner occupied and second home loans that they’re going to allow in their portfolios, which actually have opened up a new market of lenders. And they’re called non-qualifying lenders and their interest rates are in the threes and fours for long-term buying old houses. It’s amazing. It’s amazing that we have a program that works for that.

Bill Fairman (19:43):

If you think about it, it’s the same hedge funds that are buying the rental properties.

Wendy Sweet (19:47):

They got all this money.

Bill Fairman (19:49):

So if I can’t buy the house, I’ll just loan the money out of those houses and then if it goes sideways, I’ll own house and have it anyway.

Wendy Sweet (19:57):

That’s exactly right. But there’s lots of companies out there. They don’t want tax returns. They’re just looking at bank statements and the income from the property and projected income from the property.

Bill Fairman (20:09):

If you want to kind of transfer this into your short-term rental, you can always give because most of these places are going to require at least a one-year lease purchase on it. But do a regular, if you’re going to purchase one and you’re going to get deal on it, go ahead and do it as a one-year rental. And then when that lease is up, go ahead and try the short term. If it doesn’t work out, you already know that it works a longer term rental and trying to go back to doing it longer. That’s exactly right. And you should have a, you should have more than one strategy in any property, anybody anyway. Absolutely. So from a private lender, hard money lender perspective, how was this slowing down on retail sales applying to us, I’ll tell you.

Wendy Sweet (21:01):

It’s awesome!

Bill Fairman (21:02):

I mean, we’re still, we’re not doing as many single family loans as we had in the past

Wendy Sweet (21:07):

But we will because now there’ll be more and more properties available for investors to find. Cause it’s hard for investors to find properties right now.

Bill Fairman (21:15):

But what are we doing in the meantime?

Wendy Sweet (21:21):

Going to Florida.

Bill Fairman (21:21):

I don’t think you know where I’m going here. You’re not following. Remember what our transcribers says. Stop interrupting me so I can finish my damn point.

Wendy Sweet (21:35):

Talk faster.

Bill Fairman (21:35):

So what we’re doing as a lender is, and we do this anyway, we have to take what the market’s giving us and make changes where we need to. So we are doing a few more smaller multi-family we’re doing a few more smaller self storage. We’re still staying in that recession resistance.

Wendy Sweet (21:56):

Right. But our number of smaller commercial loans have gone up a little bit than they have in the past. We’re still focusing in on the affordable housing

Wendy Sweet (22:09):

To recession resistant housing,

Bill Fairman (22:11):

But you’re going to have to make those adjustments. And a lot of people that are real estate investors that have been buying, buy and hold properties and fix and flip a lot of the fix and flip people are deciding, you know, guess what, when the inventory slows down my, I’m in a transactional business, I need to be in more of a ongoing monthly revenue stream. So they switch, horses as it were and they get into the buy and hold, smaller multi-family is perfect.

Wendy Sweet (22:46):

I have a dear friend, who has been in this business for over 20 years, is a wholesaler, professional wholesaler that doesn’t hold on anything. And because of that, this friend is still in the grind, you know, everyday, still in the grind, letting, letting his future passing by because he’s not holding on anything. He’s not getting anything as a residual. He’s trading his time for dollars. He’s like a highly paid professional. Yeah. And, and you need to be thinking about that as an investor. What are you doing to really plan for your future? To have that residual income, that mailbox money that’s coming in, you do it through hold on property and you do it through lending.

Bill Fairman (23:35):

Well, yeah, I mean, the whole point of being in the alternative business world is, I mean, you want to be free. You want to have independence.

Wendy Sweet (23:47):

I wanna be free!

Bill Fairman (23:47):

Working for the man.

Wendy Sweet (23:48):

That’s right, or the woman.

Bill Fairman (23:50):

But, you know, you’re not truly going to be free unless you have multiple streams of income that do not depend on you being at work daily, right? And the only way you can do that is by either lending or holding on the property and getting income from it.

Wendy Sweet (24:12):

That’s exactly right.

Bill Fairman (24:13):

So there’s our 2 cents worth. Anything else to add? Because we’ve been flying through it

Bill Fairman (24:23):

You think she did, but she talked for an hour or more at the conference. She didn’t have any problem doing that. Thanks again, folks for joining us on the Real Estate Investor Show, Hard Money for Real Estate Investor, I’m getting it down. We are Carolina Capital Management. We are lenders in the Southeast for real estate investors. So if you are interested in borrowing money, go to CarolinaHardMoney.com and click the apply now tab. If you’re a passive investor, looking for passive returns, click on the accredited investor tab, don’t forget to like share, subscribe, hit the bell and sign up, please for Wednesdays with Wendy. Really, it’s very kind of her to devote this extra time because we need her around here. We don’t have time to mess around with, y’all. Just kidding. Anyway, you can sign up all of her calendar over there on the right hand side. So thank you guys so much. Thank you, Don! You guys have a wonderful day. We’ll see you next time. And we have a show coming up in, one o’clock, I think there’s a link over here too, for it.

Wendy Sweet (25:41):

Awesome!

Bill Fairman (25:41):

It’s about the state of the fund industry. And we have our good friend, Randy Lawrence, all they’re calling Reverend Lawrence.

Wendy Sweet (25:51):

Fellow collective genius friends.

Bill Fairman (25:52):

He’ll see us there. Alright, have a great day. Thanks.

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