The Future Of Real Estate: 5 Things Investors Should Know Now
We recently had the honor of having a public speaker, best selling author, and real estate agent rock star, Pat Hiban on our show recently and our minds were blown! We picked his brain about building wealth through real estate, and what he has learned in his extensive experience in the industry. On this future of real estate podcast, we discussed everything from investing and buying strategies, to the top qualities he looks for when working with other agents.
Before Pat Hilban wrote books and went on speaking tours, before he bought shopping complexes and started his own university, he was a young real estate agent who was eager to learn everything he could about the industry. Here are a few things he learned along the way:
How The Internet Changed (And Continues To Change) Real Estate Investing
The old-fashioned way of doing business is getting harder and harder for agents. New agents who are tech savvy are disrupting the investment game in many ways. Agents are getting their leads in different ways than they used to, and the Internet plays a huge role in that.
Now, investors have almost all of the information they need about a property or neighborhood with a simple click. In a way, the Internet has leveled the playing field for investors. New agents are sweeping up deals that seasoned investors are used to getting. The game is changing, and you don’t have to know the right people or live in a great market to find good deals. You simply log on, do a quick search, and you have instant access to properties all over the world, just like every other investor. Of course, this means that the competition is tougher, but overall, it gives investors equal opportunities to snag the best deals. To stay on top of the game, agents and investors must acknowledge and embrace the new technologies that are dominating the industry.
Understanding Block Chain Technology
Technology has a way of disrupting an industry, and real estate is no exception. Traditionally, there has always been a middleman, like a bank or a lender, involved with money is being exchanged for any transaction. Blockchain technology is designed to eliminate the need for any third party validation during a real estate transaction, or any online transaction. The software automatically documents transactions and creates a public registration for everything from moving money to clearing deeds. We aren’t experts in this at all, so if you’re interested in the future of blockchain technology, bitcoin and other facets of cryptocurrency, we suggest talking with a financial expert. Or at least starting with blogs like this one
How Real Estate Agents Are Accommodating New Buying Strategies
One of the most important traits investors and agents can have is flexibility. Being able to shift and modify based on the ups and downs of the market will open up opportunities for investments in many areas. Real estate agents are shifting from being the provider of numbers and facts to being market experts and service providers. They are no longer the only ones responsible for presenting buyers with data since the Internet gives everyone access to the data. Buyers know what is out there and can do a lot of the research on their own. The agents’ roles are now to provide updates, inside info and services that an app, website or another form of technology cannot. Buyers are much more educated now and are using a variety of different buying strategies. Some are dabbling in buy and hold, while others are taking advantage of the simplicity of turnkey properties. In this market, agents need to be flexible and knowledgeable about the different strategies and adjust their services to accommodate the buyer.
What qualities/ qualifications an investor should look for if he/she wants to work with an agent to find investment properties?
We’ve discussed key characteristics of a real estate agent before, but Pat offered a few other key characteristics that we felt deserved a place on the list. As an investor, you should be looking for an agent who speaks the language of investors. Many “right-brained” agents may be focused on how beautiful the house is and how great it would be to live there. But really, you need to know more. You need to know things like how much work it needs or what sort of cash on cash can you get for it. You need an agent who can find properties based on how many repairs it needs or how much rent it can generate. Other things to look for in an investor-friendly agent are:
- Having investments themselves and experience selling to investors before
- Focusing on more than just the MLS
- Willing to work on buyer/broker agreement
- They’re local and knowledgeable about the area
The future of real estate investing
As the market changes, many investors are wondering if they should lower their expectations when it comes to returns as the market changes. It’s always hard to predict major changes in the real estate industry, but industry pros seem optimistic about the future. At this stage in the game, many investors are leaning away from buying something and hoping the value goes up and leaning more towards buying for cash flow. That way, in case the market does experience a correction, the cash flow should protect you from taking a big hit. As it always does, real estate will hit another low cycle, which is an ideal time to buy and hold. Real estate professionals can’t always agree on when the next major shift in real estate will happen, but most can agree that it’s inevitable. Right now, it’s less risky to buy investment properties in the $50-60K price range, because even if the market makes a 20% correction, the property would only decrease 10K in value. Buying more expensive properties now puts you at a higher risk of losing big bucks if/when the market takes its next turn. The reason we see so much cash flood into the market is because of all of the issues with the stock market at the moment. We touched on this in a recent blog about real estate investments vs. investing in the stock market.
Having Pat Hiban on our podcast was a true honor, and we learned a lot from his extensive experience in the industry. We highly recommend his book, “6 Steps to 7 Figures: A Real Estate Professional’s Guide to Building Wealth and Creating Your Own Destiny.” And would recommend listening to his podcast when you get a chance.
One thing is for sure, the future of the real estate market is bright. Whether you are just getting started or are actively building your portfolio, understanding how agents, investors, and technology can work together will prepare you for the future of real estate investing.