Jamell Tousant says investing in California real estate was a no-brainer for many years. People primarily desired to reside in San Francisco or Los Angeles, both of which are already overcrowded; rents and home prices skyrocketed, and investors couldn’t pass up the opportunity. The plot has changed now. California’s population grew by zero percent in 2019, with 200,000 individuals leaving due to high housing costs and a scarcity of new jobs. They relocated to Idaho, Colorado, Utah, and Arizona, which were close by and offered more opportunities. 

California still has 15 million homes, and a million of them are sold each year, indicating that the real estate market is far from dead. However, Jamell Tousant warns that investors must now be much more cautious about where they put their money. However, investors must now be far more cautious about where they place their money and the types of investments they make. The pandemic adds to the complexity of the problem. In response to the economic crisis, ultra-low mortgage rates spurred a rush of home purchases in 2020, taking demand from 2021. Evictions and foreclosures will be the result of the pandemic’s growing financial agony. More people will be forced to relocate as a result of permanent job losses. The housing issue will not be obvious until the pandemic is gone, which we still don’t know when.

In these conditions, investors are best served by keeping to the “center” of the market, focusing on assets that are supported by local economics, and following the figures. The first statistic, the lack of population increase in practically all of these areas, is the most remarkable. Jamell Tousant explains, when a market isn’t increasing, your investment strategy is fundamentally different because it’s a zero-sum game; you have to figure out which sector of the existing demand will be the strongest. Single-family residences? Apartments? Is it better to own or rent? Is it better to invest in the high or low end of the market? Will growth resume in a year or two? Is it possible to overlook this minor setback? No. The wave of population increase in California had already peaked well before the epidemic. The large percentage of renters in most of these markets – the national average is barely 35 percent – is a second crucial statistic. This is related to the average price of a home; the greater the average price, the fewer people who can afford to buy. However, even in the Central Valley, where costs are the lowest in the state, a huge percentage of residents are renters. 

That’s because living in California is expensive; Californians pay the highest rents in the country when compared to their income. The following statistic, the year-over-year growth in home prices, is a gauge of local demand for all types of housing, not just single-family homes. It was quite weak in the costly Bay Area this year, but much stronger in the Central Valley says Jamell Tousant. Home values, like population, rise and fall in extended cycles, therefore I expect this pattern to continue. The last statistic, the average home price to average yearly rent ratio, indicates how closely the owner and renter segments of the market intersect. It’s a list of the most popular investment options in each market.

When I got started in Real Estate Investing, I had no money, bad credit, and no knowledge of investing or even rudimentary building construction.I couldn’t for the life of me have told you the difference between an asphalt shingle and asbestos siding.

Sound like a great starting point?  I was 27 years old, and devoid of any resources and even so much as a clue where to begin.

So what did I do?  I took inventory of what I did have- some spare time, motivation, and energy, found a mentor that had the knowledge and experience I needed, and offered to trade resource for resource- I’ll give my time to do any work you want for free, you teach me how you are able to buy and sell 10-15 houses per month.

Bargain struck.  I came to learn that you really did not need money (at least not your own) or credit to buy and sell houses.  What you needed was specialized knowledge, confidence, and a willingness to take action on a large scale.  Without the help of my mentor, it would have taken me years at minimum to piece things together on my own, and being perfectly honest, it probably would not have happened.

I can give you no better illustration of the power of mentorship than the story of Earl Shoaff.

Earl dropped out of school after the 8th grade.  He went on to become a success in network marketing.  It’s likely you’ve heard of the young man whom he “sponsored”, and eventually became a life mentor to.

This young man has since become an author, award-winning speaker who has shared the podium with the likes of Zig Ziglar and Donald Trump, and until his recent death (and arguably still) holds  the title of “America’s Foremost Business Philosopher”.  I am talking, of course; about Jim Rohn. But read on, intrepid reader, the story of the power of mentorship does not end here.

One of Jim Rohn’s salespeople was a tall, energetic, and awkward 18 year old young man.  This young man went on to become Jim’s top salesperson, and Mr. Rohn “took him under his wing” and mentored him, much as Mr. Shoaff had done for himself years ago.  

This student let no grass grow beneath his feet.  He was a millionaire, living in an actual “castle”, by the age of 24.  He has trained Olympic and professional athletes on how to run their brains for maximum effectiveness, helped the United States Army to improve its training programs, and is acknowledged as THE expert in his field by such giants as Ken Blanchard, who wrote the introduction to his internationally bestselling book, Unlimited Power, which he authored at the ripe old age of 26.  Most of you have figured out that I’m referring to Anthony Robbins.

In the cases of Jim Rohn, Anthony Robins, and myself (albeit to a far humbler degree), the first step from “ground zero” was seeking out a mentor who had walked the path previously, with outstanding results.

Lou Gimbutis, owner of Property Solutions, LLC, where We Buy Houses, We Buy Mobile Homes, and We Stop Foreclosure, has been buying and selling houses full-time since 2004, first in Michigan, then after moving to NC in 2007.  He serves as Director of Education for the Metrolina Real Estate Investor’s Association.

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