There were 214,323 active foreclosure cases nationwide during 2020. One in 12,000 homes are in foreclosure.
2.7 million homeowners—that’s 5.1% of all mortgage-holders—remain inactive for forbearance.
House prices are soaring while the number of homes for sale is at its lowest levels in decades.
Lou Brown has been investing in real estate for 40 years. This is his 5th real estate cycle. Today, Lou shares his predictions for real estate. Regardless of what happens, an unprecedented opportunity for real estate investors is right around the corner.
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0:01 – Introduction: “Is A Market Crash Coming?”
0:20 – Does this crash occurs naturally?
5:53 – Signs and signals of the market crash.
7:10 – What’s going to happen next?
10:03 – What will the market do?
15:27 – The law of supply and demand.
16:53 – Create a community-based business.
18:05 -Certified Affordable Housing Provider
20:46 – How should I prepare for what the economy is doing or about to do?
23:02 – Do you think this is a good space for women?
24:05 – What’s the smartest way to do real estate investing in today’s market?
25:43 – I have a living trust, what else should I do to protect myself?
Listen to our Podcast:
Lou Brown (00:01):
Is a market crash coming? Isn’t that a great question? Well, I’ll tell you what, this is my fifth real estate cycle. If you think these things occurred naturally, you’re mistaken. What I’ve learned over these five cycles that I’ve been involved in, is that they are not at all natural. They are caused. In fact, so many things and component parts are put in place to create these breakdowns.
We’ve just had a major one over the last year with the coronavirus. That was a huge setback because we had a booming economy, right? We had lots of things going on, but let’s look back at what happened in 2008.
Lou Brown (01:13):
Back then I told my audience, “Hey, get ready it’s about to happen!” I told them it would happen in June and it actually happened in July. Definitely there is something coming and it will be an upheaval. It will be a disruption in the marketplace, but it might not be what you think it might be.
In fact, the last time, there were many different factors that caused that breakdown. One was that they were making incredibly low score loans. In other words, the folks that were borrowing the money really weren’t qualified to borrow the money. They had no income and no job verification loans. Anybody who could fog a mirror could get a loan and that did happen. As a result, a whole lot of people that shouldn’t have got loans, lost their properties. That was a tragic situation that did happen to a bunch of people.
Lou Brown (02:10):
We also had the whole situation where the banks created a setup. They had bad paperwork. The people that were foreclosing didn’t even have the right to foreclose. There were a lot of things going on inside the banks, as well as out in the communities. It was quite sad and very bad for our nation.
Now, what we’ve got is something different because if you look at the numbers in 2017, there were 1.2 million properties listed on the MLS. Wow! That was a lot. If you look at now, there’s only a little over 400,000, about 420,000 properties that are listed on the MLS nationwide. Obviously when the normal flow of business and foreclosures occur, when the normal flow of properties coming onto the market occurs, then you don’t have this disruption.
Lou Brown (03:19):
Right now, we’ve got an anomaly in the marketplace and simply not enough inventory. Now if a whole bunch of inventory were to come on the market at one time, it would have a dramatic impact on the communities. In fact, we learned that the last time. What the government did was literally pay the banks, not to put the properties on the market so that it wouldn’t create these crashes and values and communities like it did. They weaned them out and doled them out.
They basically said to the banks, look, if somebody is not paying you just submit an invoice to the TAR fund. Troubled Assets Relief Fund.
What would happen is that the government would write those checks every month, instead of the people that were living in the homes or had abandoned the homes, literally banks were paid to keep properties off the market.
Lou Brown (04:24):
Over time, as the market continued to improve and values continued to increase. Then the lenders started releasing a lot of those properties, but interestingly, they’re still properties. There’s still ghost properties out there that are vacant in neighborhoods all over the country. We’ve got those properties that will eventually become available. And then, we’ve got the normal course of selling properties.
Well, over the last year, people have been staying put, right? They’ve not been looking for another property. They’ve been keeping the property they have. Perhaps with all this extra time, a lot of people have done fix up on their properties. This is the reason you see Home Depot’s stock increase in value so much because of the home effort that people are doing, because they’re not going anywhere. Well, now that’s changing.
Lou Brown (05:21):
Now people are out and they’re mask free in lots of places in the country. It’s a beautiful thing and I love it. I’m traveling all over. In fact, last year we had live events all throughout the year, our Millionaire Jumpstart events.
This year we’ve already had two live events and it’s not been a problem. People are traveling to those events, loving it. They love being back together with other humans, like-minded humans that are entrepreneurs.
Back to our market crash, I just wanted to give you some signs, some signals that I see right now. Because there’s such a low amount of inventory prices are just bumping in many parts of the country. Not everywhere. We always say that there are depressions in certain parts of the country.
Scott Paton (06:15):
There are recessions in certain parts of the country, even if the whole economy is not being impacted at the moment. Always keep in mind that there are places that you can go to invest, that can have some lower cost properties. You can have some inventory there as well.
We’ve had the impact of HUD not having their normal flow of properties being sold on the HUD home store and being sold and insured through HUD. None of that’s happening in Fannie Mae, Freddie Mac holding back on foreclosures. We’ve got the VA holding back on foreclosures. Any government backed loan is not being foreclosed. They’re even projecting forward that they’re not going to foreclose.
They say August 1st, right? Whatever. They’re just moving that can down the road, kicking that ball down the road. Now, what’s going to happen next?
Lou Brown (07:12):
The important thing to think about and watch is the impact of evictions. Across the country, many courts have been closed for months, even over a year. Now those courts in some certain jurisdictions are starting to open up and this can be a county by county, a state by state. It’s going to be a while before all the courts open up, but when the courts do open up, then they’re going to start doing those evictions.
Now, it would be interesting to discover what the impact of this $50 billion will be, because we had 25 billion from the one that was passed in December. Then we had another one just passed recently, stimulus bill 25 billion in each one of those bills. So that’s $50 billion. Well, that money is effectively just now hitting the market.
Lou Brown (08:13):
Hopefully that funding will be available for people to tap into if they’ve been behind on payments for landlords. Certainly I’ve got a solution for you on that. We’ve got the www.LandlordReliefPKG.com and PKG is short for the word package.
www.LandlordReliefPKG.com You can go there and download some vital and valuable information. If you got a tenant that’s behind in payments, that’ll give you a gift that can benefit you for sure.
Well, there’s a lot of landlords that have been burned out. Sometimes there are accidental landlords. They inherited a property and they just decided to rent it out or they bought a property, but they really didn’t make it their business. Now they’ve been impacted by this.
Lou Brown (09:14):
There’s properties like that, that can be available. I suggest that you get your eviction filings from your local courthouse and start making some outbound connections and calls with those folks.
We have a Mail Home Wiz. What it does is take those lists that you provide and does the mailings for you. They’re very impactful. That’s another opportunity that you might have that other people don’t have because a lot of people aren’t going to take the time and energy to go find those eviction records. Hopefully that’ll be of help to you, but the mystery is, what will the market do? I will say that it’s hard to predict only because we have not yet seen what the government’s going to do in terms of opening up for foreclosures.
Lou Brown (10:19):
Now, there is a proposal from the CFPB and that is the Consumer Finance Protection Bureau. That is kind of like a watchdog agency created out of the Dodd-Frank Act. That agency oversees the various aspects of consumer debt and one of those being housing.
They’ve made a proposal to extend mortgages. If you are impacted by coronavirus and you have 20 years left on your loan the proposal is that they’re going to make that a 40 year loan and they’re not going to change the interest rate. The interest rate will stay the same, but for someone that had say a 20 year loan, and they’re making that a 40 year loan, the impact of that is fantastic. But this proposal hasn’t passed yet. And we don’t know what’s actually going to happen.
Lou Brown (11:26):
Incredible, because their payment before is like $1,700 a month. But with a 40 year loan, their payment per month is only $926 or something like that. The impact of changing that from 20 years to 40 years is incredible. Now the flip side of that is they’re going to pay a whole lot more in interest over that many years, because now they’ve made it a 40 year loan instead of a 20 year loan. Interest rates staying the same, that’s going to continue to bruise now, if that’s true, because we don’t know yet that it hasn’t been passed by Congress.
You see there’s another question mark. The question mark of inventory, the question mark of evictions, the question mark of foreclosures. When are those foreclosures going to begin? The question mark of, is HUD going to go? And then, Fannie Mae and then Freddie Mac and then VA, or is it all going to occur at once?
Lou Brown (12:26):
One thing to know about whether it’s Fannie Mae, Freddie Mac, FHA, or VA, well, those are originated by banks and the banks actually have an insurance policy from HUD or from VA. What happens is the banks are the ones that have control over those mortgages. But of course they’re subject to the guidelines set forth by HUD and VA. They have to abide by those guidelines. Once it’s a foreclosed property or foreclosing property, then they deed it back to HUD and HUD pays them their insurance. Which is the differential between 80% of the value of the property and that 97%, perhaps that was the amount of the HUD loan. HUD allows people to get in for 3.7%. The rest of that down to 80%, is the insured portion of that loan. But if HUD has to pay out that insurance, then they take the property.
Lou Brown (13:33):
The lender is paid in full what they loaned on that property. Then the lender goes down the road and HUD takes over the journey and then puts it out. For 15 days, the public can bid on that property. After it goes 15 days, it then goes to the investor world. With that said, we just don’t know what we don’t know. It’s really hard to predict a timeframe.
Now, when I was looking at my crystal ball last fall, my thinking was, Oh my gosh, we have an incredible log jam of all these properties that are not being foreclosed on. But if the government comes in and rescues people and gives some forty-year financing, Hey, those foreclosures aren’t going to take place. The second thing is, we’ve seen incredible inflation in values of properties right now because of the low inventory, because of the depressingly low number of properties that are out there for people to buy.
Lou Brown (14:42):
As a result of that, there’s a bidding war going on right now. Frankly, people are paying way above current market and even sustainable markets in some parts of the country. We’ve got to be careful about that too, because that could be creating a value bubble. We’ve seen that before that was 2007, when that value bubble burst. And here we go, we had the big crash occur at that point. What we don’t know right now is, if those value bubbles are actually occurring, I do believe they are occurring in some markets in the country and it’s unsustainable levels. But again, it is a sign of the times and it is a thing called the capitalists plan and it’s called the law of supply and demand. The law of supply and demand. Right now there’s huge demand and there’s little supply, which drives up prices. Drives up values.
Lou Brown (15:51):
Maybe if you’ve got some inventory, if you’ve got some houses, now is a great time to sell. Now is a phenomenal time to sell. We’re hearing that soon as a property goes on the market, boom! There’s multiple offers, maybe 20, 30, 40 offers in a day on a single property. I saw one just recently last week, 76 offers in one day on one single property.
We definitely saw that in the bidding wars that occurred back in 2007, before the crash, people were literally bidding against each other for property. I wanted you to be aware of what I’m seeing and the fact that there’s such low inventory. I’m not convinced that we’re going to see the crash. Like some people are predicting.
Lou Brown (16:53):
What does that mean for you and me? That means we do what we do. One of the things that I teach you to do is to create a community based business. What I discovered is that when you are connected to the community leaders, people that are shakers and movers, once they know you, they want to do business with you. Many community leaders want to keep the business in the community while we could go to national companies and national people. What they want to do is if they know you, they want to do business with you. What’s occurred as a result of me evolving this over a number of years is that I’ve bought on a number of properties that were never on the market, meaning it never was listed in the MLS, meaning there was never a sign in the yard, right?
Lou Brown (17:49):
It was not exposed to anyone. Now that’s a big deal. That’s important for you to know. You and I, when we’re out there in the world, what we’re going to do is we’re going to connect with people, let them know who you are, what you do.
In my world, I’m a Certified Affordable Housing Provider. What does that mean? That means that we help people regardless of credit or financial background to end up with home ownership.
What does that mean? We have a membership that the public joins. When they join the membership, we go to work finding a property for them, but we begin where they’re at. If they have less than perfect credit, then we put them into credit restoration. We help them with their bills, their gas, their electricity, their internet, their security system, their phones, all of those things.
Lou Brown (18:46):
We can help them with, to lower the bills they currently have and receive residual income. You can get paid for putting people into the nonprofit organization that does the credit restoration. You can get paid for helping people with their bills, and you can get paid residual income on a monthly basis. You can get paid bonuses for putting people into those programs. That’s exactly what we do.
We signed people up for the membership. We start working with them and then we go look for a property that matches their situation. The number, the amount of down payment, they have to work with what they can afford on a monthly basis. There’s many things that we do to connect with those folks and connect with the community, to bring in the right properties for the right people. The MLS is one of the places that we do shop for properties because our people are willing to do some or all of the repairs.
Lou Brown (19:44):
While an A credit buyer wants a perfect house, granite countertops, the whole nine yards, someone with less than perfect credit, we’ll adjust their goals accordingly and they’re willing to do more and they’re willing to earn credits towards their down payment.
Our business model is to take advantage of the fact that there’s a huge market out there of people that are underserved. What we want to do is serve people. We want to help people not hurt people. We want to support people in getting their lives together and ending up with home ownership. We love the fact that we can be the one to bring that to the table for them and give them an opportunity at home ownership.
Scott one of the things that I was going to share with everyone is I’ve got an upcoming workshop.
Scott Paton (20:41):
Before we talk about that. Lou, we do have a question from Erica and I think maybe we’ll just bring it up.
“How should I prepare for what the economy is doing or about to do?”
Lou Brown (20:52):
Erica, that’s a great question. One of the things you want to do is to have an income stream. I’m a big believer in residual income. When you can build your model where you actually have dependable, predictable, monthly income, and it’s sustainable over a long period of time, then you’ve really got stability in your life and support for your family. That’s a very important piece of it. What to do is simply embrace what we call the house monster. It’s a marketing system that we provide. What that does is invite and engage the public to come into your world and look at who you are and what you do. They enroll into the membership. The membership is called the Path to Home Ownership. You get paid a commission on that.
Lou Brown (21:50):
You get paid a commission when they join the credit restoration. You get paid not only a commission, but ongoing commissions, when you help them with their bills to reduce the bills that they currently have. There’s a lot of different income streams that we provide on the front side.
Typically with real estate, you’re not getting paid until someone actually moves into the home or someone actually buys the home, but our model begins with the customer. Once that customer comes into our world, we begin serving them right away and starting to get the bits and pieces of money and gearing towards the hunks and chunks of money that we’re going to get from them. Once they move into one of our properties that we resource. Sometimes people come to us, they have good enough credit, good enough down payment. They can actually buy the home outright. We’ll go about finding a property for them because they’re actually all teed up. But the other folks, less than perfect credit, less than full down payment, then we’ve got an ability to serve them as well. So Erica, building a sustainable income producing, residual income business is exactly what I would recommend.
Scott Paton (23:02):
She had a follow-up question. This is really helpful information. Thank you for sharing. Another question.
“Do you think this is a good space for women?”
Lou Brown (23:10):
Erica, about 50% of the people that join me are women. Some of them are single mothers. Some of them are single women. Some of them are single mothers. I’ve got several mothers of five, I’ve got foster mothers. I’ve got all kinds of different women involved in my program. They absolutely love it. I think one of the key factors is in fact, let me just show you this book it’s called, “Doing Good While Doing Well – How real estate investors Provide a Service and Make A Difference?”
Erica, this is what resonates with people because they’re not only seeing my story. They’re seeing licensees of our system all over the country that are sharing their story in their local communities to help people end up with home ownership. This has definitely been a real winner for us.
Scott Paton (24:06):
We have one more from Kim.
“Hi Lou, what’s the smartest way to do real estate investing in today’s market?”
Lou Brown (24:13):
You know Kim that’s exactly what I was saying is the smart way to do this is to get connected to the community. The smart way is to not be in competition with all the other investors out there. We’ve got a problem because what happened in 2007 and 2008, well then by 2010 Wall Street woke up and saw that the prices of properties had dropped through the bottom. Wall Street started putting its ability to raise funds to work. They created one of the largest corporations in the world, BlackRock and others who lit open door BlackRock. There’s lots of them that are using Wall Street money, to go about buying properties in these neighborhoods.
What’s happening is they became our competitors. This used to be a mom and pop business. You and me, we used to do our own thing, but now, that’s not true anymore. Now, we’ve got Wall Street involved. What we have to do, we have to change our spots. We have to do things differently than Wall Street is doing.
Wall Street, can’t get local. Wall Street can’t connect with everybody, the community leaders and the community real estate agents and mortgage brokers and restaurant owners and beauty shops and barber shops. And everybody that talks to people in the community becomes referral sources in our world. We actually get deals that nobody else knows about. Kim, that’s what I would do.
Scott Paton (25:42):
Awesome. We have another question from Tony, heard you’re an expert on trusts. I have a living trust. What else should I do to protect myself?
Lou Brown (25:51):
Well, Tony you’re right. I’ve been using trusts since about 1983. I’ve been teaching trust since about 1985 and absolutely positively love trust. I think that’s the best entity on the planet. It gives you things that other entities can’t do.
If you’ve got a living trust, you already know that one of the benefits of a living trust is that it can avoid probate. If you’ve properly funded that trust, that means you deeded the property into that trust. Then that trust can avoid probate. But my favorite trust is called a land trust and a personal property trust for the average person. That is an ideal vehicle because the land trust allows you to put each property into its own trust and for not only estate planning, but for asset protection. Separating and segregating your assets from one another so that they are not impacting one another. If there’s a lawsuit, you see, that’s one of the things about an LLC or living trust.
Lou Brown (27:04):
Somebody could stoop that one entity and potentially get everything in that entity. What we teach you to do is to put each asset in its own trust, and then think about vehicles. Your vehicles can be in their own trust. Your bank account can be in its own trust stocks, bonds, mutual funds. They can be in their own trust. We’re separating everything out. And that living trust that you got Tony, that can be the beneficiary of all those individual trusts. If you want to add on asset protection to the estate planning provided by that living trust, that’s exactly what I would do.
Scott Paton (27:48):
Good. Lou, I think we’ve come to the end of our questions right now. What we’d like to do is talk a little bit about a way that people can get together with you and delve into these in a lot more detail.
Lou Brown (28:09):
Wow! Wealth Builder Workshop, what a great thing. This is where I take a whole day with you. Just some of the things that we just covered, I’m going to go a lot more in detail with those literally laying out for you, a master plan that you can follow step by step instruction.
We’re going to be doing this one day on May 1st. I’m doing a crazy thing. Since you joined me here on this Facebook live, I’m going to give you a very special discount. Instead of $197 I’m going to give it to you for a whole $1. That’s right, $1 you get Lou over 40 years, experience buying, holding, and selling property.
I’ve done a lot in this industry. In fact, I was Founding President of National REIA, National Real Estate Investors Association, President Emeritus of the Georgia Real Estate Investors Association. There’s a lot of things I’ve done in and with the industry. It’s so vital that you get the right information at the right time. You got to stay safe. When things might be crashing or might be shifting and changing, You got to put yourself in a position to protect yourself. You got to put yourself in a position to prosper.
Lou Brown (29:35):
One of the things that I found is that, when you join me at this www.WealthBuilderWorkshop.Online/Lou what happens is that you and me, we’re going to be together for that full day. You’re going to be able to ask questions. We’re going to have the chat wide open so you can learn with me. You can learn and earn.
I want to teach you how to make money up front in this real estate business.
Again it’s www.WealthBuilderWorkshop.Online/Lou to get the special pricing of $1. That’s one whole dollar when you sign up, we will send you the invitation in advance.
Lou Brown (30:34):
One of the things is when you sign up right before the event, we’re going to be sending you downloads of documents that we’re going to be using during that training as well. You’re going to get some real value from what you’re signing up for. We’re going to spend a day together and I am going to be covering how to find your buyer before you even buy.
We’re going to talk about wholesaling versus long-term hold. I’m going to give you some actual numbers in there so you can get the formula in your head. We’re going to talk about trusts, land trusts, and personal property trusts. We’re going to teach you about the 30 different benefits of trusts that you cannot get from any other entity, not a corporation, not an LLC, not a limited partnership. You can only get these benefits from a trust.
Lou Brown (31:26):
It’s going to be an action packed day. I totally invite you to come on, know that you’re going to get benefit from it. No question about it. Even if you could only be there for half of the day, you’re going to get tremendous value from it. Just know that joining me is going to be 10:00 AM Eastern Time to 6:00 PM. There’s even going to be a happy hour after that. Join early, you can talk to the other participants and definitely get your downloads.
When you join, we’re going to be sending you your downloads the day before the event. If you’re not joined, you won’t get your notifications about that and you won’t be getting your download. It’s very important to go ahead and join. One whole dollar, huh? That’s such a deal of a lifetime. I know it will be.
Again www.WealthBuilderWorkshop.Online/Lou join now!