Over Two Decades of Real Estate
John Jones interviews Tim Dutton about the differences in the home markets over the past Decade, and how Technology has affected the way real estate is advertised and sold.
JOHN: Hey, guys. Another edition of Tuesday Morning Coffee. I come to you today with a good buddy of mine and also a guy that works with me, Tim Dutton. So guys, you’ve got about 500 pounds of beef in front of you right now.
TIM: And 300 years’ experience.
JOHN: Yeah, that’s right. That’s right. But I thought it would be a neat segment. Tim started in this business—we started together back in ’94 and Tim was in the business full time for about three or four years. And then he bought a store out in Auburntown, a successful business out there. Recently sold it. Had a lot of success in that and decided to come back into real estate.
And I thought it would be neat to have Tim share his perspective on the market in the early 90s to what the market is today when he came back into it. So I guess that’s my first question, Tim. What is the biggest difference to you from those early 90s to I guess you came back in ’09?
JOHN: To the market we’re currently in.
TIM: John, probably technology. Back in the day, you’d advertise in the Buy Home, the real estate book.
JOHN: A lot of print.
TIM: It was all print.
TIM: And even, I can’t remember if it was this one we started, but we had the real estate book that would come out every so often.
JOHN: Yes. The big MLS book.
TIM: Yeah. And now it’s technology and Internet. It’s just fallen by the wayside due to the Internet as far as advertising.
JOHN: Do you see a big difference in what the consumers know today compared to what they knew back then? Seems like to me there’s more information.
TIM: They’ve got access to all the information.
TIM: They really do as far as the virtual tours on the inside of the house as far as being able to compare neighborhoods. There’s a huge difference.
JOHN: A lot of times, they’ll call me and tell me about houses I don’t know about. They know more than I know.
JOHN: As far as like market conditions, what’s the difference? The early 90s, we hadn’t gotten into the full sprint that we got into the early 2000s, but it was on its way. As far as the market in general, what was the market like in ’94 compared to now?
TIM: John, it was easy. It was easy for sellers. It was easy for buyers. As far as the seller goes, you could pretty well get them what they wanted for their house. And today, it’s a struggle to get things accomplished as far as that goes. And as far as new construction. You know, people who wanted to sell their existing home and go to new construction, they could do it.
JOHN: New construction was huge. I can remember you and I, I mean, our big goal in life back then was just trying to find a builder.
JOHN: You know, we wanted a builder to work with us. Man, if I can find a builder, that would be awesome. And today, we can’t find a builder.
TIM: If you had a builder, y’all would both be sitting there twiddling your thumbs most of the time.
JOHN: It’s amazing. It’s amazing.
TIM: And that’s because new construction just cannot compete with existing home markets due to the foreclosure and distressed property.
JOHN: It is very tough to compete. I mean, there are small pockets that compete with that, but that does put a burden on the new homes. I still say some people just want a new home though.
TIM: There’s always that segment that wants it and can do it.
JOHN: But the builders I see surviving right now are the ones that have adapted. Somehow they’ve adapted either by picking up cheaper lots. They’ve adapted by somehow remodeling what they do to create a more value.
TIM: And maximizing the square footage and creating a bigger value.
JOHN: That’s right.
TIM: The other thing that I was thinking about on the way home last night was that interest rates back in the day 7%, John, it just was a bargain. You bought. Anything you could get at 7%, send in the money. Do it.
JOHN: Oh, yeah. I can remember thinking 7 was awesome.
TIM: Right. And now, we’re at what? Four, 4.5%. And we’re still dealing with what we’re dealing with.
JOHN: Yeah. Right. It’s amazing. It is. Paying 4.5 is almost like not paying interest.
TIM: It is. And the other thing about it is the opportunities that are out there in today’s market with the 4.5% with the depressed prices. It really is a good time—
JOHN: Let’s talk a little bit about that. You love rental property. I love rental property. You’ve been buying it since you were a young guy. You’ve been picking some real property up. Have you ever seen it in the last 15 years where the ratios are working out the way they’re working out right now?
TIM: No, we went through a period of time where you couldn’t do the 110 rule, which is if you pay $100,000 for something, you should expect to rent it for $1,000.
JOHN: $1,000. The 1% rule, we used to call it.
TIM: Yeah. And John, nowadays, it’s doable again.
JOHN: It’s very doable.
TIM: And between writing off depreciation, everything associated with rental property, it is an excellent time to look at investment.
JOHN: The best I’ve ever seen.
TIM: Yeah. Oh, absolutely.
JOHN: Guys, you heard it straight from him. If you guys or anybody out there is looking to invest in real estate, there is no better guy with knowledge that this man has as far as buying rental property. One reason, he’s taken all the bloody noses. He’s been doing it for 25, 30 years and he does a heck of a job. So give us a call. If we can help you, give Tim a call, 867-3020. Thanks.