Scaling Smart: Real Estate Strategies with Jeb Smith

What's up, everybody? And welcome back to another episode of Loop It In, the DoorLoop podcast, where we pick the brains of experts in property management, real estate, and investing.

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Hey, everyone. It's Galena Rubin, property management expert with DoorLoop, and I will be your host for today. We will be joined by Jeb Smith, a real estate broker associate with over eighteen years of experience in Orange County, California.

You can find Jeb on YouTube, TikTok, and Instagram for some really valuable insights regarding real estate. He has over a hundred thousand accumulated followers and subscribers. Also, he has a course that teaches first time homebuyers everything they need to know. If you're thinking of getting into real estate, you need to check it out. Jeb, tell us a little bit about yourself and your background.

Thank you for having me on. First off, I appreciate, you know, you taking the time out of your schedule to, to talk to me. So, I've been in the business, about twenty years. Originally started on the mortgage side back in two thousand and two.

Over time, my career changed. The past changed. And, in about two thousand twelve, you know, during this whole time, I was doing both real estate and mortgage a little bit, and then kinda transitioned a hundred percent into real estate in early two thousand and twelve, and that's been my primary focus for the better part of the last eleven years. From that, I've been able to you know, you talked about some of my social channels and that sort of thing. Those channels are really about educating, buyers, sellers, investors. Actually, a lot of other real estate agents and mortgage professionals watch them as well. And it's really just about providing guidance, providing, you know, updates on what I see out there in the market in order to help, you know, both sides, if you will, become, you know, better at the home buying process, selling process as well as those agents that are kinda going through the same things that I'm going through at that time.

What are some key steps that home buyers should take to prepare for a home buying process?

Yeah. I mean, I think the most important one, and it's often talked about but overlooked in many ways because people what I've found is that when home buyers get the bug to start looking at houses, they do the exactly that. Right? They start to look at houses.

They start on Zillow. They start on Redfin. They go out and see open houses, and they haven't really started with the basics of, you know, really creating a budget to start with to to see where they kinda fall, with regards to what they're able to afford in a monthly payment. But more importantly, talking to a mortgage professional, going through the process.

And and with that, just not not just having a conversation on the phone, but providing documentation, like going through the full process. It's a little bit it can be, it can require extra steps. It can require a little bit more time, but gathering documentation, submitting it to a lender, letting them review it all, and say, hey. Listen.

You're you know, based off the information you provided, this is what you're able to afford. And then you can kinda look at your budget and say, okay. Well, based on my budget, that fits and we can start shopping for homes in that price range. Or maybe that's too much for your budget and you know that, hey.

I'm not able to go with that number. I'm not comfortable with that number. What can I get based on this payment? And then the lender can work backwards and kinda give you, you know, an idea of where you're going to be.

Because otherwise, if you start looking at properties, you get this idea of what the property you're going to buy is in your head. And, you know, real estate's an emotional process, and and people often buy emotionally. They justify logically. And this is one of those those times when if you can, you know, not put the cart before the horse, if you will, and and just, you know, make sure you kinda go in these steps, it'll be a much better process, and, you know, you won't have the the anxiety and and and a lot of the things that come along with with the home buying process.

Yes. I I absolutely agree with that. For someone looking to buy and rent in the future, what are some tips for them to consider when evaluating the rental market in the future?

Yeah. I mean, buying and or renting. Right? It's it's kind of one of those things that you have to decide what's right in your life. You know, my whole, premise when I talk about the home buying process is that, you know, when people say should you buy or should you wait, it's where are you in your life? Are you at that point where you're stable with with the with job security, you know, relationship security?

You're you're you're talking about the idea of having kids or maybe you've had a kid and you're you're thinking of having more and you're looking to build that foundation. In in that case, the next step is probably trying to find a residence that you can be in for an extended period of time to lay that foundation. And in that case, buying is probably the right choice. But if you're somebody that's early in your career, you don't know where you're going to end up, you're climbing the ladder, so to speak, and you know that that's gonna take you in different areas, different, you know, cities or whatever, then renting's probably the better option.

There's no right or wrong answer to each his own. You know, I can see a path for both, but there is, you know, a statistic that people need to be aware of, and that's that homeowners have a forty times greater net worth than those of renters. But it it doesn't happen immediately. It takes time.

And and that's because, you know, real estate is a long term game. So if you're thinking of buying in the current environment, I think you need to have that five, seven, ten year type horizon or or timeline rather so that, you know, you're not in a position where you're trying to sell in two or three years. And and it's not because the market's gonna crash or anything crazy, but you just if when you're buying your your property and you've only been in it a couple of years, the cost to sell that property and that sort of thing are typically higher than it than what you've paid down in principal balance in a lot of ways in order in with the commissions and everything involved to sell, then then it is, you know, worth it in in in many ways.

Unless you're gonna keep it as a rental, which a lot of people do, and that can benefit you in other ways. But that's really the advice in talking to buyers and sellers. I think just find out the path that where you're trying to go and go there. And stop trying to pick tops or bottoms or highs or lows and rents and and just do, you know, where you are in your life and and try to to make the best fit for for yourself at that time.

This is gold for all of you listening and watching out there. This is really good information.

So another question. What is the best way for home buyers to navigate the competitive real estate market and to make strong offers on desirable properties?

You know, work with people that understand the business. You know, real estate is is the barrier to entry is very, very low. It's very easy to get into real estate.

It's, you know, couple classes here and there, take a test, and and you got a license.

And you you can have zero education, and you can be a realtor, so to speak, because you've paid your your national dues, and and that's your designated title now.

So there's a lot of realtors and but there's not a lot of professionals. And so I think you gotta differentiate between the professionals and and the realtors, and, you know, and and that can come by asking the right questions, by getting referrals of people that have that have been through the process, that you trust, that you, you know, that, that can guide you and and answer the questions. And, really, that's where it starts. And and just because somebody's only been in the business a couple years doesn't mean they don't have the knowledge of somebody that's been in the business fifteen, twenty years.

I mean, education right now is so easily available, and you can do it at any time. And, I mean, experience is is always one of those things that you can't duplicate, by by reading and that sort of thing. But, you know, I there are agents that are newer, that are on teams that have been able to take learning, you know, exponentially, the the growth of learning, up so fast because they're on these teams and able to build. So, you know, you don't have to find the person that's been in the business twenty years like myself.

Find somebody that you're comfortable with, that you like to work with, that you feel like can guide you through that process. But when it comes to writing offers, I mean, there's a couple of different strategies in depending on the type of markets you're in. I mean, a lot of markets right now across the US are still sellers markets, which means there's less inventory than there is buyer demand. And so in those markets, it's more competitive, multiple offers.

So you have to do things to differentiate your offer in many ways in order to stand out. And in twenty years of of selling real estate, I mean, one of the questions that comes up often when I'm sitting at a table talking to a seller, I ask them, what's important to you?

Nine times out of ten, price is the is is the is the answer.

Now it can go beyond that, but price is always number number one. So if you're making offers in this market, you know, I can't tell you how to to to to price a property or how what price to offer on a on a show like this. But what I can tell you is none none of the other stuff that you decide to do in your offer matters really unless you're competitive on the price to start with. So the price needs to be competitive.

If you're in the range to start with, then there's some other things that you can do to differentiate yourself, like time frames on contingencies and, you know, escrow periods and down payments and, you know, what you ask the seller to pay or not pay. Buyer commissions are kind of in the in the limelight right now. How that's negotiated? There's a lot of different nuances to it, and that's why it's important to make sure you're working with somebody that can explain this to you, so that you feel comfortable when you're making your offer.

But we could do a whole episode on that.

That's for sure. So going off of that, what would you say is something that people don't think about when they're purchasing, that you think is important?

You know, I think a lot of buyers only look at the costs that are involved when they're buying a home. So for example, you're buying a home, you know that, hey. I'm putting twenty percent down, whatever the number is. I know I've got closing costs. So you look at your account and you go, well, I got the twenty percent. I got enough for closing costs.

Doesn't really leave me with a lot in my bank account, but I can make this happen. And then you get in the property and you realize that, oh, wow. I didn't know that this needed to be replaced or this needs to be done or something happens, there's a leak or whatever, and you're kind of in this position where it's like, woah. I didn't realize all the costs involved.

I didn't realize all these things were gonna happen. You know, HOA dues go up higher than than what you thought depending on when you bought the property. Maybe the HOA gets an assessment. I mean, there's all these little nuances that can happen in the transaction.

And and over a long period of time of selling real estate, most of the time it doesn't happen, but it can. And you need to be in a position where you are comfortable not only with the monthly payment, but comfortable with the the idea that things could arise and that you're in a position to have money to reconcile whatever it is that's going wrong. And and I think there's too many people at the moment just based on conversations that I've had and comments that I get on different videos that just have enough money to get in and aren't thinking down the road. And I think it's important to to budget accordingly so that you're not putting your self in a position where, you know, you're you're going to fail.

Yeah. So always, always, always budget, plan ahead.

And a really good example is investors buying investment properties with the idea that, hey. This property cash flows. Okay. It cash flows because you haven't factored in replacement costs.

You're not setting aside replacement costs every single month out of what's going there to replace the roof down the road or the water heater or the things that are going to break on that property. So, yeah, it looks like it's a cash flow property, but once you start factoring in the expenses of things that are going to have to, you know, be replaced at some point, maybe it's not the investment that you thought it was. And so I know we're talking to a lot of investors on a on a podcast like this, and so you gotta factor some of these unknown things in. It it's not pretty, and it's things we don't wanna think about.

And, hopefully, you never have to do it, and the money can come back to you, but you should be budgeting for it.

Yeah. For sure. From your experience, can you share, like, a memorable success story or a challenging experience?

Memorable success stories. I I have a lot. You know, just over over the years, I've been able to help a lot of people get into property, you know, in competitive environments over the last, you know, couple of years when the markets were absolutely crazy. I was able to get clients into properties doing you know, we weren't waiving all the contingencies and doing all the crazy things that you heard about online.

But, you know, being able to negotiate, I've been able to negotiate, you know, the highest I've ever done is a seventy two thousand, seventy three thousand dollar repair request on a property.

And we're talking a property just over a million bucks, so it's not like, you know, it was a five five million dollar property. It was, you know, pretty substantial amount for things that, you know, depending on how you looked at it, weren't that big of a deal.

So big amounts there. On the flip side, I guess the the the struggles, that I'm facing, that a lot of agents are facing at the moment, is just the lack of supply and having to help buyers understand the idea of being patient in environments like this, not making irrational decisions to just buy a property, to buy a property that, you know, it sucks to wait when you're excited about the process and you're ready to buy. And then month after month after month, there's just not a home that pops up. And I'm experiencing a lot of that right now. I have buyers that are ready to make offers. They're preapproved. They're solid buyers, large down payments, and we just can't find what they're looking for.

And whenever we do make an offer, there's multiple offers and it's you know, they just decided, well, I'm not even I'm not gonna go through this. So it's that's the struggle. And I think it's one of those things that is, is it's there's no easy fix for it. It's just one of those things you're just gonna have to kinda work through.

And but as agents, we all deal with it. We deal with different things. You know, the last couple of years, the the struggles were that homes were just selling too quickly and that, you know, if you had a buyer, you you were there was plenty of property, but it was all selling very fast and whatever. Now we have the opposite of that.

We just don't have enough property. People aren't listing it because of, you know, where rates are and just different struggles. But it's you know, all of it, over time, will will correct itself. It's just a matter of being patient.

Yeah. For sure. The next question actually ties into that. For investors listening and watching, where would you recommend them to go to find good deals in the market like today?

You know, I think, like anything else, connect with a realtor in your market, and, you know, like me, for example. Like, in my market or twenty years of selling real estate, I've been a part of different communities, with real estate professionals. And, you know, I go to different events and and different seminars, and some of them are real estate related, some of them aren't.

But I over time, I've developed a lot of relationships. And one thing about real estate real estate is it's a relational business. I've built my business off relationships.

And so I know people in a in pretty much fifty states. And if I don't know someone, someone else does. And so it's always about asking the right questions at events like this and saying, you know, what's happening in your market and, you know, or what opportunities are you seeing and that sort of thing. So I think if, you know, assuming your agent does business in a similar fashion, connecting with an agent in your market and saying, hey. Listen. Are are you aware of any opportunities?

Where, you know, where is the growth happening? Where should you know, who should I talk to? It's a good place to start.

You know, you don't go in and type in something on Google about, you know, the fastest growing cities and that sort of thing. Because by the time it hits there, a lot of that is already happened, and it's already, pretty well known. So you try to find the the people that are doing the business in in these various markets. And if you don't know somebody, I mean, you could always reach out to somebody like me.

I'm happy to put you in touch with other people that do business in other states, but there's always there's always growth. There's always these emerging little markets. But I think if you're gonna do the research on your own, you wanna find cities that are growing. Alright?

Population wise, you wanna see cities where businesses, bigger companies are now setting up other locations. Right? Because it's gonna bring in workers where hospitals are being built, you know, brings in health care. There all of these things, when you see redevelopment in an area and and it's growing because, you know, they're they're having to grow because of the population that is growing, those are always cities because rentals are gonna do really well in those markets.

Because a lot of people that move there, especially, you know, health care workers and and and, you know, doctors and all of these different occupations, they rent for for a period of time before they do anything just to make sure they're gonna stay there. And one is to figure out the cities and that sort of thing. And usually, these are really good tenants because they have good paying jobs, and, you know, they're stable and that sort of thing, and so they make make for really good, opportunities for for tenants down the road. And so there are definitely markets out there that are still like that.

You know, rates are higher. It's you know, these properties are a little bit harder to cash flow in in some markets, but there's always opportunities.

I'm sure you get this question asked all the time. Where do you see the market going within the next twelve to twenty four months?

I see a market really similar to the one that we saw last year.

I think rates will come down. You know, the the economy is likely going to slow because of of where the Fed has pushed the Fed funds rate. So that's gonna slower growth in the economy, which is exactly what they're trying to accomplish.

Inflation is likely going to come down, continue coming down, if you will. And so with that, I think over time, interest rates are going to come down some. What does that actually mean? Hard to say.

I mean, I think, you know, I did a forecast earlier this year, and I think rates I think we could see a a five in front of interest rates, sometime in twenty twenty four. Does that mean five nine nine? Does it mean five point five? Hard to say, but I think we'll be in the fives at some point in twenty twenty four.

With that, I think the following year, assuming the trend continues, which I think it will, you'll see rates go a little bit lower. And as rates move a little bit lower, you're going to see more inventory come to the market. And now the problem that I foresee is that even though we get a little bit more inventory coming to the market, most sellers are buyers. So they put one on the market.

They take one off the market. So net inventory doesn't grow.

And and that is, in my eyes, the biggest struggle out there, just because I don't know how you correct this. We've got, you know, a population growing. We've got more and more millennials buying properties that are kinda turning prime buying age. Behind that, you have a whole another generation that'll be hitting prime buying age over the next ten years.

And so there's there's growth in that market. And, you know, everybody wants to be a homeowner, whether they say they do or not. People want to become a homeowner. And so the struggle at the moment is affordability.

Housing affordability is still sitting near all time lows, and so that puts a strain on the number of able buyers out there in the market. Right? Everybody's a willing buyer. The able buyers, there's just less of them because of affordability.

Rates coming down is going to improve affordability a little bit. I think there's a limit to some extent on the upside of growth of appreciation to real estate just because of that, that affordability metric. Right? It's not back in twenty twenty and twenty twenty one where rates were at three three percent, two and a half percent, you know, where affordability improved significantly.

We're now kind of on the other side of that. Rates are going to be lower, but home prices aren't going to come down in any meaningful way. In fact, I think home prices will probably continue to go up three, four, five percent this year. And I think that's a conservative number looking at a lot of the analysts out there.

So I think it's a market similar to last year. It's gonna be slower. A lot of people are predicting, you know, a big jump in transactions, you know. Yeah.

Last year, we sold just over four million homes, nationwide.

People are projecting somewhere in the four point six, four point seven number. I find that hard to believe where where where we are at the moment that we're gonna see that big jump. So I think transactions stay on the lower side, and it looks a lot like it did last year. It's just a a little tougher real estate market, but people will continue to buy homes, and there will be opportunities in every markets just, you know, buying when it's the right time for you.

I've mentioned earlier that you have a course called first time home buyer, which is dedicated to helping people get their first property. What inspired you to create this course?

You know, over time selling real estate, you just get the same questions over and over and over and over and over, and I could just continue that down, you know, for the next ten minutes of how many questions just just rattle off, and they're all the same. So it's why not so my YouTube channel initially started as this way to answer those questions.

And what I found is all the answers are always out there. I wasn't new to answering those questions. The answers have always been there. I was just putting them in a different format on my channel.

But even then, the information's out there and people continue to ask me the same question. So the idea was why not put them all in a place, you know, kinda walk people through the home buying process from start to finish, what it looks like, different areas from, you know, deciding whether or not to buy, whether it makes sense to buy, to the preapproval process, to finding your real estate agent, to writing offers, to negotiating offers, to the escrow process, the whole thing. It all in one place kind of in order so that if you want to learn what it is, it's a one stop shop. It's not you having to go, okay.

What is the next step? And then, okay. That's the next step. Searching for the next step, watching the video, and then getting it from all of these different sources.

You're getting it from one person, kind of just a a walk down a path. And, you know, you and I can have the conversation, but you and I can have the conversation, and it would take a very, very long time to go into depth like I do in in those videos that are you know, that you can do on your own timeline. So that's really what it's about. Just kind of just throwing information out there so the people that wanna become educated, that wanna know the process can.

What I love about your YouTube channel is that you explain everything so easily that pretty much anyone can understand what you're talking about. And if you're listening or watching and you haven't yet seen Jeb's videos, you have to go check out his YouTube channel. It's absolutely amazing. Lots of valuable information. So definitely something to check out. We've also got a question about what kind of advice you would have to offer for people looking to buy this year.

I think you have to this isn't the advice people wanna hear, but you gotta control the controllables. Right? Too many people are worried about what's gonna happen tomorrow, what's gonna happen next week, when our rates gonna go down, when's inventory gonna come in the market, when are all of these things that we can't control, when are they gonna happen versus what can I control? Well, I can go get preapproved.

I can continue to save money. I can work on my credit if it needs to be worked on. I can budget. I can do all of these things.

Oh, I can buy a house if if the right one presents itself, but I can't do that until I've done all the other things that I should have done to start with. So control what you can control.

Let the market do its thing, and maybe you'd buy a home in twenty twenty four, maybe you don't. Maybe it's twenty twenty five. You know, just unfortunately, it's we don't know how some of these things are gonna play out, when they're going to play out.

So, you know, all you can do is is do the best for for what you know, and I think that's that's that's the best advice I could give.

I love it. Is there anything else that I missed that you would like to add?

No. I don't think so. I mean, I think, again, it is real estate is long term. Right?

So a lot of people in the market today that are that are home buyers were either kids and or young adults when the last housing crash took place. So the memory is very, it's right there. Right? It is it's like it happened yesterday.

And so when people start thinking about real estate and and they've seen home prices go up and they've seen all of this craziness in the market, they immediately go back to the last time that they remember anything like this, and then what happened afterwards. Just understand the market then was entirely different than the market now, for many different reasons, but it's, you know, again, it is it the market's a crazy thing, and and trying to pick the tops or the bottoms is is a fool's game. Just buy when it's the right time in your life. Focus on the things you can control.

Be comfortable with the payment. Be comfortable with the monthly payment, and have the longer term time horizon, and, ultimately, you'll be in a good position.

Thank you so much, Deb, for giving our audience an insight on real estate and what they really need to know about buying properties. If anyone's interested to buy with you, how can they connect with you?

Well, I'll give you my contact information, or you can just reach out. You know, again, you have my name, Jeb Smith. If you search that, you're gonna see this mug, unfortunately, all over the Internet, and my contact information is everywhere. So just, you know, you can call me, you can email me, you can find me on Instagram and direct message me. But either way, would love the opportunity to help guide you, to serve you, and ultimately get you into a home. So if I can be of assistance, please reach out.

We'll also add your information in the video as well so everyone will be able to see that. Thank you again, Jeb.

Alrighty. I appreciate it. We'll talk soon.

Thanks for listening all the way to the end. Don't forget to give us a good rating on whatever platform you're tuning in from, and we'll be back soon with another new episode. We hope to see you there. And until next time, this has been Loop It In.