How to Cash In on This Huge Real Estate Trend
If you’re interested in real estate investing… you’ll like today’s essay.
If you want to learn of an interesting new way to invest in home flipping through the stock market… keep reading.
You see, we did it again…
In November, we bought the neighboring 4 acres and a barn on the northern end of our farm.
And now we’ve got a signed contract on the land to the south. It’s 10 acres… and, oh my, it has a house.
To be clear, calling it a house is a bit generous. It’s got four walls and a roof, but even the snakes and mice have long moved to nicer digs.
The two-story home was built in 1850 out of logs and sweat. We plan to put both back into it to restore its historical charm.
But really, we’re buying the land because it makes sense. Land around here trades hands only once in a generation or so… often less.
Even then, we had to take unusual tactics to get the property. After all, this piece wasn’t on the market.
We found the owner (clearly, she doesn’t live there), put a nice note in the mail… and then forgot about it.
A month later, she got back to us.
Our timing was good. She has to sell.
We got a deal… and so did she.
A Changing Landscape
That’s what makes the real estate market such a place of grand opportunity. For the patient and the savvy, there are few other places to build such reliable wealth.
But technology is changing that.
For some, it’s a good thing. For others, it spells big change.
Earlier this month, we told our Manward Letter subscribers about a freshly debuted stock – thanks to the booming special purpose acquisition company (SPAC) craze – that is changing the world of real estate. It’s allowing folks to buy and sell homes with a click of a mouse. Its potential is off the charts.
We’re already doing well on the play.
And last week, Zillow (Z) proved our prediction that this new business model is the way of the future.
It’s very exciting stuff that any homeowner – and investor – should know about.
To be fair, Zillow is an open position in our Alpha Money Flow portfolio. We’re up more than 130% on it. But we’re not just “talking our book” here. This is big news that makes us like the stock – and its new technology – no matter our subscribers’ stake.
The company just debuted what we’re convinced is the next giant step in a massive transformation for the real estate market.
It’s not good news for folks like us who invest by putting a note in the front door… but it is great news for a market that’s long suffered from illiquidity and inefficiencies.
Making the Market
Here’s what’s happening…
Most folks know about Zillow’s main product offering… home listings and home values.
Bring up its map, click on a property and it will tell you what its algorithms say a property is worth.
Over the years, the predictions have gotten much more accurate (the benefit of mass amounts of data). They’re so accurate these days that the company is risking its business on them.
Since 2018, Zillow has been making cash offers on homes. Potential sellers simply need to fill out a form on the site, send in some details and a picture… and the company will send out a representative to inspect the property and make a cash offer.
Now it’s skipping the formalities.
Beside many Zillow price estimates, you’ll now see a cash offer. That’s the price the company is willing to pay right now for the property.
Click it and your house is as good as sold.
Zillow buys the house, makes a few cosmetic upgrades and relists it… banking the profit.
The Future Looks Different
This is a big turn of events for several reasons.
Like we said, there are other companies in on the action. The more that do it, the stronger the business model and the more efficient the market.
Soon, the days of listing a home and waiting months to sell it will be gone. The showings, the open houses, the staging, the chess game of buying one home while selling another will be gone.
Instead, a few centralized brokerages will be at the center of it all.
We’ll let you decide whether that’s good or bad. It depends on your role in the property game.
But here’s the most powerful thing this trend will do. It will make for a market with a much more efficient method of price discovery.
Already, we’re seeing the valuation pricing game fade away. We’ve got better estimates of our home’s value than ever before.
But as Zillow and others start putting cash behind those estimates, they’ll no longer be estimates. They’ll be values.
Just like we do with stocks and bonds, we’ll be able to watch the value of our homes rise and fall.
It will create new opportunities for homeowners, flippers and investors.
If the Zillow algorithm favors a new bathroom… replace what you’ve got and watch the price rise.
Fail to upgrade your kitchen… and watch as your neighbor’s place sells for more.
For flippers, it will create arbitrage opportunities. Find a mispriced home, take care of what’s dragging the price down and fix it. Voilà… a profit. But you’ll have to beat Zillow and its competitors (one of which could be the next big monopoly) to it.
This trend won’t erupt overnight. But it will happen.
New technology ensures it.
It’s bad news for realtors. But good news for investors who get in on the action now.
We’re excited to watch the price of our new shack rustic getaway climb the charts.
P.S. We just told our subscribers about another hot tech play… and it’s flat-out soaring. It’s a 5G-busting pre-IPO play that anybody with just a few bucks can get in today. Check it out here.
Would you invest in this new real estate trend? Share your thoughts at firstname.lastname@example.org.