Real estate news has dominated headlines for years. Certainly when the bubble began to expand, then when it burst and now the trend has continued throughout the recovery. Real Estate investors can easily get caught up in the latest changes in market statistics and forecasts. But how helpful is following all that news? Should you consider ignoring much of the hubbub or is shutting off the constant flow of news a detriment to savvy and informed investors? In this video, you're going to discover if your should ignore real estate news:
The Information Age
We're in the information age. There is so many things coming at you all the time, so much information that it can get you all confused. What I have discovered is that there's a lot more noisy information. Noisy, meaning it's not productive. It's not going to help you. Then there is signal. Signal mean that those nuggets of wisdom that are absolutely essential. Let me talk about what would be some of the noise that you're going to read about in the news. I'm going to say, "Noisy news." Noisy news is going to be things like foreclosure rates. It's going to be, you'll hear phrases like "builder starts."
They'll just talk about overall sales, both of new and existing. You'll read these things in articles. You'll read things where it talks about interest rates. I know, some people are going, "Phil. Interest rates, those are really important." Okay, hold on. Hold on, I'll get to it. Okay, so this is what I defined, in most cases, as noisy news. First of all, who's creating these news articles? Journalists. What are they creating them for? So people will read them. They're not real estate investors. They're not in the field doing the business. They're journalists, and they create these articles so people will read them, but it doesn't mean it's going to help you and your business. Now, some people say to me, "Phil. I want to keep up to date what's going on."
Real Estate on a Neighborhood Level
Well okay, this is the next part of this. If the foreclosure rates are high, the builder starts are low, the sales are low and the interest rates are high, how does that change the way you're going to invest? That's a big question, right? Because I would position that regardless of where the market is, my approach is still almost identical. I only buy rental properties that cash flow incredibly well. Otherwise, I just flip the deals. If a deal is a good deal, I don't care if the interest rates are high or low. I don't care if the sales are good or bad, because all of this stuff, here is a big one, this is macro. This is what's going on on a national level.
You know what? Real estate happens on a neighborhood level. Real estate happens in such micro localities that even if the city has lost value in properties, it doesn't mean the entire ... the neighborhood you're doing a deal in is losing value. Warren Buffet does a great job of communicating this concept when he talks about the idea, like you buy a farm and you buy it based on what it's going to produce, not based on what the value is going to do each and every month. Following all of this is largely a waste of most people's time, because it really doesn't affect a wise real estate investor's approach.
Now, if you are buying bulk properties, 2,000, 5,000, 500 homes at a time and you're a hedge fund owner, okay, you can disregard everything I'm going to talk about because you do have to watch all these things, but for all of us individual investors, this stuff really doesn't make a big impact. But I'll tell you what it does do and it confuses new people, it confuses existing people. "Uh-oh, the builder starts are up now." "Oh my gosh, the sales are up. Okay, the real estate market is booming again. I can't find deals again." These are the kinds of people freak out about and none of these matters to me, because we were making great money when the market was booming in the mid 2000's. When the market collapsed, we made a ton of money, when the market is on its way.
People Will Always Need a Place to Live
We're always being very productive because the real estate business is especially what we do at residential, is very consistent. It's going to be consistent because people always need a place to live. We only select those deals that stand on their own two feet. I'm not worried about what's going to happen next, which is, here is the next piece. You can't predict the future. I know I'm bursting your bubble because you were probably one of the few that guessed that the market was going to collapse in 2007, and so you pride yourself on predicting the future. I got news for you, you can't do it.
You Cannot Predict the Future
Predicting the future is a huge waste of time. Real estate investors should not be investing in deals, I mean, some of the long-term basis, based on what's going to happen in the future because you never know. Let me give you a simple example. In 2010, 2011 as the interests are really, really low, everyone said the rates were going to go up. In 2010, they were going to go up, they didn't go up in '11. They didn't go up in '12. They went up a little bit slightly in 2013. We don't know what's going too happen. This is fascinating, in 2007, they did a huge study when the market was starting to collapse, when they're asking all of these brilliant economists, "Hey, are we about to have the biggest catastrophic plunge in our economy that we have since the great depression?"
Almost everyone said, "No." And we were in the middle of the drop and they didn't even know. We're lousy at predicting the future. We're terrible at predicting the future. I pause it to you here that you attempting to predict the future is a complete waste of time. Noisy news, not only does it confuse you, not only is on a macro level on almost all cases, so it's pretty much useless anyways, but also, to try to use that data to make decisions is kind of a poor approach because you can't predict the future anyways. I mean, when the market is as bad as it is, what's supposed to happen is the interest rates are supposed to be up, but they're not. They've been down.
I mean, we don't because everything is different all the time. We don't know what the future brings. With having said all that, where is the signal? Where is the signal? This is the good stuff. Where is this? It's in doing deals. It's getting out there, getting properties under contract, getting properties closed that are wise deals and getting stuff done. When you're in the game, that's when good things happen. By the time real news hits the newspaper, if you are out there doing the deals, you would have already known about it.
I'll give you a good example. Several years ago, the market is melting down and everybody is panicking and the sky is falling, and they gave ... The government did a tax credit for anybody that bought home, like a first time home buyer tax credit. When they released that, especially as it started to expire, right before it expired, there was a huge boost in sales. If you had some deals out there, you made it. You made some money. We did. We made some good money from that. Another example is when the market really hit rock bottom, which is in about 2012, a lot of hedge funds came in and bought a bunch of property. Then in some markets, they're still buying them right now, but that's really trailing off. I mean, it was like an in and out.
Those hedge funds went in, bought a ton of properties and came right back out. What happened was, if you have properties on the market, you had deals you were working, you got paid. It was nice. But hey, once it hit the news, that Blackstone group was buying a whole bunch of properties. Just as quickly as it hit the news, bang, it was already gone and you missed your opportunity. The signal is out doing deals. Now, in your local, local market, there may be some statistics that could be very helpful. Maybe your local board of realtors releases some data. Some of that can be helpful. That can be signal too, when you get really, really localized. If you're in a big city like Los Angeles and they give you Los Angeles-wide statistics, that's still not as helpful. I mean, you got to hone it down, [inaudible 00:09:01] kind of level.
What I'm trying to get across is the idea that a lot of people spend a lot of time wasted on focusing on news, as opposed to focusing on doing deals, because when you're doing deals, great things happen. That's where the news comes into play because you're there before the article comes out. You know what's happening before anything else is happening because you're out there. What drives me nuts is when somebody just takes a cursory glance at their market. They read a couple articles and they go, "Well, around here, Phil, things are a lot different than where you live." I go, "Really? How many deals have you done this last month?" "I've never done real estate before, Phil." "Oh, so you're giving me some advice on your local area and you've never done a deal there."
The Real World
That's the difference. The signal comes from being in the real world. You're not going to shortcut it reading some news. You got to get out there and do deals. I got a little intense on this one. You could tell a stuff drives me nuts when people do this, when they make these assumptions based on some macro news, I'd tell you ... Now, am I saying that you completely shut off the news? No. I mean what I do is, I'm always tracking what's going on out there, but I only read the articles that I can tell has some signal on it. Most of them aren't anything like, "Sales plummet in November." "The National Real Estate Association said that real estate crisis have actually leveled up."
They make these grandiose claims and it's like, "Okay, so it's November. Yeah, of course real estate slows down in November. That's Thanksgiving. People don't buy as much, as well as December." Then June, people buy all- It's a lot more bustling in June because everybody's out of school and they're all buying houses to get transition for the next year. The key here, in my opinion, shut off the noisy news, don't try to predict the future and go out there and do this business in such a way whereby the deal stand on their own two feet. It doesn't matter what happens tomorrow. You're still going to get paid.
John Washington says
Thanks! Love the show…
Flamur Haxhialiu says
I have been watching since from April 2017.
I finished one deal in November 2017 in West Palm Beach, Fl
And another deal in September 2018 in Jacksonville Fl
Thank you, Phil, for all your good info and inspirational topics. I’ve been watching you since November 2017.
Real state investing works for us.
Robert H Bruno says
Your information on NOISY NEWS is so true and your commentary is spot on.
Focus on doing deals and forget about all the other noise.
Phil — You say you love opposing views, but I can’t help you, man. I just have to agree with you on noisy news.
Love your down to earth direct no nonsense approach and appreciate your generosity of spirit in sharing your wisdom and knowledge in REI.
Ashfaq Ahmed Sheikh says
Phil, this is probably one of your best videos. Thanks.
thinking about investing in buying, fixing and flipping…
what advice do you have for first timers?
Freedom Mentor says
Have you looked in our Free Online Course
Jerry Smales says
Your work is truly appreciated. Thank you for your inspiration.
Greatly appreciate all your info.
Gerard H. Briggs says
Agree 100% Phil.
Claudia T. says
Phil, you’ re really great! Learning to weight news in the real estate market is crucial for professional investors! I’m reading and studying your ebooks: they provide me precious informations on how to make profitable deals, also in Italy, my country. Thank you very much, Phil.
I will like to join and have a mentor show me the ropes without mental reservations.
Phil how much will it cost me to join the apprentice program.
john de decker says
It’s like that! No matter what everybody says, no matter what the news is; everybody can do business in RE everywhere! In good and bad times 🙂
The key is, like you always say, to buy below market value. So if you’re doing flips whatever the market does you make money because of the speed. And if you ‘re doing “buy and holds” the only thing that matters is that you have a positive cash flow. CASH FLOW RULES.
I’m doing business in my backyard which is the little Belgium and I can only confirm loud and clear that your info is REAL GOOD 🙂
Professional Realty groups, especially on the national and state levels, were guilty of sending out propaganda during the last real estate downturn of 2007-8. Despite burning-house evidence obvious to investors, these associations regularly dispatched “massaged” happy statistics to prove the boom was still in progress — even when the bust was in full thrust.
Reader, and buyer beware of such groups.
Always very informative info, I will become a mentor of yours, it seems to me that I would get more help from you to really learn this business.
Anan, Madan says
Very Informative. Generalist creates Hype. N Hype is Hype so ignore it. U right there Phil. I agree.
Local news is something that you need to keep abreast of the trends that will have an impact on the rei market.
Is there a new plant, casino, shutdown plant repair that will stimulate the market?
Phil do you think getting my RE license will make REI easier?
Phil Pustejovsky says
Watch this video: Should Real Estate Investors Get a Real Estate License?
Phil most people I talked to are trying to discourage me from getting a hard money loan to fund a deal saying that it seems like I just be working for the lender but they aren’t offering money to lend to fund a deal.. So do you discourage a person from using a hard money lenders?
Phil Pustejovsky says
I encourage hard money loans on short term deals that have tons of room in them whereby you don’t already have a buyer lined up.
Pavel S says
Really liked the comment that press makes the news so people could watch them and make decisions based on what other people have told them.
I do not watch the news, I think it’s a waste of time, because people that produce the news, want you to be affected by them and make decisions based on the news. I’m sure that I would know that something very important has happened from somebody. What important has happened in your life people while you were watching news for last 30 years?
I control my own destiny and suggest to others do the same. Who I’m to give suggestions?-nobody, I’m 35 years old, completed over 500 real estate deals (commercial and residential) own 8 independently run businesses and do anything that I want to almost any time that I want to 🙂
Phil, keep them coming. It’s so rare when people tell the truth!
I agree Phil focus on doing deals this is the best way to find out what going on.
Hi Phil, I enjoy your videos.
I am starting to work on Wholesaling. I have found Buyers and Agents to work with.
On this video I have a question regarding where you would get the local news from.
Would it be local papers or are there good websites or organizations that you recommend for good info and stats?
Thanks for your help.
Phil Pustejovsky says
Can this apply in africa – specifically Kenya?
Phil Pustejovsky says
I don’t know
Audie J. Clark says
I agree. I’ve come to learn and understand that economics is the study of human behaviors not predictions. Meaning, human beings are not made to predict but we can observe the signs. Economic behavior always involve the buying and selling of products and services in our markets. We can’t predict when these behaviors will happen, but in due time it always will.
So, the signs of the times are more important than the predictions. Besides, history has proven that more millionaires were made in the depression than any other economic period. Phil, I got my eyes on the fig trees…
Phil, I want to thank you so much for this valuable lesson about “ignoring real estate news.”
I appreciate how you teach from personal experience what is working now.
I have been guilty of making decisions based on the news and it cripples you with fear.
Then you don’t take action which means you are not making money. Keep up the good work!
Always so informative…love it
Hi, Phil I like your attitude you seem to be really concerned about not giving out bad or erroneous info thanks for another
Thanks Phil. All the noise sometimes make it appear that these hedge funds are buying up all the r/e and there will be nothing left for the small guy. We are not out there to win every battle we are out there to win the war aren’t we? whenever I drive around looking for property, I always say, how many people are having financial, divorce. lost job etc
problems. BOY OH BOY, there are a lot. You are 100% correct. thanks you again.
Charlie Hoffhine says
Great video, now take it down so you don’t let too many people know this. LOL. Keeps the competition low. Long time no hear.
erwin simangunsong says
after seeing this video, My conclusion is that we focus on the houses we want to buy instead of information that we can’t influence.
mark romero says
Hi Phil. I have watched all of your videos, taken your online course, read your book and am reading your recommended books. I am really motivated to get on the real estate business and want to take advantage of all that deals around my house. I am currently living in south chicago and houses are selling at extremely low rates. I am looking at a single family home with a arv of 150k and they are only asking got 25k. I have the money for the down payment and closing cost, but will not have much left over for renovation cost. The house needs 25k in rehabilitation cost, but the equity will be well worth it and i would be able to rent the place for about 900 a month.What would be the best way to finance the rehab on the building? Thanks for your time.
Phil Pustejovsky says
Get a hard money loan from a local hard money lender there in Chicago.
I am also on the south side properties like this will not last long if you don’t jump on the deal immediately
Rob Arnold says
Any statistics on a national level really mean nothing at all. Even on a local level you have to examine the source. I saw someone write and article that listed the headline from our local Realtor association’s analysis of their monthly real estate stats. Even when the market was crashing in 2007 and 2008, the Realtor association would put a positive spin on the stats every month – shows how bogus their commentary really was. Take it all with a grain of salt.
The news I do look at every month is the actual local housing stats. Those numbers do tell what is going on if you know what to be looking for. Stats like inventory levels, new listings vs new pendings, absorption rate, and days on market. I also watch for anything going on with Fannie Mae, Freddie Mac, and FHA because those affect people’s ability to get financing.
Enjoy your videos. Thanks again.
Phil Pustejovsky says
Great point. Those MLS driven stats are sweet.
Tammie Johnson says
Good information. Thanks
Each day when I open my email I go straight to your email FIRST because I know that has real value to what I do. That is the kind of real estate news I pay attention to! Today, you get an “OSCAR!” for your thoughts on real estate news Learn to read between the lines of the real estate news and you live better and longer.
DAWN ALFONSO says
it is hard to figure who is saying right like you said the news are just making money . but what is the good deal in real estate. so they are not pulling your leg.
the media gives lots of information but what is right and what is wrong.
very good question for me.
Phil Pustejovsky says
The players who are making big money in this space know the answer to your question. And the smart ones aren’t telling anyone how their doing it. I only reveal the detail details with my apprentices. I still share a ton of great information, but as far as the intricate details that lead to big money, I reserve that for my inner circle.
kim powell says
you are dead on target phil just keep investing that,s the key. by the way I,m looking to do some bird dog deal could you use a pair of ears and eyes. I,d love to do some deals with you feel free to email any time if your intersted. thanks
Victoria Trescott says
I’m impressed, Like the No B. S. ( Your the real deal )
THANKS for giving real information, not just another sales guy promoting your books/videos.
All of the information I have received from u have been very helpful and accurate, especially your book i n how to be a rei. Thx u 4 sharing!
Daniel Askew says
Great post Phil. I agree 100% and believe that most information flying at us is just noise! Just keep your head down and focus.
Mel steffin says
Hi phil. I always enjoy ur views. Lots of knowledge and experience to back it up. My wife and I live in Vancouver BC canada and are looking to do real estate in the USA. We have been listening to webinars buying courses taking in seminars and getting the grandios view. Looks like there are tons if different ways to make money in the USA real estate. From SFD to multi to apartments to notes to overages to HUD homes tax liens and deeds the list goes on and on. I am so confused I don’t know where to start. Sorry for the long winded mail. Anyways I always look Frwd to ur videos. BTW we love Florida we were there last summer on the SW side and would love to invest in that state
Take care mel steffin
Phil Pustejovsky says
Try investing in your own backyard.
Masood Durrani says
Very Informative Video – good to watch and learn
Rodney Hamp says
Prince .C says
Hi ; great info, its good to listen to informative from the right source, what you do with it ‘s up to you