Home Builder Offers Are Getting Ridiculous | Landlords Hit With Crushing Costs

Well guys, some of these new gimmicks to spur buyer activity on new construction are getting absolutely ridiculous. I got one recently where the builder national builder is offering 0% interest for seven months on a house on a house. Guys, this is like, I would expect that on a big screen TV, maybe a computer purchase, like a balance transfer on a credit card, you know, what are we doing? Guys, what are we doing here? What are we doing here? Lower price. I mean, if that's to the extent that the marketing has to be ramped up to 0% interest for seven months, which I don't know if you're going to buy, it's a good deal personally. I don't, I don't know if that's going to move the needle, but what it tells me is what I've suspected and what I've kind of seen around Southwest Florida is the incentives alone are not moving the bar for buyers on these new construction homes. So they're rebranding incentives now, which at the end of the day, it's basically the same incentive. So if you read the fine print on an offer such as this, you're going to find that it's basically flex cash. And for those who don't know what flex cash is, it's the builder will give you a certain amount of money at closing. You can use it however you see fit. If you would like to put it into design upgrades or pay down your closing costs or buy down your interest rate or have them prepay seven months of interest for you. Ah, I don't know. This is so wacky. So wacky to me like this because the climate from having to bid bid with builders to get an offer in just to just to bid, to be able to give them an offer, not even like to bid for the property. And now all of this as new construction inventory continues to pile up here a few videos back, I told you guys they're pumping the brakes, but they still got a lot out there. And really quickly guys, if you like this content, please consider hitting that like button, maybe subscribing to the channel. It helps me out immensely. And thank you to everybody who already has, but I've been reading nationwide, but seeing locally is indeed happening. Builders are having to get more aggressive with their offerings. It's not just, we're going to give you a rate buy down or we're going to buy your interest for seven months. It's we still, we, and then price drops and then maybe some closing costs. Like there's still a lot of inventory out there. As we've mentioned, they've pumped the brakes on building in a lot of areas, but there's still a lot left over here, especially in Southwest Florida. So I don't know. I don't know. What's what's what's next. Like I told you guys a few weeks back, they're giving you free stays at some places, some places will reimburse your airfare. If you fly down here and purchase one of their properties, like everything is getting thrown at the wall right now. Every time Sherry gimmicky thing. And I guess credit card, big screen TV promo option now with something like this is getting thrown at the wall and they don't seem to be sticking because they keep changing, they keep modifying them. If it worked, if one of these was a great idea, everyone would start doing it. And you wouldn't see all these random different kinds of promotions that just seem absolutely insane to do on a home. So new construction in a weird spot, guys, the resale market, as you know, in Southwest Florida, very tumultuous right now. It's not looking good in a lot of places and the media has come out and kind of acknowledged that. I keep speculating that if we have another strong listing season, it's going to be another year of what happened this year. So I do believe that that may occur because it seems to be when you remove investors from the equation here specifically in Southwest Florida, but a lot of areas that sucks up a huge portion of what was driving prices up. And as we know, real estate investment right now, very hard to make the numbers work, the one, one bad move, bad tenant, storm, anything can really throw away any profits you had. And right now with the way the market's looking around the country, it's not even a guaranteed appreciation play, which has historically been the reason why everyone's like, Oh, it's safe. It's safe, but you can get better returns elsewhere. I'm seeing landlords really start to take some beatings here. Take a look at this post that I caught the other day. So this is the post I was talking about. It's just one of many, basically a landlord saying, wow, the cost of replacing shingles on a roof is blood. I'm assuming they meant bloody expensive or they want blood. He's getting quotes 15 to 18,000 in Colorado Springs. That's about seven months of rents. Crazy. If I include taxes and insurance and a hot water heater replacement, I will only break even on being a landlord for one of my houses this year. Crazy. And a lot of the comments are echoing this. I'm seeing a lot more posts again. He says, ouch. If there is a big hail storm someday, I am literally wiped out. I do not have the money to replace multiple roofs. Also saying now that the insurance companies only want to pay on a percent of the roof slash shingle repair based on the age of the shingle. So they want depreciation, depreciation on the repairs. Is that like how they're looking at it? That's crazy. So this person's in the hole guys. And there's a lot like them, a lot like them. Now we don't know how many years of profit is offsetting this year of loss, but we're starting to see this more and more where people, landlords, even with multiple properties are coming online and complaining that they can't make a profit and again, maybe just this year, but your amateur landlords are also mixed in with this, of which there are a lot that is something. People overlook, they tend to think that it's all the big real estate conglomerates, a lot of mom and pop landlords and people still getting into that, people still getting into Airbnbs down here, which I personally think is very risky given all that we know about that market and has happened here, which is probably one of the main drivers of our inventory is the Airbnb sell-offs. Uh, but investment is right behind that. So, you know, they were sold. A lot of people were sold this passive income dream. Oh, you're just going to get mailbox money. You're going to get checks in the mail. Yeah. You rent things out and it's easy. Just pay someone to manage it. It's not easy guys. It's not easy. It's not always profitable. It's not guaranteed money. It's certainly in my opinion, have having been a property manager certainly is not passive income. If you have passive income and you have someone managing it great, but you're not, you're not the standard, you're the exception. So had a lot of people fall into this, which is what's caused a lot of people to list because they realize, Oh, this ain't the moneymaker that I think it is. What's up? Oh, got sidetracked there. Came back to see who it was, but, uh, I don't know if that was you guys. Let me know in the comments or an email. I don't know. I passed the lady a couple of weeks back. She said, I didn't know who she was. And, uh, her husband emailed me over to, Hey, that was my wife. Oh my God. That's awesome. Appreciate that, man. So yeah, please, please do. Uh, so not only are a lot of people finding out that this passive income from real estate investing is an absolute myth, they're also finding out they're not able to raise the rents to cover these new expenses or one-time occurrences like, you know, that, and that's part of being a landlord. Guys, if the roof goes, you got to eat it. Maybe you don't make money that year, but it sounds like this guy's in more trouble than that. Uh, I don't know if he should be in the game. If you're not comfortable taking losses, but again, like I said, so many amateur investors jumped in with no anticipation of this, that they're really getting caught off guard at the end of the day and speaking of roof stories, we were, Sherry and I were working on a contract recently, and there were some issues with the roof and the roof was installed in 2023. So you would think, okay, two-year-old roof. Why do we have issues with the roof? Well, there there's a warranty. We said, okay, let's send it out. Let's call the warranty guys in. And this happens sometimes guys, particularly with roofs replaced in 23 down here, when things were fixed quickly from the hurricane, some of the stock had been sitting around for quite some time, we were just getting out of the pandemic, things may have been stuck on shipping containers for months. Who knows years. So some of the shingles, not that great. I've had it happen before. Warranty company comes out, says, okay, we'll fix this or we won't. But this is the first time that I had the warranty company tell me, and I guess this is pretty common. You guys may know better than me. Uh, send us a sample of the roof. What are you talking? Mail us a sample of the roof. What? No, no, no, no, no, no, no. You come to the roof. The roof doesn't come to you, but Oh, lo and behold, I am incorrect. Yes, it does. So I don't know how that one's going to play out because you got to cut a piece of the roof off. A professional has to cut a piece of the roof off. You can't go up there and do it, or they better not find out you did. They come with a very lengthy checklist on all the things you have to do. And if you do any of them wrong and you package it wrong, Oh, you can contaminate the sample. Now we can't tell if it's faulty. So I would think just having anybody hop up on your roof and cut a piece of it off, if I'm a warranty company, it'd be like, it just voided your warranty. But, and then you get into who's got to put stuff back. It has to be re it's crazy. So never seen that before. Guys. Don't know if you guys have, but something to keep in mind. Some of these roof warranties are going to make you send them the roof. So I'm even saying it out loud again. I'm blown away by since we talked about new construction guys, something I get asked all the time is can I go to a builder without a real estate agent? Absolutely. Go, you can buy a house without a real estate agent. You know, people do ask me in this context of if I go talk to them and then I come get you, can you help me? Um, yes and no. It, it, the answer is it depends. So if you go without an agent and you get very far in the negotiations, they're probably going to have a problem. If at the 11th hour, you pull up and say, Hey, I want to pull my real estate agent in here as well. And I understand why guys, it's not how I do business. I would not want that done to me, but people don't understand that. So if you're going to get a real estate agent involved, generally I say pick one before you go shop new construction and put their information down. When you go, if you go without them, usually I try to go with my customers, but sometimes you can't and they will go without you and they put your name down. But if you're in the middle of negotiations, it's kind of hard to change your mind and say, Hey, I decided I want to get representation and unfortunately I have this happen from time to time. And depending on the process, it goes different ways. But the most recent one I had was a property down in Babcock Ranch. I got a call from someone who wanted to purchase a new construction build down there and I said, Oh, okay. Well, you know, have you toward the community? And they're like, Oh yeah, we stayed there. We played golf. They, they gave us 18 holes. Now right away, the hair on my neck goes up. I'm like, Oh, whoa, wait a sec. He said, are you working with anybody? No, no, we're not working with anybody. You know, that's okay. That's kind of weird that you, you got in, they gave you a round of golf, but you're not working with anybody. So anyway, it turns out they do have a contact, which they then send to me who I call out of a courtesy because I don't want to be that guy. Hey builders, I don't want to be that guy. I'm going to tell you right now, buyers. I don't want to be that guy. I don't want to be the guy that shows up after you basically negotiated a house, just cause a big mess and also pay me. That's not how I would want business done to me. That's not how I do business. So I call up this rep and I say, Hey, this is so-and-so looking for a house here. You know, have you ever heard of this guy? And he starts laughing and it turns out this guy is under contract on a home already set to close very shortly. I mean, come on. Like I don't even blame him. I said, Oh my God, man, I'm sorry. I'm so sorry. Didn't know. You know, I had suspicions obviously from the reasons I named, but that's why I say bye and I could not get involved in that. Absolutely not. There was no way. There's no way. So guys, that's when if you're going to get serious about looking at homes, you're going to start leaving information with builders. If you want representation by an outside entity, by a real estate agent, you need to link up with one and pick who it is and make sure you're putting them down when you do that or else later. It's not going to, it's just not going to work out some of the time. All right. That's all I got for today, guys. If you liked this video, give me a like, share, subscribe, and I'll see you next time.