All Forum Posts by: Justin Moy

@Mike Lambert I didn't know about their stock market gains as well, great point!

In the past 13 years we’ve started to see huge changes in the overall cost of manufacturing and importing into America.

China has been the leader when it comes to cost but over the past decade Mexico has started to beat China in almost all the major categories.

China is seeing an increase in effective labor rate per hour, at $6.50 versus Mexico at $4.82 - with China seeing an increase of 37.5% since 2010.

This is largely due to China’s aging population with a large gap in population where in the next 50 or so years we should see their labor force be cut by 30 - 50%.

Not only is labor becoming noticeably cheaper in Mexico but foreign exchange rates are also making it more effective to manufacture in Mexico, with the Peso steadily declining against the dollar which causes another effective labor rate reduction of about 3% per year.

Labor cost are dropping, foreign exchange rates are also causing a decline in effective labor cost and productivity is higher in Mexico. In 2014 China and Mexico had almost identical productivity outputs but by 2019 Mexico has started to see up to 20% more efficiency per dollar spent in production of some industries.

All of this combined with how much closer Mexico is to America which reduces shipping cost and time can mean over the next few years companies will continue to expand reshoring production from China to Mexico.

So, what can this mean for real estate investments?

We can start to look at what will happen to demand of logistic based real estate like warehousing by the southern border or in the major manufacturing cities of Mexico.

Prologis, which is the largest warehouse operator in the world is seeing vacancy in these regions drop to just 1.1% with a 16% increase in rents last year.

We’re seeing more and more manufacturers shift their focus from China to Mexico and trends like these are great pieces of information that can help you decide where future supply and demand can shift for your investments.

The biggest thing you're looking for is training and reputation at this stage in your career. I'm not familiar with how those brokerages train but have heard good things about KW. 

Also look at the size of the office itself because those can lead to partnerships or team formations. Some brokerages discourage creating internal teams and others actually encourage it. Some don't care. I'd personally look for ones that either encourage teams or don't mind them. The ones who discourage them typically do so in the brokerages best interest, not in the agents. 

No matter what brokerage you go to you'll be responsible for creating 90%+ of your business, some brokerages lure in new agents with the promise of 'hot leads' to call on and close but I've never seen that be the case. Some may provide lead generation or get more walk ins or inbound calls but you'll still be working to get your own book of business, so at this stage of the game I'd prioritize the training and reputation of the firm.

Unless you sign documents stating they can't purchase it the only thing really is trust. Any good agent who's been in the market for a bit of time wouldn't risk their reputation for a single deal. 

So tenure is a good filter for these types of people. 

Also brokerage, many agents would be let go if the brokerage they work for found out they did something like this so if they're part of a larger firm you have that chip to play if you feel they acted shady. 

One unique part about the real estate negotiation process is how stark our supply/demand imbalances can be. Lots of books don't have tips for negotiating when you're 1 of 8 offers with comparable buyer profiles. 

Once you're in escrow lots of the negotiating leverage is really how much the seller doesn't want to put the property back on market and how bad your buyers want the house. 

This isn't like the luxury listing shows where there's 2 brokers fighting in a restaurant. Both brokers want to get the deal done on acceptable terms for their clients. I'd also think about your reputation in the market. If people start to know you constantly say the same things in every escrow, they'll eventually know that's just your playbook and won't take your word seriously. Treat each situation differently and know when to stand up for your clients and know when to bend so you don't break

It's just their policy. When I was more established in my broker career I required it to work with buyers. Since you're looking to buy fairly aggressively it may not be for you but I'd ask what you get for that agreement. Are they going to work to source off market deals for you? If not and their idea of working for you is setting you up on their listing drip then there is no real advantage they're giving you

It definitely depends on your investment strategy, personally I don't take on negative CoC properties predominantly because I always think of the alternatives for that money.

Syndications and funds can have lots of upside but still have a CoC return or an accruing pref, but it's not something that you'd typically plan on paying out or floating every month.

We used to purchase vacant buildings which of course we'd pay out of pocket monthly until we stabilize, upside was of course very high but it became something that I don't do anymore

I was a RE agent about 11 years ago and it was a struggle to stand out for sure in the beginning. 

My pitch was always that if you work with me on the buy side I do set you up on the same email drip other brokers would set you up on, but I'd also prospect for off-market listings for you or pre market. 

My goal was always to show them 1 off/pre market opportunity every week or so. 

But if you're going to just put them on a drip then you're very easily to replace

If you feel sophisticated enough to represent yourself then I'd do that unless a buyers agent brings me an off market deal. 

If you don't feel confident enough to pursue a deal yourself then a buyers agent is worth their commission. 

It's tough to work with many buyers agents so I'd start speaking with a few if you want to go that route and establish a strong relationship with someone who you want to work with. 

If you'd rather go your own way you can set up your own alerts on listing sites (zillow, realtor.com for SFH, crexi or loopnet for commercial) and just submit LOIs as they come up.

I would tell them to lower their price or back out of the deal. Now they also have an appraisal at that value so if anyone asks if the property has been appraised they have to say yes and that value will come out. 

If they have people who are willing to overpay in cash for it then let them. But likely if they had cash offers competing with yours to begin with they should have taken those over yours. 

Submit a notice to cancel and hopefully your deposit isn't nonrefundable at this point.