Is it even possible to make money in real estate investing when prices decline? How can you protect your investment when real estate prices come down? Should you look to invest outside of the United States? Our guest and real estate investor, Ryan Weimer, shares how he feels at peace, despite home values. Ryan even shares how he’s able to invest living abroad in England, and why he prefers investing in the US. Tune in now!
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How To Make Money In Real Estate When Prices Drop With Ryan Weimer
I appreciate you tuning in. You’ve been binging into this show faster than we can get through them. I appreciate you guys just hanging in there. Get in our episodes as we come out. I’ll give you a tip on these episodes. If you wanted to figure out how to make this work for you, if you’re someone who’s a startup entrepreneur, go back to episode one.
Go all the way back to the crappy episodes I did, at least audio quality-wise. Go back to the beginning. You can find that on BlogTalkRadio.com/MoneyRipples. Start from the beginning. If you’re just starting out, maybe you’re young in life or trying to start out a new business and an entrepreneur, start that direction. If you’re looking more on the passive investing side, start from the most recent, and then work your way back. There’s your little tip for the day. As a reminder, if you haven’t done this already, check out MoneyRipples.com. We got that great passive income calculator on there so you could find out how much passive income you could create in the next twelve months. Happy new year to you. Check that out.
I’ve brought a guest someone that’s in a mastermind group with me. He’s been in the real estate space for several years and has got a wealth of knowledge, especially right now because I’m sure some of you are wondering, “We’re hearing the news.” There’s always been fear-mongering about real estate in the news, but now, we’re hearing about markets shrinking and prices are going down. It’s got to be a bad time investing in real estate, or is it? That’s why I’m bringing Ryan on here with us.
Although he’s living out in the UK, this guy had a massive amount of experience investing overseas and here in the US, Boise market specifically. I’ve mentioned many times on the show that the western half of the United States sucks for buying rentals. Ryan, even with the adjustments of what’s going on, he’s going to share with us now what he’s done to be able to adjust as markets are going down, and how you can make money even if the market tanks on you. Welcome to our show, Ryan.
Thanks for having me, Chris. I’m excited to be here. The name of the game is cashflow. It’s all about setting yourself up for financial freedom and time freedom. That’s a lot of our whys. Why we get into real estate is for that cashflow and time freedom.
Give us some of your backstory. How did you get started? You’ve had made millions in different businesses and whatnot. Tell us more about your story.
I went the normal corporate route. My background’s in mechanical engineering. I started off in an oil and gas company, got let go when oil went down to $30 a barrel, and joined a semiconductor company. I realized that this corporate route isn’t going to get me to where I want to go as quickly as I need it to. I don’t want to be 60 years old wondering where the last 40 years of my life went. I want to live life on my terms as soon as I can. I didn’t even know that there was a different avenue or a way to get there truthfully.
It took quite a few years of education, failure, and just pushing through that to get the confidence to pursue it full-time. There was a period for about three and a half years where I was doing real estate on the side and I was working my corporate job, and working a lot of hours just to try to mend those two worlds so I could ditch the corporate job. I’m so happy I did it because stuff happened a lot faster than I thought it would.
Did you go more of the active real estate route or how were you doing this when you started out balancing a 9:00 to 5:00 or 9:00 or 9:00 job?
My first property was just a single family that I bought 50/50 with one of my college roommates. We sat on that for about 1 1/2 to 2 years before we did anything else because I just wanted to get my feet wet. I started seeing the rent increase year over year. I saw a little bit of cashflow coming in, and I was like, “$200 a month? This is awesome. I got to do this 1 million times.” I started getting the bug when I saw it happen, and I thought, “This is perfect.” It started out active. I only had that one property and I was just thinking the whole time, “How can I replicate it?”
I realized the fastest way to get me to financial freedom and time freedom was going the active route. I also had some passive involvement in other people’s deals to get an education and exposure, and help diversify my income in general. I did a little bit of each at the start because I think that’s how we grow, educate ourselves, and figure out what’s best for us.
This is over the course of how many years? How many years has it been now?
It’s only been about six years.
You work pretty fast.
Real estate is a multiplier. The eighth wonder of the world is that compounding interest. It works no differently when you’re doing real estate. You’re gaining knowledge. You’re picking up properties under market value. You build up a crazy amount of momentum in a short period of time. It doesn’t take much. If you just bought 1 rental property a year for the next 15 years, you would just be completely set for life as long as the cash flows and you’re buying properly.
You could pretty much screw it up almost. Not even buy wisely, you could possibly even do it right.
I did. Trust me. I had a lot of failures. I still do. We don’t shy away from that. One of our core values in our company right now is to seek failure because there’s a theme, the people that fail the most are also the most successful. I don’t think there’s any coincidence there. It’s not a matter of if, but a matter of when adversity hits you, how are you going to handle it? That applies to not only business but a lot of parts of life, too.
Seek failure. The people who fail the most are also the most successful. Click To TweetThat’s so true. It’s so funny because so many people will avoid failure. They’ll do everything possible to avoid it. I can see at some level, you don’t want to be stupid, but at the same time, I can see we’re trying to strive to grow and improve will naturally bring up the opposition, won’t it?
I know how daunting that can feel because I felt it myself. Even making that first cold call as an engineer to a homeowner or a property manager, I’m shaking and sweating. It’s much like running a race or working out. There are not any people that are naturally better, naturally salespeople, or get-it-done type of people. It’s a muscle that you build over time. The key is to give yourself some grace to not be perfect right away, and realize, “If I can make a little bit of action each day over a long period of time and build that up over a long period when I look back in the rearview, I’m going to be so much further than where I was.”
Let’s jump in the question of the minute. You’ve noticed some changes. We were talking about this. What are some of the changes you’re seeing in the markets around Boise and other markets that you’re familiar with, too?
At the time we’re recording this, we’re in the low twenties in terms of decline in values. We’re down about 22% for 2022. We just turn negative year over year. Essentially, most of our price gains of 2021 are completely gone already, and there’s more pain to come, which is pretty substantial. We went from this insane sellers’ market where you’d have 8 offers within 24 hours, and all of them over asking. Now, in markets like Boise, Reno, Salt Lake, Phoenix, and a lot of the West Coast, we’re just seeing huge price reductions, even a slight buyer’s market in Boise right now.
That’s such a fast shift, isn’t it? Months ago, it was still going crazy in Boise.
If you’re a flipper, which we do some flipping, we’re not all long-term stuff, we’re taking it on the chin on a few projects. However, when markets are good, and it’s hard to find a deal when the market’s a buyer’s market and hard to sell a deal, it’s much easier to find a deal. In the last week alone, we were able to get four terms properties under contract. What I mean by terms is a seller finance or a subject to at a sub 4% interest rate with a low down payment. What the market taketh away, it’s now giving us other things like this.
You have to be nimble about your strategy and what you go after because truthfully, as a real estate investor, we’ve been waiting years and years for there to be another pullback so that we could swoop up all the deals. Now that it’s happening, there’s some fear involved. It’s a human thing. As long as you’re going at about this the right way and innovating your approach to picking up deals, it’s a fruitful time.
Even when we air this, which will be a few months down the road, still, I can guarantee the news is going to still be saying, “We’re just in. The market’s going down” Now, we’re starting to see it be a bad time. Now, it’s becoming a buyer’s market. By that point, you probably have already bought in dozens of properties by the time anybody does in the media.
These last couple of months have been quite difficult though because like you said, the mainstream media message lags by quite some time. We’re having conversations with sellers where they’re like, “I can’t sell my home. What’s going on?” There’s an education process to this. Right now, if you’re looking to get involved in real estate or passively, either way, make sure that you’re taking that long-term view because right now with how volatile everything is, people’s natural state is going to be, “I’m going to put my head in the sand or I’m going to wait and see what happens,” which is a normal thing. If you’re planting seeds and you’re educating yourself about how to navigate this market, it can be one of the best times and completely explosive to your own wealth.
Let’s talk about that a little bit deeper. How are you able to find the right opportunity and the strategy for the right market? Is it something that you already had mentally prepared and said, “This is the time to do that. Check the box. This is when this strategy comes into play,” or is this something more of, “I’m here in the market. This is what the market wants. Let’s see if we can give it to them, and find a way to make it a win-win?” What is your strategy personally?
It’s the latter. We’re all familiar with the sports analogy, take what the defense gives you. It’s true. When times are good, it’s a seller’s market, and you can sell your property for boo koo bucks, it’s going to be hard to find deals. You might want to take on some more flips in that time period because people will outbid each other for that. In times like this, you just have to match the market to know these strategies.
Seller finance and creative deals are more nuanced. They do take a little bit more practice in time to master that craft and get a seller to agree to give you a property for $10,000 down at 2.5% interest. They only do that if the market is not giving them anywhere close to what they thought they could get on a cash price. You’re not going to just convince somebody that they should do that. It’s all because the market is not giving them what they thought they could get.
Between the market and education, you have to give them that perspective a little bit, too, don’t you?
About half of our job is educating sellers, buyers alike, and people that we work with in our community. Our biggest competitive advantage is even if we’re not the right fit, we’ll still help educate and talk to people about what’s going on because with all the fear out there, recession, interest rates, and the Fed, it can feel extremely overwhelming, and nobody knows what that means or what’s going to happen in the future. It can be very daunting to take any action at all.
Maybe I’m a seller that needs to be a little bit educated because I hear the news and I know the basic stuff. Months ago, I was hearing people tell me stories about competing offers, and now it’s not happening, I wonder if it’s my agent or not, and you’re coming around the block. First, how would you approach that topic to educate me on that? Second, how would you even explain the seller financing aspect of why I would even want to do that because that sounds I’m not making any money from the outside perspective?
It all comes back to motivation. The first thing I’m going to ask you is, “Why are you looking to sell?” If it’s because you’re looking to upsize, moving somewhere, or you don’t have a lot of pain, and you’re okay, if you can’t sell your house, nothing bad will happen. We tell you then even if you list it at this price and it doesn’t sell after a few months and multiple price reductions, you’re going to be okay. If something bad happens, maybe you have some debt or there’s a reason that you have to sell, now we’re talking, “What are your needs?” I know you want a cash offer at this range, but if you don’t get that, what are you going to do?
A lot of people in this space are scared to be blunt because it’s confrontational. It feels uncomfortable a little bit. Ironically, that builds credibility with people. We think, “This person’s not going to like me. They’re going to hang up on me. They’re not going to do business with me unless they like me.” If you’re coming to them with the truth and you’re saying, “Have you seen what’s going on around you lately?” storytelling is effective here.
We’re having a lot of people reach out to us right now that can’t sell their properties on the market. I don’t know if you know of anybody in that situation. It’s bridging that gap. You don’t want to be the one that’s telling them that the market is bad and they can’t sell their property. You want to ask them questions so they come to that thought process on their own, if that makes sense.
I have a neighbor. I run by their house all the time, and I see the sign. Now, I’ve seen the sign switch to a different realtor at this point because it’s been several months. I’m thinking, “It was so hard for me to find a house in this town, and now, they came and sell the sucker.” I don’t know why if the price is too high or what, but something’s going on.
It’s all an affordability thing. What’s happened with people’s interest rates, they’ve essentially doubled in a matter of a few months. What people can afford now and get approved for on a monthly mortgage, they’re trying to look at qualifying for half the house than they used to be able to get. When you see the numbers of the effect that it has, the mortgage and interest rates have on the monthly mortgage amount, there are very few buyers that can even afford anything close to where prices were at based on a monthly payment. It has a lot less to do with the quality of your realtor. Don’t get me wrong, realtors matter and the marketing plan matters, and you have to stand out in this market, but everything has to do with affordability and what’s happened in a short period of time.
If somebody is in that situation saying, “I need to get out,” how do you explain the terms to them and say, “Here’s a way we can do seller financing?” How do you explain that to them?
I say, “What options have you done? Would you rather have a lower cash offer or make significantly more money over?”
Neither. Depending on what they’re motivated by.
By asking that question, we don’t want a yes or no. We’re hoping they’ll give us more information about their situation. “I need $150,000 down because I’m working on another project, I’m buying a business, or whatever.” “It sounds like the cash option is the best for you. The market is bad out there, but maybe you should consider listing it or going on for sale by owner, or something like that.” You’d be surprised once people understand how small their selling price would be now versus a few months ago. It makes the terms offer look that much more sexy because, in their mind, they’re not losing as much.
They got to understand, they can make more money, it just takes a little bit longer to get it.
I’ve sold quite a few properties on seller finance by the way. That is a great passive way to become no longer a landlord, but turn yourself into a lender, too.
Explain to our audience what that entails. Give us an example of one that you did recently.
We had a pre-foreclosure, and the lady she was behind on her payments. Are you talking about a seller finance?
Yes.
I had a rental property in maybe like a C class area. It wasn’t as good as my A or B classes. It had a few more tenant issues with my property manager. I decided my time, energy, and focus is better spent elsewhere. Instead of trying to just list it with a realtor, I listed it for sale by owner on Craigslist, Facebook marketplace, and Facebook investor pages as, “No loan required. We’ll finance you. We’ll be the bank. You don’t need to get a loan. Here’s what our asking down payment is, and the rest is negotiable.”
It’s then a conversation of qualifying that buyer, covering your own interest with that down payment, and then you make interest on your money, and it compounds over time. Instead of someone going to a Chase or Wells Fargo and getting a mortgage, you’ve now become the bank. You just get a check every month, no different from them.
If somebody doesn’t want to pay 7% interest on their mortgage, that’s where you could provide a win-win for them.
That’s the best part with all of this and creative finance is you get to determine the terms. If you’re going to sell at 3% interest, maybe the price is higher. Maybe your down payment is significantly higher. Whereas, if you’re going to sell at 8% interest, maybe the price is a little lower. Maybe the down payment’s a little lower. By giving people options, you just open up your buyer pool to exponentially more people than your conventional buyer who’s getting qualified right now through Wells Fargo being like, “I’m at 7.5% rates. I’m qualified for what?” If it doesn’t work, you’re just giving yourself more options.
Now, I want to ask you about down payment specifically. Before I do that, I know you’re coaching people how to do stuff like this. Tell us a little bit about that.
I do one-on-one coaching, and private mentorship. We do have a small waiting list right now, but there’s an interview process where I’ll sit down with you and talk about what your goals both in the short term and long term are, and if we might be a good fit. In our portfolio, we do rentals, flips, passive stuff, seller financing, fundraising for new apartment builds, and Airbnbs. There are a lot of different things that we can do depending on what your goals are.
Any of those strategies could work in different markets, too. Some better than others at different times. For some of them, you can vary interest rates, down payments, and things like that. You were telling me even some of these down payments could be ridiculously low. What would that look like, for example? Would you just raise the interest rate significantly more, or how does it look?
What we find with the sellers is a lot of times, they’re stuck on, “I want the highest price.” If the conversation you have is, “Mr. Seller, it sounds like price is the most important thing to you. Is that the truth? Is it down payment or monthly payment?” We work on those three things. Based on the feedback that we get, usually in order of importance, we find price is number one. Monthly payment is usually the second. Down payment is typically programmed to think that they need 20% down because that’s what a standard bank requires you to do.
The way we combat that is we say, “I can get those terms from a bank if we came up all the way to your price. To make it a win-win, we just have to be a little bit lower on the down. Would that work for you or would you want a smaller price?” or working them off of, “You can have the higher down payment, it just has to come at the expense of price or a lower down payment, we can give you a higher price.” You don’t want to do all this in one conversation. You want to plant some seeds and have them think about what’s most important to them.
If we get those objections, “How do I know you’re going to not just wreck the place and not make payments, and I’ll just be left holding the bag?” it’s, “Mr. and Mrs. Seller, we have 50-plus doors of rental properties ourselves,” or leverage a friend or somebody you know that’s in the space. “We manage a lot of rental properties. The tenant’s going to be the one that’s paying your note. Everything is set up through the title company for long-term escrow. They just take a direct deposit from our proceeds every month from the rent, and it goes straight into your bank account.”
“The title company handles all that for you, but we’re just going to put a renter in there.” Especially if the property needs work and we need to make improvements a lot, another line we use is, “If we default, that’s the best thing that could happen to you. You get the property back plus all the repairs that we’ve made, plus any payments we’ve made to you.”
It’s like an HGTV show. Congratulations. That’s awesome. That’s great. I love how the creativity behind that because it always, again, comes back to that win-win, which is a hard part. A lot of people get distance from creating that transaction because it’s always been, “The banks will figure this out. They’ll tell me what the terms are,” versus, “We can work this out. We can make it to where it’s fair for us and for you. You don’t have to worry about whether banks will pre-approve or not. This thing is done. We can have this done for you in no time at all.”
Creative finance in real estate is truly the only win-win there is. If I’m making you a cash offer, typically, somebody’s giving up equity for speed and convenience. They may or may not have a problem. There’s value in solving that problem. In creative finance, you can literally tweak any lever you want based on what seller needs are. They love that. It’s so different. People like having options.
Creative finance in real estate is truly the only win-win there is. Click To TweetI can see now, as long as the numbers justify you, you don’t have to know your numbers ahead of time. Otherwise, it doesn’t make sense for you.
Most people don’t even know you can sell a property like this. A lot of times, something that helps on the educational side, and I took this from one of my mentors, Pace Morby. He gives the F-150 story, and he talks about this truck that he’s had for a long time. It was a great truck. He couldn’t sell it on Craigslist for the cash offer that he wanted. His wife said, “Honey, I’m sick of looking at that thing in the garage. You got to get rid of it.” He changed the posting a little bit to will take payments. All of a sudden, I was able to sell it for the price I wanted. I just had to take payments over time.
For some reason, that car example clicks for people because they’re used to that car payment and everything, and then they’re like, “I get it now. The same thing can be applied to a house.” There’s a lot more emotion tied up in a house typically that people don’t think about the practicality of that. We have all our guys tell that F-150 story if they’re not understanding what it means to take payments.
Last question. I promise. I want to ask you this one right here. The big question people are going to have is, what protects you if the market goes down more? How do you make sure you’re protected there? If you offer a higher price than what would market would support, how do you still get around that?
Cashflow. It’s got to rent for significantly more than what our monthly payment is. If the property needs work, we got to factor that into the overall price. There is an equation involved, but the short answer to that is cashflow. In the next year or two, I don’t care what happens if my properties are cashflowing. My values could go up 40%, down 40%. Rents typically don’t change very much in a recession, especially with how low our inventory base has been the last few years. All of our rents through this so far have been strong.
Multifamily is a safe space to be in right now. Whether it’s a new build apartments, fourplex, even a beat up duplex that you can house hack, live in one side and rent out the other, these are all multifamily’s recession proof. That’s an asset class where with what’s going on right now, single-family homes are affected the most. Multifamily is where we’re doing a lot of our marketing towards, even doing some builds, too, if it pencils.
I’m sure it’s almost like this quasi-credit crisis being created as we keep jacking up rates so quickly. I’m sure now the market’s getting so limited. You probably have a lot more negotiating power on multifamily anyways.
The irony in multifamily sellers, too, is even though the deals are way bigger, because it’s more units, they know about seller finance and they’re more educated on creative finance. The conversation’s a lot easier ironically.
They can already know what they would accept anyways, and you could just negotiate more quickly and less education.
If you’re somebody new looking at how to get involved, I would just start looking at multifamily properties in your area, and getting educated on that because it’s a safe space to lend in and to be active in, too, right now.
Like you said at the beginning of the show, your big thing is creating failure. You’re trying to almost force failure to be able to learn this stuff in a faster pace than what most people do if they get in real estate investing, casually dabble in it a little bit. You’re forcefully trying to ensure you get as much education and experience as you possibly can at a short period of time.
What I would say to that, too, is it’s all about having clarity. For a lot of people, they don’t know what they want. I find myself in the predicament often, too. If we sit down, we find out, and we map out what we want the next year, 5 years, or 15 years of our life to look like, and work backwards from that, we can set up some actionable steps for us where we don’t have to go full tilt towards it. If you just buy one rental property a year or maybe you invest in other people’s deals or you lend to somebody, those are all ways to start getting action and experience. That’s also building your wealth slowly over time, so you don’t have to go full bore. It’s just in line with what you want and what your goals are.
The way I see it, too, is that you’ve already gone full bore. You’ve already gone through that. Someone who hires you get on that waiting list for coaching and apply for that. If they get you as a mentor, you can say, “Listen. I’ve already tested that. You could try that, but this might be a little bit more effective way for you, and it’ll probably save you a crap load of time and money.”
What’s more precious than time?
Energy. I would even say energy’s more precious than even time for me.
That’s what mentorship does. It saves you both of those things. There are some things that you can’t learn to a certain level without having somebody that’s been there and done that. You can look at any single industry or any part of your life, and apply that same reasoning. That’s why it’s such a multiplier.
Ryan, I appreciate your time. This has been great. Be sure to check out at WeimerInvestments.com. Whether you’re looking at trying to get coached and get on that waiting list, whether you’re saying, “I might want to do some short-term lending deals with these guys,” because they’re raising capital and do some of this stuff.
Maybe you’re looking at having that kind of relationships, something you could trust long term to be able to get your money working for you, check them out. Follow them and reach out to them. Again, we don’t give any investment advice on this show, but I know that Ryan definitely is willing to be that go-giver. Knowing Ryan for the last several years, he’s that kind of person. He’s given us a lot of good information. Ryan, I appreciate it.
Chris, to your audience, this is an open invitation. If you guys need any help with anything, just shoot me a message @WeimerInvestments on Instagram. I’ll be happy to help. There’s no question too silly. We all pay it forward. We’ve all been there at one time, and it gives me the energy to see other people take their first steps, and ultimately, achieve what they want out of life, which is through financial freedom.
There it is again. There’s that ripple effect. Ryan’s creating it, too. It’s the same for you guys. We’d love to help you guys do that. Be sure to reach out to Ryan if you have any questions. Ultimately, it comes down to you. What are you going to do with this information? Are you going to just sit back and say, “That was interesting,” or are you going to say, “This is the time for my life to change right now. This moment and decision I make right now will make the difference of all things in my life to allow me to have a different path and direction that will essentially create not just a great living for me, but a legacy for those after me”? Go and make it a wonderful week, and we’ll see you later.
Important Links
- Episode One – past episode
- BlogTalkRadio.com/MoneyRipples
- MoneyRipples.com
- WeimerInvestments.com
- @WeimerInvestments
About Ryan Weimer
Ryan Weimer lives financially free in London full time, while running multiple 7 figure businesses virtually from anywhere in the world! Boise, Idaho is his primary real estate market with 40+ rental units, and 100+ apartment units.