#323 Mail-Right Show Lead generating In a Cooling Real Estate Market?
Lead generating digital marketing ideas in a cooling real estate market?
Robert Newman: Welcome back ladies and gentlemen, to episode number 323 of the mail rights show. Can you believe that John has been at it for that long and I’ve been at it for about 200 episodes? today we’re really excited or I’m really excited because John wants to surprise me at the beginning of the show, but what we proposed and had discussed as a show idea was how to market yourself digitally some concepts, or actually maybe not even digitally, just some ideas and how to market yourself during a slowing real estate market. Now, whenever that happens, because, it doesn’t seem to be right now, but, anyhow, so John, go ahead, hit me. How are you gonna kick this off and amuse yourself by surprising me this morning?
Jonathan Denwood: Well, obviously the title of the show is how to get lead generation in, a cooling real estate market. What I want to cover is; are we going in 2022 to be facing a cooling real estate market? And that is really up to micro economical conditions. And I think because of the inflationary situation, is that gonna be long-term medium, or short? And there are different experts that are being discussed that I personally think the inflation environment is gonna be reasonably short to medium. I don’t really buy into, that it’s gonna be a medium to long term factor because we are just about and got to quantify this statement just about, in some ways, getting over a two year very difficult period around the virus. And that has really shaken up the whole economy and people’s lives in a big way, right?
But obviously, inflation has taken off anybody going to a supermarket or going and buying anything, trying to buy a new car or any, anything can see that prices have increased substantially. Okay. Obviously, the Fed’s reaction to that is that they have publicly stated that they are, and they want to increase interest rates. Every half-point increase or 1.4 increase normally has a direct effect on the pricing of housing. How far they can increase those interest rates is another topic that we could discuss for the whole show, because the Feds’ ability to really increase interest rates without their being a major economic downturn and reaction to that action is probably quite questionable how much they can increase interest rates. I think they would attempt to do it. I feel at some stage they will have to reverse the policy because there’s gonna be a sizable market reaction. If they, keep on increasing, interest rates. When that happens, none of us can tell.
I think the other biggest factor on the housing market, that, which is a result of the pandemic, which accelerated this process is what has happened to the commercial real estate market it is quite obvious, even though if we have a full recovery from the pandemic, that the amount of people that will be working remotely, that will not be going back or not going back very often to a centralized office environment is a trend that will continue. The need for commercial office space I can really never see it fully recovering. Obviously companies, individuals, companies sign reasonably long, contracts. So even if their office is half empty or two thirds empty, they cannot just walk away from their commercial contract unless they go bankrupt, or unless they can come to some agreement with their landlord that allows them to walk away from their contract and get a much smaller office, which would fit, what I see as an ongoing scenario, that a lot of people are gonna be working remote, or it’s gonna be a hybrid situation.
How does that affect the domestic property? Well, commercial property has always been the way that most hedge funds and most pension funds, and most large institutions or investors have placed; they’ve placed their money in bonds shares, and in commercial property. And they’ve got great returns from it, and it’s always seen as a pretty solid asset class. That future is now in great doubt. You only have to go to any major city and you’ll see much of the retail outlets, malls, normal retail outlets, office complexes. You’ll see a lot of retail properties empty and empty for very considerable periods of time. And most of them probably will never find a tenant at the kind of rates, rental rates that are being asked. Obviously, there will become a time where rentable rates will have to become more realistic and that will now allow smaller enterprises to move into retail units.
In general, when it comes to offices, which is the real bedrock of the commercial outlet and malls, I really don’t see those markets really recovering. I really honestly don’t so where are they gonna put their money? well, they’re gonna look at the domestic market, the housing market, and it’s a market, which they’ve never really looked at because it’s got real, difficulties, but I’ve been looking at some statistics and really this really has affected the number of properties that are on the market, especially on the Sunbelt and on the west coast of America. There are statistics that almost 40% of housing that’s been bought has been bought by large investors. And they’re buying it before it even, it doesn’t even get into either its new development or it’s, an individual that has a portfolio of domestic houses.
It’s not even housing, that’s reaching the market it’s been bought before it even goes onto the normal market, but that does affect the market because that property that would normally go on the market isn’t there. And that is exasperating the shortage of properties that are available for people to buy on the semi-free market. Obviously, they have to get a return on these properties because they plan to rent ’em out or flip ’em. Obviously, you can increase rents, but there is a, there is a level where people just cannot pay the rent, all levels that you are requiring because people’s wages or incomes will not sustain. They can’t pay the rent basically. So how all this pans out and how this affects the real estate market in the next two years is the big question.
So I just wanted to give you and the listeners. What I see as the real big question of the next 18 months, 2 years, how do these large institutional buyers will their influence continue? Will they still be buying an ever-increasing percentage of domestic properties? The reason that’s driving them is the money that they would normally put into a commercial property. They can see the writing on the wall. There is no real future in building office blocks or buying new commercial property that at best is 50% empty. And the prospects of getting any quality tenants is 0 Robert.
Because of the way real estate is, once again, nobody’s, complaining about this because home prices are up. And I mean, even small mid-range markets like in the suburbs of Texas, you homes that used to sell for 180,000 are selling for 300,000 and that’s just a two-year jump and, and prices. So you’re, you’re getting all these. So when a realtor is getting an extra $120,000, that’s an extra three, four grand in commissions. So obviously you can afford to pay whatever, a few hundred extra dollars per call, there’s gonna be a time, the Merry go round stops and everybody’s gonna be in trouble. Zillow’s gonna be in trouble. I mean, they’re not gonna be in trouble everybody’s gonna take a kick in the teeth and the market’s gonna adjust and everybody will figure it out. I just think, and the purpose of this show is definitely to start having the conversation with everybody that’s listening. Trust me when I tell you right now, we’re in the last gasp of the market being this crazy nutty thing. I think I think by the end of the year, we’re gonna see some major changes happen.
Jonathan Denwood: 80%, my heart totally agrees with you in my mind, 70 to 80% agree with you. I honestly feel the only variable, the only two variables that will affect this that I’m not saying it won’t crash. What I’m saying is these two variables might keep this thing rolling for a bit longer than we think is that the feds will not be able to increase interest rates to the level that people are anticipating in. And secondly, these and in the end, and I’m not an expert, but I’m just giving you the viewers, the listeners, my honest opinion, these institutional investors that are buying domestic properties. I don’t think it’s gonna work out as well for them as they think it’s going to and I think it’s a totally different market to the normal commercial real estate market that they’re used to. And they’re looking at the domestic because of all the things I said in the first half, because they don’t see a tremendous future to the same extent around commercial properties and bonds don’t yield stocks. They’re at crazy values now anyway.
Robert Newman: No stocks have dropped about 40%, man.
Jonathan Denwood: Well, some have and some haven’t. So we have Titanic sheets going in different directions. So it’s a very confusing situation. So I’m just pointing out that this crazy market could continue a bit longer than it should do because of these, institutional investors. An enormous amount of VC money is been put into some of these players. It, just gonna be really interesting to see how all this pans out, Robert,
Robert Newman: I don’t disagree and I could be, wrong. And without some of these huge market factors, I would’ve been right long ago, the pandemic, and other things. And you know what, where I get myself into trouble audience, John, everybody is I’m an incredibly long term thinker. I don’t really pay attention to what’s happening in the market. I’ve already seen one major crash and that any number of Hills and valleys inside the real estate market and you know what, everybody who’s listening, I pay zero attention to any of it. And the type of marketing that I tend to tell people to do, which is long-term. Yes. Is it more effective at times than others? Of course, it is. But the beauty about high-value content-based marketing is that it always comes back and provides value.
Since you have it, you already have it up. Let’s say it’s doing nothing for you without spending a single extra penny one day, all of a sudden your phone starts ringing off the hook, and it’s stuff you did a couple of years ago. And you’re like, oh my God, where’re all these calls coming from. It’s not like direct marketing where you always have to have 30 grand in your pocket to then put into that platform. And maybe if the market is bad, you lose all that money. Content marketing maintains its value. And so do all the marketing strategies that I put in place for myself. Do I get as many calls one day versus another? No, I had a quiet November and now I’ve had the busiest December and the busiest January of my entire five-year history running inbound REM. And is there any rhyme or reason to that? No, there’s something going on with real estate agents to the people listening to the show, you guys are reinvesting or rethinking, whatever it is about your career, realizing the pandemic is gonna extend out a year, whatever it is, but my marketing hasn’t changed my message hasn’t changed.
That’s why I get myself in trouble is because I have strongly and always leaned heavily on types of marketing that don’t respond, like are Bulletproof against the ups and downs of the marketplace. And that’s what I want.
Jonathan Denwood: I just wanna finish is that obviously, Zillow closes down their wholesale side of their business.
Robert Newman: Yeah, they did.
Jonathan Denwood: I was listening to, a YouTube video and there was some figures there that there are still substantial, institutional investors that are buying substantial blocks of properties. Personally, am amazed that they’re still doing that. If I was in their shoes, I would run to the Hills. I cannot see, this working out that well for them. But if the facts that I heard this morning are correct. The figures that I was listening to are correct, this market could continue a bit longer than what it should do, because if they’re dumb enough and yeah, they’re institutional invest and you would think they were highly sophisticated, but the truth is they’re a bit dumber than we think.
They’ve kind of been driven by what’s happened to the commercial market. I still in my heart don’t think this is gonna work out that well for them. And I’m just saying that the cooling of the market might not happen until much later on in this year then. On the other hand, I do hear whispers about mortgage companies and banks they’re really not lending the way that they were. And I think they’re getting the jitters as well. I really think they’re getting a bit worried because they don’t want to end up in a situation that they found themselves in in 2008. That’s the last frigging thing they want. So I’ve heard on the grapevine that they’re getting the jitters as well. So there’s a lot of confusion out there, isn’t it?
Robert Newman: Oh yeah. And, and smart institutional investor money is pulling back right now. And for the first time we’re seeing all that pull back com not only in stocks and bonds, but we’re also seeing it come in crypto. We’re seeing a come in, every single, every everybody is pulling back. The only people that seem to be rushing forward based on the input that I’m getting from my clients, I expected a slowdown in January for real estate. I’m being told by many clients in many different states that are not happening, that everybody is back to being incredible.
Jonathan Denwood: I wouldn’t buy, I’ll give you an example. I’m not gonna tell you where I live. There’s a house and it’s a very strange layout physically. It’s a very strange layout and it was bought in 2 0 15 for $150,000, and they’re trying to sell it now it’s on the market now for $550,000. And I wouldn’t– I might consider 300 maybe, I might consider 350 because it’s a really wacky layout. But I certainly won’t give you 550,000 bloody dollars for it. And it’s been on the market for about 10 days and I’m just watching it to see if good luck to ’em. If they can find somebody that’s prepared to give them $550,000, of their hard-earned money or find somebody that’s prepared to lend them the money to put 550,000 good luck to them.
Robert Newman: Right. Well, I think this is a good place for you and we’ve lasted by our stop time. And I think this is probably a good place for us to consider. Let’s see. How long yeah. Well, we’ve been at this for 40 minutes or so. So for everybody that’s watching the show, listen, John and I would love it if you’re watching it on YouTube if you’re watching it on the Mail-Right it’s YouTube hyphen Mail-Right.com. Please go ahead and, drop us a message there. John is one of the most clever and experienced WordPress developers that I know. And if you’re trying to get started with a real estate website, like you’re, you’re going towards independence for the first time ever. John is probably a great solution.
For real estate vets and people who are GCIs over 150 to 200,000 already, and are looking for ways to bulletproof their marketing. You have some questions you can probably find out. You can probably have a consult with me at inboundREM.com. And I just have contact pages there and you’ll get a sent to either my assistant or an automated calendar, either way, schedule a call with me either one of us love to talk to you about some of this in real-time. Like if you’re a real estate professional, like what’s happening, what can you do? Do we actually offer any solutions or do we just have some advice for you? Is there anything you’d like to add to that, John?
Jonathan Denwood: No, that’s great let’s wrap it up, Robert.
Robert Newman: All right. So with no further ado, we’re gonna say goodbye. We appreciate you, coming to our show today and, we will see you hopefully the next time.