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Rates are Rising! What’s Ahead?

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Image from Pixabay

By Bruce Kellogg

The Reversing Interest Rate Trend

In 1980, only two years into real estate investing, I purchased two rental houses with 18% loans from Glendale Federal Savings, which is long gone. So are the two rentals, lost to foreclosure because I could not handle the resulting negative cash flow.

18% was the peak in mortgage rates at the time. In the subsequent 42 years, they have drifted down to the recent 3% range, largely due to fiscal and monetary actions taken by the U.S. government intended to manage the economy.

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Now, due to rampant inflation reaching 8.5% annually, the Federal Reserve Board has begun to raise rates rapidly. They never quantify their intentions, but reputable financial observers are predicting increases of 1.5% or more over the rest of 2022.

I believe that the long-term trend in interest rates is reversing now. I think this will change many aspects of the real estate industry in major ways. After 44 years in the business, I feel qualified to express what I envision happening in several areas. I’m thinking about what will be happening December 31, 2022 and beyond. Let’s see!

#1 – Mortgage rates have just reached 5.25% for conforming 30-year fixed rate loans. Adding in the Fed’s 1.5%, we get a conservative 6.75%. I say “conservative” because lenders will add 0.5% or so to protect themselves in the rising trend. So, 7.25% is also possible. Adjustable-Rate Mortgages (ARMs) will be cheaper for borrowers, but riskier in a rising rate environment.

#2 – Car loans are usually close to mortgage loans. Several years ago my son got one below 2% (barely). If these go to 7-8%, a lot fewer new cars will be bought. Vehicle, heavy equipment, and some consumer-financed goods will suffer sales declines. Production cuts and layoffs could result.

Image from Pixabay

#3 – The Federal Debt portfolio is huge and varied. But new, long-term federal bond issues could reach 5-5.5%. Recently in the 2% range, this will increasingly make it harder for the U.S. to service its debt. Additional borrowing, or tax increases, could be the result. Oh, oh!

#4 – SFR (Single-Family Residence) Listings will be low and will stay low. See the diagram (Source: Axios). 92% of homeowners say their home is affordable for them now. Houses are appreciating nicely so far. So, why list, find a new place, move, and pay more??? Some will list due to a job relocation, divorce, inheritance windfall, but not many for a “move up”. Homeowners are “set” at this time.

#5 – Buyers’ Offers will be fewer. With fewer listings, higher prices, and higher rates, the number of buyers will drop off. Prices could decline after a while. Some markets are “topping out” already. This is a local phenomenon, so pay attention!

#6 – Refinances were off 80% last week. This industry is destined to be hit hard. Loan agents will be leaving. Offices will be consolidating or closing. There’s no stopping it.

#7 – Real Estate Agents will thin out, also. Those with small clientele and/or high overhead (e.g., poor commission splits) will not make it. Some will downsize, prospect more, and further educate themselves. Grow professionally, and “hustle harder”!

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#8 – Real Estate Brokerages will also need to retrench. They have been on an “agent acquisition binge” for several years on the belief that more agents = more deals = more income. This has been true, but going forward many agents will add to costs, but not to revenues. Cull the flock. Get lean for the uncertain future.

#9 – “Flippers” are dropping out, and they should. Material costs are rising. There are supply shortages. Loans are more costly. Deep-discount acquisitions are scarce. Buyers are fewer and reluctant. I heard a speaker say 80% of “flippers” do one deal, then quit. In the coming times, that makes sense.

#10 – Syndicators will need to throttle back, also. Especially apartments, mini storage, industrial warehousing, and student housing, have been on a tear nationally this market cycle. “Gurus” have been teaching, and novices have been jumping in. The party is becoming more subdued. Lenders are raising rates and qualifying criteria. Investors are pulling in their horns. Opportunities are fewer and weaker. The bloom is off for syndication.

#11 – Ibuyers are companies, usually brokerages, who buy houses from homeowners as a service, refresh the home, then market it. They have abundant “Wall $treet money”, and they aim for a 7% margin or so. Most are losing money on this business model even in the current rising market. When the market turns, this will no longer be viable for them.

Image from Pixabay

#12 – Real Estate Technology Startups are a new model funded by venture capital and piloted by technology entrepreneurs. Their model involves combining real estate brokerage, lending, title work, and more, to make the process seamless for the consumer. This has been tried for 70 years already, but these people believe that the injection of technology is the key to it finally working. Two of them tried to recruit me. Amazingly, they offer a salary, bonus, health insurance, vacation, etc., in the traditional corporate mode. It was nothing like the old-style brokerage model! They have raised money in the $300-700 million range, so they can hold out a long time when the real estate industry inevitably contracts in the coming years. So, we’ll see.

#13. – Hedge Funds and other institutional investment vehicles have purchased tens of thousands of houses this market cycle. They have “crowded out” traditional homebuyers in many locations, and this has become upsetting to some. When this started, hedge finds targeted yields in the 6-8% range. Now that inflation is in the 8.5% range already and still rising, the yield to the investors is “walking backward”. Enough of this, and these funds might start liquidating their houses in substantial quantities. This could strongly impact SFR markets where it occurs. Some signs of this are starting to develop.

#14 – NNN Lease Properties are commercial properties that are sold to investors who want no involvement and just want a net check every month. Often they have a single tenant, like a Subway restaurant or a U.S. Post Office branch, which is very secure. During a real estate industry downturn, these properties become more risky. If the tenant vacates, or worse, files bankruptcy, things could become quite complicated. I had a client who owned six restaurant buildings during the 2008 Great Recession that a commercial broker had sold to him. Two stopped paying, and two went vacant. We saved them all, but only because he had cash reserves. That will be important in the days ahead.

Image from Pixabay

#15 – Homebuilders had ideal conditions until recently as they worked on the “housing shortage.” Since then: A) Materials prices went up. B) Supply chain delays got underway. C) Mortgage rates began increasing. D) Fewer buyers qualified, and more became reluctant. Fortunately, like farmers, homebuilders stay on top of their conditions. For now, many have gone to “building to order” rather than “building on speculation”. The future will dictate what else needs to be done.

Conclusion

Trends give rise to events, and the trend here is the increase in interest rates, probably over the long term. The foregoing discussions are presented to stimulate your anticipation and response to events as they unfold. Good luck, and I hope you enjoy the ride!

Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 40 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

Mr. Kellogg is a contributor and copy editor for two national real estate wealth-building magazines: Realty411, and REI Wealth Magazine. He is a recipient of an Albert Nelson Marquis Lifetime Achievement Award, listed in Who’s Who in America– 2019.

He is available for consulting with syndication, turnkey, joint-venture, and other property purchasers and note investors nationally, and other consulting assignments. Reach him at brucekellogg10@gmail.com, or (408) 489-0131.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Probate Real Estate Investing Niche Secrets Unlocked

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Image from Pixabay

By Tamera Aragon

Are you scratching your head – Probate Real Estate Investing – What exactly is that? Probate is the court supervised legal process that includes determining the validity of your will, gathering assets (including real estate), paying debts, taxes, and the expenses of will administration, and then distributing the remaining assets to those persons entitled to them. This process commonly takes a few months to a year. “Probate” real estate investing provides opportunities for discounted properties because the person who is left to handle the assets often must sell the real estate they were left with.

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Benefits Of Investing In Probate Properties

There are many 5 main benefits for why this is a good niche to consider as a real estate investor.

Bargain Basement Prices: The probate market is full of tremendous properties you can snap up for 30% to 50% below market value. Resell quickly and capture a lifetime of gains within days. It’s the ultimate buy low/sell high scenario.

Huge Inventory: There are almost 6 million estates in probate, with assets worth trillions of dollars. Every type of real estate – from houses to beach front motels – are in probate.

Buyer’s Market: Purchasing property out of an estate assures you of a highly motivated seller. Most beneficiaries are anxious to sell the house (and other unwanted assets) so that they can pay off debts attached to the estate that must all be settled before the estate can be distributed.

Image from Pixabay

All Kinds of Treasures: in addition to real estate you’ll find, classic cars, fine jewelry, antiques, art, toys, collectibles, and much more enter into probate every day. Millions of items. And they can sit there for years unless you rescue them.

It’s a Investing Secret: Few people know how to find and purchase property from an estate. Even the beneficiaries don’t know how to sell. That means, you’ll be the first one on the scene because you have little or no competition from other buyer’s – plus you’re helping anxious sellers.

Disadvantages Of Investing In Probate Properties

No real estate investing niche or specialty is without its own set of unique risks. Probate investing does have a few cons I want to share with you. So what are downsides of this niche?

Finding Leads Is Time Consuming: Most counties you have to go to the court house and read through files to get probate leads and information this information is not available on line or from leads lists to purchase.

Executors Can Be Difficult To Talk With: The executor is usually a very close relative to the person that just died: wife, mother, father, sister and they are mourning their loss and can be difficult to talk with. One has to be very sensitive to the situation.

All Heirs Of The Will Need To Agree: Many times there are many heirs of a will and getting them to all agree to sell to you at the price you want may be challenging.

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Market Conditions For Probate Investing

Good Market Conditions

  • Property is located in a flat or declining market
  • Large City where there are more options
  • In a city where there is a good % of retired and elderly population

Bad Market Conditions

  • In an up market
  • Small town
  • In a city where there is a very small % of retired and elderly population

Steps Involved For Investing In Probate Properties

Image from Pixabay

  1. Get a newspaper and look at the legal notice section that lists the announcements of an estate. This is where the administrator, personal representative, executor is named (depending on the state you are in, the above will be one of the names for the person in charge of the estate).
  2. Get a file number on any probate case from the ad
  3. Contact govt office and find out where probates are filed in area where person lived.
  4. Take file number (s) and go to the county office where probates are filed.
  5. Go the office where probates are filed and ask, for example, “Where do I find information on case number 2454059i843” – The case number you took from the newspaper. They will direct you where to go and who to talk to.
  6. Go to the file room and ask to view the file in question.
    The above process is to get you to the file room and to get you talking with someone and building some type of rapport. Once you are directed to the files and know how to look through them, follow these next steps.
  7. You will need to look for aged files, at least 2 to 3 months old because these will be the files that have an inventory sheet that will tell you in one minute if the case has any real estate.
  8. Once you have a file with real estate you will need to get the contact information for the PR (PERSONAL REPRESENTATIVE), it is all in the file.
  9. You will next need to identify all the heirs of the estate and gather all their names and addresses in case you will need to contact them in the future.
  10. Once you have gathered this information, you will send personal hand written letters to the PR
  11. After one letter, wait 1 week and call the PR to see where they are at with the situation.
  12. If it is determined the seller is motivated, and if local, you will want to meet all heirs to finalize contract. If not local, mail the contract with a nice cover letter.
  13. Negotiate and Sign Contract
  14. Sell or Rent Property for profit

Image from Pixabay

Where To Find Probate Property Leads

  1. Probate Attorneys
  2. Newspaper
  3. Local Government Office

TAMERA ARAGON

Tamera Aragon is a professional online entrepreneur and has bought and sold over 300 properties, establishing her as an expert in the real estate investing field. Since 2003, she has purchased over 10 million dollars in real estate and currently holds properties all over the world. Tamera’s focus is on the booming Foreclosure market, buying Pre-foreclosures, REOs and Short Sales. Tamera who is a noted Author, Success Trainer, Speaker & Coach, shows her passion for helping others with the 17 websites she has created and several specialized products to support fellow investors throughout the world. When Tamara is not busy running her website, she is very involved with her Fiji joint ventures and investments. Tamera Aragon is one of the few trainers and coaches who is really “doing it” successfully in today’s market. Tamera’s experience has earned her a solid reputation in the industry as well as the respect and friendship of many of the top national real estate investment and internet marketing experts. Tamera Aragon believes her success has garnered her the financial freedom to fully enjoy her marriage and spend quality time with her children.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Inflation, Tappable Equity, and Home Value Trends

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Image from Pixabay

By Rick Tobin

Historically, rising inflation trends have benefited real estate better than almost any other asset class because property values are usually an exceptional hedge against inflation. This is partly due to the fact that annual home prices tend to rise in value at least as high as the annual published Consumer Price Index (CPI) numbers.

However, inflation rates that are much higher than more typical annual inflation rates near 2% to 3% can cause concern for the financial markets and Federal Reserve. As we’re seeing now, the Fed plans to keep raising interest rates to combat or neutralize inflation rates that are well above historical norms.

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The true inflation rates in 2022 are at or above the published inflation rates back in 1981 when the Fed pushed the US Prime Rate up to 21.5% for the most creditworthy borrowers and the average 30-year fixed mortgage rate was in the 16% and 17% rate range. Back in the late 1970s and early 1980s, rising energy costs were the root cause of inflation just like $5 to $7+ gasoline prices per gallon in 2022.

All-Time Record High Tappable Equity

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In the first quarter of 2022, the collective amount of equity money that homeowners with mortgages on their properties could pull out of their homes while still retaining at least 20% equity rose by a staggering $1.2 trillion, according to Black Knight, a mortgage software and analytics company.

Mortgage holders’ tappable equity was up 34% in just one year between April 2021 and April 2022, which was a whopping $2.8 trillion in new equity gains.

Nationally, the tappable equity that homeowners could access for cash reached a record high amount of $11 trillion. By comparison, this $11 trillion dollar amount was two times as large as the previous peak high back in 2006 shortly before the last major housing market bubble burst that became more readily apparent in late 2007 and 2008.

This amount of tappable equity for property owners reached an average amount of $207,000 in tappable equity per homeowner. If and when mortgage rates increase to an average closer to 7% or 8% plus in the near future, then home values may start declining and the tappable equity amounts available to homeowners for cash-out mortgages or reverse mortgages will decline as well.

All-Time Record High Consumer Debts

The March 2022 consumer credit report issued by the Federal Reserve reached a record high $52.435 billion dollars for monthly consumer debt spending. This $52 billion plus number was more than double the expected $25 billion dollar spending amount expectation and the biggest surge in revolving credit on record. In April 2022, the consumer spending numbers surpassed $38 billion, which was the #2 all-time monthly high.

Image from Pixabay

For just credit card spending alone, March 2022 were the highest credit card spending numbers ever at $25.6 billion. The following month in April, credit card debt figures exceeded $17.8 billion, which was the 2nd highest credit card charge month in US history.

While many people are complaining about mortgage rates reaching 5% and 6% in the first half of 2022, these rates are still relatively cheap when compared with 25% to 35% credit card rates and mortgage rates from past decades that had 30-year fixed rate averages as follows:

● 1980s: 12.7% average 30-year fixed mortgage rates
● 1990s: 8.12%
● 2000s: 6.29%

In the 2nd half of 2022, it’s more likely that many borrowers will fondly look back at 5% and 6% fixed rates as “relatively cheap” if the Federal Reserve does follow through with their threats to increase rates upwards of 10 times over the next year in order to “contain inflation” while punishing consumers at the same time who struggle with record consumer debt (mortgages, student loans, credit cards, automobile loans, etc.).

Financially Insolvent Government Entitlement Programs

There are published reports by the Trustees of both Social Security and Medicare about how the two programs are potentially on pace towards financial insolvency in the not-too-distant future. The Social Security Trustees claim that their retirement program may not be able to fully guarantee all benefits as soon as 13 years from now in 2035. Over the next decade, Social Security is calculated based upon current income and expense numbers to run budget deficits of almost $2.5 trillion dollars.

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As per the Trustee’s published report linked below, it’s claimed that the Social Security Disability Insurance (SSDI) trust fund may deplete its reserves as early as 2034.
Social Security report link: https://www.ssa.gov/OACT/TR/2022/tr2022.pdf

If and when the Social Security trust fund starts operating with cash-flow deficits, all beneficiaries, or Americans who receive the Social Security benefits, may be faced with an across-the-board benefits cut of 20% as suggested by the Trustees. For many Americans who struggle to get by on 100% of their Social Security benefits, the threat of a possible future reduction in amounts of 20% or more can be quite scary to think about.

The average Social Security benefit paid out nationwide in 2022 is estimated to be $1,657 per month or $19,884 per year. A 20% reduction in monthly benefits without using future inflation adjustments would be equivalent to a reduction of $331.40 per month in benefits and a new lower monthly payment amount of $1,325.60.

The Medicare Hospital Insurance (HI) trust fund is also on track to exhaust its cash reserves over the next six years by 2028, as predicted by the Medicare Trustees in their own gloomy report that’s linked here: https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf

Let Your Money Work For You

Image from Pixabay

As noted in my past published articles, the bulk of a homeowner family’s overall net worth comes from the equity in their primary residence. The average US homeowner at retirement age has approximately 83% of their overall net worth tied up in the equity in their home and pays monthly expenses from just the remaining 17% of overall net worth that is held in checking, savings, or pension accounts.

While inflation usually is beneficial to pushing up real estate values at a rapid annual pace, inflation is also devastating to the value of the dollar in your pocket as purchasing powers decline. Inflation for real estate does have a ceiling level at which it becomes detrimental to housing values if the Fed starts doubling or tripling mortgage rates to slow down the inflation rates.

Equity in properties isn’t so easy to access to buy food, gas, clothing, or to pay your utilities as having cash on hand. If and when future government entitlement benefits decrease and inheritance and property taxes may increase, then being self-sufficient while earning monthly income from tenants in your rental properties or by pulling cash out of your properties near peak highs may go a long way towards allowing you to maintain the same standard of living that you’ve been accustomed to over the years.

Rick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

The Advantages of Commercial Real Estate Investing

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Investment has long been a great way to grow your wealth but often comes with a high barrier of entry. Not only can it be difficult to learn about the various types of investments and how they can work for you but it can also be difficult to find a way to make that initial foray. Investing in the stock market or a start-up can be simpler to do but both bring a high level of risk. If you’re looking for a safer, long-term investment that can bring you regular income, you might be looking to invest in commercial real estate.
The Basics

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Unlike some forms of investment, this is tangible and is considered to be a hard asset. When you make this kind of investment, you can expect to be rewarded in one of two ways: appreciation, which happens when the value of the building or property increases over time, and income gained by renting the space out. These investments tend to be long-term, as it takes far more effort to buy and sell a large building than to trade or sell stocks. When making investments of this type, you’re not looking to make a quick buck, but are thinking about the long haul.
How It Makes You Money

Commercial real estate is a limited resource, which means that it will always be in demand. Companies need offices or manufacturing space, individuals need apartments and entrepreneurs need restaurant or store space. All of those people will pay for that space, and that’s where the first source of income comes from. A well-located building with modern spaces will fetch top dollar from all of these renters, and that income is regular and can be counted on.

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Appreciation is the other source of financial reward but takes longer to build. With this, you’re looking farther down the road, to the point where you can sell that property. This can be a great return on investment if you look at demographics and market patterns. Buying a property for a low price in an area that will boom in a few years means that, as long as you maintain the building, you can sell at a profit.

Commercial real estate can be a very powerful investment tool, as long as you do your research. It boasts potential for high returns and also offers the advantage of a regular income, which many other investments do not. Because of these reasons, this can be a great way to start investing and making money right away.

Contact Vista Capital Solutions today to start exploring our wide range of financing options for commercial real estate.

3 Wildly Innovative Real Estate Trends to Watch in 2022

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Image from Pixabay

By Charles Sells

Real estate investors know that the real estate world is full of innovation. While many outsiders label the industry “stodgy” and slow to adapt to change, the reality is that real estate is full of imaginative and creative individuals dedicated to problem-solving both to the benefit of their own portfolios and to the benefit of every party in a real estate transaction. After all, no one knows better than a real estate investor that the “win-win-win” model is the key to investment success.

In 2022 as the rest of the world emerges from pandemic-induced lockdowns, real estate investors and real estate innovators are playing a bigger and more important role than ever in the health of the economy and in national well-being.

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Not surprisingly, more people than ever are being drawn to real estate as an asset class as well as a place to live. Also not surprisingly, new technological, legal, and structural formats for investing in real estate are emerging as companies and investors strive to provide access to this valuable asset class to an increasingly avid and often unconventional investing population.

In 2022, as never before, the real estate industry is full of wild innovations. Here are three that smart investors will keep an eye on as the year progresses.

1. Crypto Real Estate

Image from Pixabay

Since the beginning of the blockchain, investors and entrepreneurs have been trying to figure out how to leverage the mania for cryptocurrency in a way that enables them to build bigger and better real estate projects. Many of the early attempts to release real estate-related “coin offerings” have suffered under the scrutiny of the SEC since they were essentially glorified syndications without any of the legal underpinnings, but more recent efforts have resulted in structures that, in some cases, purport to enable would-be landlords with as little as $50 to invest in a share of a specific rental property and then make decisions about the operations of that property via a series of polls conducted among dozens of similarly vested “landlords.”

Historically, it has been possible to participate in crowdfunded real estate projects at levels as low as $1,000, but driving the bar to entry as low as $50 has created a new type of landlord to go along with a new type of asset class.

Some analysts say that this new level of accessibility for investors is actually pricing would-be homeowners out of the market since large groups of investors with $50 each can easily put together a competitive bid via a platform that prices out an owner occupant. Others worry that these “1/50th” landlords will become absentee by virtue of their multifaceted nature and the potential for discussions about property and upkeep to stall if there is no supermajority reached in polling.

Our Take:

For investors who cannot invest in real estate via more traditional routes, these platforms could be a wonderful solution. However, if you can retain full ownership of a property and hire a good, local property management company to handle your assets, this is likely a case of “tried-and-true” works best.

2. Elaborate Remote Showings & VR

Image from Pixabay

Although the metaverse is not taking off quite as quickly as certain social media moguls might like, junior Millennials and Zoomers entering the housing market and looking to buy their first homes are demanding increasingly elaborate home showing options when it comes to remote viewings, 3D tours, and interactive floor plans for properties up for sale.

Given that these two populations will likely account for the formation of about 6.4 million new households in the next 2½ years or so, more and more single-family and multifamily investors are accepting the fact that the youngest generation of homebuyers is going to definitely favor the house with the best “gee-whiz” factor (no, they’re not going to call it that) when it comes to the showing as well as the actual amenities.

According to a study from Zillow, 59 percent of Millennials said they would buy a home online and sight-unseen (in person) and feel “at least somewhat confident” in their decision. 80 percent said they prefer viewing listings with 3D virtual tours and digital floor plans.

Zillow analysts noted that the respondents backed up their statements with actions; a home with a 3D home tour is 32 percent more likely to be “saved” than one without, and these homes also get 29 percent more views.

Fully one-third of Zoomers told analysts they would be comfortable buying a home online, and more than half said they would be at least somewhat confident making an offer without seeing the home in person.

All generations from Baby Boomers and the Silent Generation to Gen Z found the convenience aspect of new technology appealing; more than half of respondents 57 and older said they would prefer to unlock a home using their phone and tour it on their own, while younger generations were even more fond of this option. Gen X and Millennials favored it by more than three to one.

Our Take:

Real estate investors must embrace the emerging homebuying population’s preferences when it comes to showing homes. Otherwise, when the market inevitably cools, your promotional strategies may not beat the competition. However, be sure that whatever options you offer would-be buyers protect your property and privacy as well as the privacy of potential buyers.

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3. Data Analysis & Machine Learning

It seems like every real estate firm that has ever used Excel to make a line graph now is boasting about their “machine learning” capabilities and how real estate investors should be using the company’s advanced “AI” to make decisions about markets.

Data has been the driver behind the best investors’ decisions and strategies since the beginning of private property ownership; today’s general consensus is that making that data and those decisions and strategies all part of one seamless, automated process is the best way to go because, well, technology.

Image from Pixabay

In most cases, you will find that technology is not generally as unique and groundbreaking as most companies would like you to think, and there is a great deal of value still to be found in simply reviewing all the information available about a market and potential acquisitions using your own learning.

Our Take:

Data analysis and predictive software are great, but do not get too carried away. If you are running a huge firm and need to deploy so much money that you cannot physically allocate enough time to make decisions about assets, then this stuff is invaluable. If you are personally supervising the creation and upkeep of a profitable real estate portfolio of your own, then this is probably overkill. Machine learning is great, but it is not infallible. Big companies have bottom lines that have room for “lemons” built in whereas individual investors often do not.

Innovation & Experience are the Best Combination

No matter what, the best investors rely on experience (their own or an advisors) as well as new technology when it comes to deploying capital. This combination will never be beat.

Charles Sells is the CEO of Platinum Investment Properties (PIP) Group, a boutique investment firm based in the southeast with more than 10 years’ experience in residential real estate. Learn more about emerging trends and the best markets at PIPGroup.com.