VDI Insights: Zilllow Tapped Out — Find Out Why

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-Tim Murphy

Big news. Zillow is not going to be buying any more properties right now.

Yeah, imagine that.

That's what happens when you overpay for property, just like Open Door in my market of Minneapolis.

It's been crazy what those iBuyers are paying for a house.

But it leads me into an episode that we're going to have coming up, which is going about micro flipping.

Because as I watch these iBuyers, from the lens of being a real estate investor for 17 years, it makes me laugh.

Fundamentally, the only way that they're able to do what they do is because they have billions of dollars.

Billions.

And it's not their money.

So they're able to take chances that other people would not take or even make a lot of sense, like overpaying for a property.

Why?

Because they want market share?

Or could it be because they don't have the right people who are investors who have actually practiced real estate investment representing them in each individual market.

Zillow blames it on the lack of labor, and that could be true, but I don't think that's the reason.

I think they're realizing that the boots on the ground are overpaying because they're getting emotional, about the investments, about the deals that they're putting together.

They think that just because the market is hot, they can't do anything wrong. That is, until it changes.

In my market, winter is coming. And in Minneapolis, when it comes into winter, things start to slow down.

Now, it was a little bit different last year, but that's because of COVID.

This year, humans are getting back on track. They're getting back to their habits. And it's amazing how humans fall right back into their old habits. How we're predictable.

So Zillow, what I think they're really telling us is we need to recalibrate the market, and we need to see where things are going.

Back to micro-flipping. I'm so excited about this episode.

That's why I wanted to incorporate Zillow into this Insight because Zillow is, by definition, my definition, Robert Grand's definition, a micro-flipper.

They're buying properties at a higher price, making simple updates, a trying to get in and out of there as quick as possible.

The only problem is they're paying a little bit too much, which is a fundamental mistake.

They might be putting in a little too many improvements spending a little bit more than they wanted.

Another fundamental mistake.

And they can't sell it for the price they're going after.

When you put that combination together, it doesn't really add up to profit.

Well, in micro flipping, that's exactly what you do. Except you have to buy it at the right price.

That is the number one golden rule.

Always in real estate investing, you have to buy it at the right price, especially in micro flipping.

Because in micro flipping, you're making limited improvements. So buying at the right price is the number one most important thing.

And it will also be the number one most important thing in reducing risk.

Micro-flipping means making minimal improvements for minimal dollars and having a healthy profit margin that will get you that end result.

We're all gonna make mistakes. Staying unemotional means having a plan, and executing that plan based on logic and experience...not emotion.