In this segment of HyperFast Wealth, host Dan Lesniak speaks with the founder of Automation Finance, Paul Birkett. Paul has bought thousands of mortgages and has created a way for everyone to benefit from his strategies!
Episode Highlights:
- Paul is taking advantage of the remote working opportunities and staying a few weeks in Dublin.
- After spending 25 years as a corporate executive, Paul arrived in the US just after the economic crisis of 2008.
- With about 30 rental homes, Paul became incredibly unhappy because of all the admin work.
- Unlike Europe, the US allows businesses outside of banks to buy mortgage notes.
- The mortgage business requires a lot less admin work than buying a large number of real estate properties.
- Roughly 50% of rental property owners only own one property and pay it off on a 30-year mortgage.
- Paul’s company has created a fund that allows investors to liquidate in a few months with interest.
- By purchasing mortgages for much less than the borrower owes on the loan, Paul’s company is able to make large dividends.
- After purchasing the mortgage, Paul negotiates new monthly payments and interest rates so that the homeowner does not have to foreclose.
- Non-performing loans usually come to the market about 2-3 months after some sort of financial crisis.
- Over time, Paul has built up personal relationships in the industry and now has clients reach out to him for deals.
- Due to the global pandemic, many rental property owners are having a hard time making their mortgage payments.
- With a normal rate of foreclosure in the 1-2% range, the current range of 7-8% is quite concerning.
- Many large cities, and ones that depend on tourism, are going to take the biggest hit from the pandemic.
- Washington D.C. has seen a buffer from the effects of the pandemic because of the large number of federal government jobs.
- There will be opportunities in every area of real estate as a result of COVID’s effects on the income of renters and owners alike.
- Those that find themselves in the bottom 20% of the economy will be forced to restructure their mortgages.
- Eventually, the struggles of the bottom 20% will catch up to those that are surging right now.
- Keep an eye out for deals because there will inevitably be distressed salaries around the country.
- Even though businesses are closed across the country, real estate prices continue to rise.
- As the federal government continues to pump money into the economy, the value of the dollar will go down.
- If the government did nothing, we would experience The Great Depression all over again.
- Now is a great time to refinance for those with mortgages because of the all-time low rates.
- It’s not the time to be aggressively buying assets because we can’t be sure of what lies around the corner.
- Paul’s company was not able to keep up with the number of assets that it was purchasing.
- Optimism can get you into a lot of trouble when trying to scale your real estate business.
3 Key Points:
- One of the downsides of buying a large number of real estate properties is the massive amount of admin work that comes with it.
- Right now, there are over 2M home loans in forbearance because of the income troubles caused by COVID.
- The lower-income consumers generate the revenue for the higher income jobs, so you can expect that the effects of COVID will catch up to those higher-paid consumers.
Resources Mentioned:
- Learn more about Hyperfast Academy; Get 100 HyperFast Tips HERE
- Dan Lesniak (bio, Facebook, Twitter)
- Paul Birkett (LinkedIn, Automation Finance)
- Hyperfastwealth.com