While the overall economy is pretty dismal right now, there is a slice of the real estate investing sector that continues to provide a nice ROI – for the fortunate few, who know where to look. More on that in a moment.
But first, let’s take a look at the overall economy and how rising inflation and rising interest rates are eroding consumer confidence and, therefore, less consumer spending – and what all this means to investors
The U.S. Department of Labor (DOL) reported that the inflation rate reached 8.6% in May, which was its highest level since December 1981.
And, even though wages are increasing, higher inflation means the buying power of workers’ take-home pay is shrinking, due to record-high costs for everything – especially housing, food and gas – which everyone requires to survive.
A recent article from Bloomberg reports that US consumer confidence dropped in July, 2022 to the lowest level since February 2021.
In fact, it is precisely because of a steady weakening in consumer sentiment that’s causing consumers to cut back on discretionary spending.
Americans are postponing buying things like cars and major appliances. And plans to buy a home have dropped to the lowest level since 2015. In fact, actual sales of new US homes in June dropped to more than a two-year low.
And, our good friends at the Federal Reserve are forced to employ interest rate hikes geared at curbing demand… to help cool inflation. The idea being that the more it costs for credit cards, mortgages and car loans – the less people will spend.
Speaking of higher mortgage rates… it’s been a wild ride, as the 30-year fixed briefly hit 6%, following the Fed’s recent historically-high rate hike to curb inflation.
So, if you’re trying to keep up with the mortgage rates from day to day, be careful because you could suffer a whiplash, as it bobs up, down, and back again.
Bankrate’s chief financial analyst, Greg McBride, CFA, said that the July Fed meeting will most likely bring about lower mortgage rates because long-term rates respond to growing recession worries.
According to this July 1, 2022 Forbes article, “Mortgage Rate Predictions for 2022,” experts are forecasting the 30-year, fixed-mortgage rate will vary from 5% to 7% by the end of 2022.
The same Forbes article quoted the National Association of Realtors (NAR) Chief Economist Lawrence Yun:
“Mortgage rates bouncing along near 6% is certain for the remainder of the year. They could go up even close to 7%, especially if oil and gas supply further lags behind and pushes up the critical energy prices during the winter heating season.”
And just 25 days later, another Forbes article reported the 30-year fixed mortgage rate increased to 5.81%, up from 5.73% just the day before. The 52-week high is 6.11%.
So where it finally ends up by the end of 2022 is anyone’s guess.
But in the meantime, this year has been a gold mine for off-market real estate investors, like Fix&Flippers. And one of the biggest success stories is right here in the Phoenix market where KeyGlee’s headquarters is located.
A recent article in Axios reported that one in 10 homes sold in Q1 2022 was flipped… or bought and sold within a year, by an arm’s length buyer. That’s the highest level since 2000, the article says.
Actually, ‘home flipping’ has been on the rise for FIVE straight quarters, according to ATTOM, which runs a national real estate database.
Both the Axios and ATTOM articles are very interesting. And for those, who want to dive a little deeper, you’ll also see why the profit margins have fallen off their highs.
If you’re looking to get into real estate investing and like the Fix&Flip model, there is definitely a place for that. But if you’re like us, we prefer to let other people scout, locate and fix-up ugly houses – and then sell them to other investors.
KeyGlee’s Wholesale Real Estate Model…
Our KeyGlee model doesn’t deal with contractors and the escalating material costs (due to supply chain issues) that eat into our profits. We have a proven system that has allowed us to go from 5 friends in a living room to over 100 franchises– in only 5 years.
In fact, our CEO/founder decided to expand, nationally, in 2019. He and the other founders wanted to share their proven systems and processes with other business-minded people, who want to build generational wealth.
And so our wholesale real estate franchise operation started. Today, we have about 120 franchisees, located in various markets across the country – and we’re still expanding.
If you’re an entrepreneur or involved with real estate (maybe you’re a ‘Flipper’), we’d like to invite you to learn more about how we operate our wholesale real estate business.
To get the FACTS, we offer a Discovery Day. It’s a low-key time for serious people to meet with a franchise consultant and learn more about the nuts and bolts of our operation. And be sure to jot down all your questions for us, too.
Find out why we’re so successful, during up or down markets. And how we commit to your success by providing leads, systems, processes and ongoing training… to help you scale quickly.
It’s your Discovery Day, so choose the date/time that works for you. And just show up, virtually. We hope it’ll be the best 90 minutes you’ve ever spent.
To your investing success,
PS. Just below the blog section, you can sign up to be notified every time there’s a new blog post… and never miss one again!