Real Estate Playbook: Prepare For The Downturn Opportunities
Fortunes are made in downturn markets. Here's how to prepare for it to enhance your lifestyle through real estate wealth generation.
I wanted to share this with you.
It’s important. It’s an opportunity.
Make sure to read through its entirety. I hope it makes sense to you.
We only have a limited amount of clients that will make sense for both of us to work with, coach through and represent you through this playbook.
Don’t wait, join the waitlist now
Real estate has been very good to me and my family, and many of my clients. Many have done very well and have created life changing, generational wealth over this last boom cycle. I want this to happen for you, too.
We are in the midst of a downturn economic shift, and many are - or will be - impacted.
The housing market is in a recession by the FEDs decision to hike overnight rates, which is directly impacting the treasury yields, whereby mortgage rates have doubled in a year reaching 7%.
The next 3 FOMC meetings are expecting rate hikes of 75 bps (Nov), 50 bps (Dec) and 50bps (Feb)
The Median housing prices in Southern Nevada have already dipped from their May highs of $482,000 to $440,000 for October. That’s a decrease of 8.7% in 5 months.
The Median housing prices for the United States peaked in June, 2022 at $413,000 and as of September, 2022 sit at $384,800, a price correction of $28,200. That is already a 6.8% decline off the highs in just 3 months. I expect that to be even greater for October.
It is my opinion that there is still a ways to go. I believe rates are going to be elevated for quite some time before they start coming down. I believe rates will settle back down around 5% once pricing comes down to be affordable at these 7-8% rates.
Let’s look at the public math
A $450,000 home last year with 20% down at a 3.00% 30-year fixed mortgage rate had an estimated monthly payment of $1,975 including principal, interest, taxes & insurance.
Homes in the price range in some areas are renting in the range of $2,500-$2,800/month.
Today, that same home is at a 7% 30-year fixed is $2,853, a difference of $878/mo or $10,536 per year.
If you are in the market to purchase, make sure you are asking the Seller for a rate buy-down. Seller’s are doing this. You could potentially buy one point with $10,000, which would bring your payment down by about $250/mo.
Instead of taking $10,000 of the purchase price to $440,000, that difference is only $64 per month to $2,789..
It’s much better to take the seller’s concession. In many cases, you might be able to get even more.
But, enough about that… How does this impact your opportunity to make a calculated risk?
Considering rates will remain elevated for the time being, and prices coming down, the average household can afford a $2,000/month mortgage payment.
This varies based on location, but we are going based on the median household income in Southern Nevada.
With a 7% rate, median prices would need to be at $325,000 for an estimated monthly payment of $2,060 with 20% down.
For lower down payment options for owner-occupied, such as FHA 3.5% down, that number is far worse. Home prices would need to be a median of $275,000 for a $2,130/mo mortgage. Close, but tough.
Prices WILL have to come down for affordability to be achieved. 19% of homebuyers in the U.S. believe it is a good time to purchase a home. FED Chairman Powell even said a couple months ago that “housing needs a reset.”
This last cycle, Wall Street, private equity, and foreign investment syndicates dumped hundreds of billions into residential real estate turning them into cash-flowing assets (rentals) through their subsidiaries ( , paying cash, waiving appraisals, paying above market value — effectively and efficiently driving up the values of homes across the country.
See This Article: Wall Street Landlords (New York Times) (just do a quick Google search and you will find tons of reputable articles on this topic)
Did you know these mega funds now own 20% of all residential single family homes and 50% of all apartment doors in America? That’s right.. One in FIVE of the homes in your neighborhood is owned by MEGA corporations. And they’re not done.
Blackstone alone spent $10b (thats $10,000,000,000!) this last cycle to purchase residential real estate. They want you to own nothing and be happy. Say a generous purchase price of $500,000 per home average, that’s 20,000 properties! (
For context 6.12M properties traded hands in 2021, and Blackstone is just ONE of HUNDREDS of FUNDS)
But get this, here’s a headline for you: Blackstone is preparing a record $50 billion vehicle to scoop up real estate bargains during the downturn — here's how to lock in higher yields than the big money (and here’s the article)
$50,000,000,000 FOR THE NEXT CYCLE DOWNTURN.
It MIGHT be a good idea to jump in if they are.. I know I will.. I hope you do too.
So what’s going to happen?
I genuinely believe that home prices are going to decline over the next 12-18 months before bottoming out and normalizing. I believe we will go back to pre-pandemic levels. ($249,400 ($384k currently) median national average - January, 2019)
I believe interest rates will come down to around 5% at the end of the housing recession (hopefully more!)… Keep in mind, historically, recessions last about 18 months on average.
Once those rates come back down and buyers start getting active in the market again at higher levels, THAT’S WHEN WALL STREET JUMPS BACK IN TO CYCLE IT ALL OVER AGAIN. There is no doubt in my mind they want to own ALL of residential real estate and turn the middle-class into rental slaves.
We had a great run… And now it’s time to pay the PIPER.
But guess what, all cycles end… eventually.. And you NEED TO BE PREPARED to take action.
That means living more frugally. Not using credit. I’m not saying don’t have fun, but BUILD A WAR CHEST and KEEP YOUR POWDER DRY to take advantage of these opportunities that are coming.
Here’s how to do it.. Here’s the PLAYBOOK
We’re going to start seeing some serious price drops to compensate for these rates, but is going to be gobbled up by the insane amount of underlying demand.
Are you ready for a really good deal on a rental property, or multiple rental properties?
Step 1 - Keep Your Credit Very Good/Excellent
One of the first keys is to keep your credit clean. Try not to create new debt. Keep your scores above 740 (very good) or 800 (excellent). You will be getting the very best of terms if you are not buying cash. You have some time to get started on this RIGHT AWAY.
Step 2 - Get Your War Chest Ready
You’ve heard the old adage - “it takes money to make money” right, or “Scared money don’t make money” - Well, those are both true, but it has to be calculated. You will need funds to close. Most mortgage lenders require borrowers to have at least a 15% down payment for investment properties, but 20% down will get rid of PMI (private mortgage insurance). You will also be asking for Seller’s assistance for closing costs and get some very favorable terms when negotiating the purchase.. I will help you with that.
Other ways to get funds for down payment or to purchase in cash:
Withdrawal 401k/IRA
Savings/Money Market Accounts/CDs
Crowdfund (Source/Gifts from friends & family)
Partnership (Joint-venture with business associates)
Once your WAR CHEST is built, or while you are building it, it's time for Step 3.
Step 3 - Get Pre-approved or Prequalified for a Mortgage
Work with a mortgage professional to get approved for your maximum amount. If you want, see if you can get approved for multiple mortgages and see if you can ratio. More information on this coming soon on my YouTube channel as I speak with Mortgage Broker Chuck Barone, so make sure you are subscribed there.
Once you know what you can afford, it’s time to go to Step 4.
Step 4 - Get your Criteria & Join the Waitlist
Once you know what you can afford, it’s time to get your criteria over to our team so we can begin the process of finding smoking good deals.
We only have a limited amount of clients we can work with, and only want to work with those who we FEEL will be a good fit for BOTH of us. We will not work with everyone. Space is limited. Go to our website and join the waiting list.
Once you are there, fill out the form and supply us with your information and housing/location criteria.
I have professional agents all across the country who I am training on this playbook to prepare their clients for. So if you are outside of the Southern Nevada market, join our waitlist and I will connect you with a fully-cooperative agent who has undergone the playbook training and who provides this service in your area.
It’s time to fight back against the mega corporations and make something life-changing happen for ourselves.
Make sure to join the waitlist immediately as this opportunity will close in the near future. Join it RIGHT NOW.
Step 5 - Begin the Hunt
Are you ready? The time is coming in the near future. Are you truly and duly prepared? Do not miss this opportunity that is coming. If you missed it in 2008-2012, do NOT MISS IT THIS TIME.
What we’re going to do now, if selected to go on this adventure, we are going to be finding homes that have been sitting on the market for 89 days or more with no showing. We call these “stale listings” in the industry.
We are going to show your pre-approval/pre-qualification and edit the amount you are qualified for DOWN to what you decide to make an offer for.
We’re going to send them LOW BALL offer, with your approval + asking for many Buyer' incentives.. Our team will help you with this.
The seller can either TAKE IT or LEAVE IT.. If they don’t take it, move on to another house. There will be plenty of opportunities.
What’s going to happen is…
You will start to see the Sellers who HAVE TO sell start taking these offers. It will start happening. And that’s when the snowball begins… a NEW lower comp.
It only takes ONE LOW HOUSE SELL to reduce the value of an ENTIRE SUBDIVISION.
Once the reality of the market sets in with the current unrealistic sellers, I strongly believe this is going to happen.
We’re going to help you get a rental property for 40-60 cents on the dollar, you are going to cash flow it with a tenant (we help with that, too!)… You’re going to collect a nice profit every month, and I believe homes will start to appreciate at a much normal pace of 3-5% per year.
POSITIVE CASH FLOW + CASH FLOW ASSET + APPRECIATING ASSET
= MORE OPPORTUNITIES.
From there, we can discuss your options on using a 1031 exchange to expand your real estate portfolio, using the cash flow to acquire more property, and so much more.
We can discuss all of this once you start the PLAYBOOK. It’s time to get started.
All information is deemed to be reliable but not guaranteed, and is the opinion of Jordan C. Dove
Jordan@DoveandAssociates.com
702.767.5557
JordanDove.com
NV Lic #S0180594
Equal Opportunity Housing