Stop Timing the Real Estate Market | How Smart Investors Buy Value Instead of Guessing

Davis Bartels (00:00)
So prices aren’t going down because interest rates aren’t going down. Prices aren’t going up because interest rates are going up. Prices are going up because the sentiment is that prices are going to continue to go up. So if buyers think that in 2023 prices are gonna be, you know, median home prices of million and they think that that million dollar home is gonna be worth 1.1 next year, then they’re gonna do whatever they have to do to buy that home today because they wanna get in before they get price out or before that home adds another 10%.

Cody Crabb (02:00)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. And today I’m joined by Davis Bartels, managing partner at Pinnacle Estate Properties out in Westlake Village, California. He’s been in the business for over a decade. He’s doing over 100 deals a year, around $150 million in volume. And he’s working heavily with real estate investors across fix and flip and buy and hold strategies. ⁓ what we probably are gonna get into really deeply today is the systems. He’s been diving deep into SEO and AI.

and he’s gonna help us kind of talk about how we can get found in a world that’s kind of not just focusing on Google searches anymore. So Davis, thank you so much for joining us.

Davis Bartels (02:40)
Yeah, thanks for having me man. Glad to be here.

Cody Crabb (02:42)
Yeah, could I get a quick, let me get a quick little origin story. How did you get ⁓ from into real estate and from where you were to where you are?

Davis Bartels (02:51)
Sure, yeah, so I started my path. So I have a little bit of a checkered path past and I won’t get into that side of things, but if you do too, then there’s hope for you. I’m living proof of it. Cause if I can do it, anybody can do it. So a little inspiration for you there. But I started when I was about 24. Well, I probably started when I was about 22 or so. And I decided to make a change in my life around 24 and

Cody Crabb (03:08)
Awesome.

Davis Bartels (03:21)
I remember I started, went back to college. I was disqualified from college and I wanted to go to college to be an architect and I was going to finish up and I got a call from my dad one day and my dad owned a short sale negotiation firm at that time. And he was at a very, it was very successful actually pretty cool business model. We won’t get into that. ⁓ But I went back to work for him reluctantly. And at that point ⁓ I thought that I was going to go work for him temporarily and I haven’t left since well.

him and I don’t work together anymore, but I haven’t left the real estate industry since. At that point, we negotiated short sales for agents, investors. We represented a lot of investors on short sales. In those days, banks would sell you properties at 70, 80 % of market value just to unload the inventory. So we made a lot of connections in that and opened me up to the world of real estate and a very challenging side of real estate. From there, I had also worked at Bank of America.

doing short sales as well. And eventually my dad decided to open a franchise of Help You Sell, which is a discount real estate firm. And I rolled into more traditional real estate sales. Since then, I have joined a firm, Pinnacle Estate Properties. We’re a boutique firm out of Southern California as a managing partner. And I run our operations out of here. And we run a team of about 12 agents and three admin.

⁓ And so, you know, we now we are doing your prototypical, you know, gig as a realtor. ⁓ We do work with a lot of investors, a lot of large corporate investors, too, because I think that in traditional real estate sales, what’s really tricky is the non residual factor of that. And when someone closes on a sale or does a deal, it’s you know, you kind of eat what you kill and not many people move very often, especially not now.

So, know, investors deliver a great opportunity for realtors who are looking for transactions and some consistency.

Cody Crabb (06:11)
Thanks for running through that for us. It sounds like ⁓ you’ve kind of settled in, you’ve nestled in, you’ve found a spot where you’re really liking it and I love that. So as far as, ⁓ I’d be interested to know, so you’ve been in the business a while now, what changes have you seen in the last, I mean let’s say last five years that have kind of made a big difference, a big impact in how we’re doing things?

Davis Bartels (06:36)
Well, you know, ⁓ I mean, everything has changed in the last five years. We’ve gone from a lot of markets, a seller’s market to a buyer’s market. And, you know, Southern California is pretty steady seller’s market even today. ⁓ You know, we’ve seen a significant change in, you know, there’s a lot of factors. I mean, we’re dealing with geopolitical, ⁓ you know, concerns, you know, political issues at home. ⁓ You know, there’s a big, you know, half of the United States are

Cody Crabb (06:39)
Yeah, everything.

Davis Bartels (07:05)
thinks one thing and the other half thinks the other thing. ⁓ know, oil prices have gone up a lot with what’s going on with the war. That’s had a pressure on the tenure, which has had a negative impact on the interest rates. have, ⁓ know, inventory has changed significantly. And, you know, I think the biggest factor that moves the needle for people is consumer sentiment. you know, consumer sentiment has shifted dramatically in the last, I would say, three years, but it’s also shifted dramatically.

Cody Crabb (07:26)
Yeah.

Davis Bartels (07:34)
in the last six months, which is having a huge impact. I mean, we went from a market in 2020, 2021, where, you know, you could buy a home that backed a busy road, sited a busy road, and, you know, wasn’t in great shape and people were tripping themselves over to buy it. And now you’re getting homes in good areas and good neighborhoods that you price it at the comps, but buyers want to pay well below the comps. And that’s just the market that we’ve gone in. And so now in order to get things done, you know,

People have to provide value. Buyers expect value. Value is not five homes in the same neighborhood all listed at the same price. That’s four homes in the neighborhood listed at the same price. And the one with value is listed $80,000 below that home. And then that will get the traction. And so the first one to move, the one that adds value, is the one that’s getting done. And that’s what we’re finding in our marketplace today, is that buyers are not buying to buy. They’re buying to buy value.

Cody Crabb (08:20)
Hmm.

That’s interesting ⁓ because when we’re talking about the market, I always kind think it’s ironic that the sentiment can drive things so hard because it’s like, that’s just our own fault. Whether or not it actually affects the market, actually, it does. Yeah.

Davis Bartels (08:49)
It’s the biggest component. I mean,

the data and the charts and affordability and interest rates all move, you know, all change things. But the reality is that affects sentiment. sentiment is ultimately what moves the market. I mean, we saw interest rates go from three to 7 % and prices went up. And then we saw interest rates go from seven to five and a half percent and prices have gone down.

So prices aren’t going down because interest rates aren’t going down. Prices aren’t going up because interest rates are going up. Prices are going up because the sentiment is that prices are going to continue to go up. So if buyers think that in 2023 prices are gonna be, you know, median home prices of million and they think that that million dollar home is gonna be worth 1.1 next year, then they’re gonna do whatever they have to do to buy that home today because they wanna get in before they get price out or before that home adds another 10%.

But today, buyers don’t think that prices are going up because if they did, they would be buying. buyers think that prices are going to stay flat to down, which means that buyers are much more reluctant. And that’s why they’re looking for values because they think that if they wait, they’ll get the same or a better deal. So there’s no urgency. There’s no FOMO. FOMO sells houses. That’s the simplest way to put it. And there’s no FOMO. And why would there be? Do you think prices are going to go up 10 % this year? Hell no. They’re going to go up zero to negative 5 % this year probably.

Cody Crabb (09:48)
Yeah.

That’s really true. Yeah.

Davis Bartels (10:13)
based on where we’re at today. Now, if we can get out of Iran and things change or Trump does some of these things that he says he’s gonna do, then we’ll see what happens. But at this moment in time, there’s not a lot of optimism and that affects the market greatly.

Cody Crabb (11:04)
Yeah, so this is a question that kind of pops up a lot. People try to time the market a lot. They try to figure out, well that’s what I was gonna ask you. So what would you say to the people that are like, when should I jump in? What’s a good time? How do I know how to time the market?

Davis Bartels (11:10)
Good luck.

So I work,

well, this is what I have a lot of feelings on that and probably more than we have time to talk about. And I’m an economics major. That’s what I studied in college. And ⁓ I’m not an economics ⁓ expert. That’s for sure. One of the things I’ll tell you, I feel like the more you study economics, the more I’ve learned that I’m not an expert. markets tend to move themselves. And that is something that people much smarter than me can’t tell you what’s gonna happen.

Cody Crabb (11:28)
⁓ wow, okay.

Davis Bartels (11:51)
you know, that that’s my feeling. I think that, you know, it’s very, it’s, it’s a lot of fun to speculate and pontificate about what’s to come. But, you know, that’s really all it is. ⁓ I,

Cody Crabb (12:03)
Well, so that’s my question.

So what should you do then? Because really, you’re making it sound like it’s just guessing anyway.

Davis Bartels (12:06)
Listen, I’ll tell you

this. I’ll tell you a quick story. So I owned a home, my own home that I lived in with my wife and my kids in 2020. And this was, you know, what happened to 2020. The world ended. had record unemployment in the teens, which was unprecedented. And I, as someone who looks at the charts and understands economics, I said, well, record unemployment homes are expensive. You know, there’s this is we are absolutely going to see home prices come down as a result of

Cody Crabb (12:20)
Yeah.

Davis Bartels (12:36)
you know, coronavirus, and I’m planning on selling my home and buying a bigger one anyways. If I’m gonna sell my home in the next two years, this is the time to sell it. And it was like March or April of 2020. So it was before coronavirus became a big problem, but it had already presented itself as some varying degree of problem. And I said, this is going to be bedlam. Home prices are gonna drop 20%, 10 % at least. I said, at the worst case scenario, they’ll trade sideways.

Cody Crabb (12:52)
Yeah.

Yeah.

Davis Bartels (13:04)
I’m not gonna get priced out of the market. I’m gonna sell my home and then I’m gonna go figure it out and I’ll just buy something when I see it’s available and I’ll go live in another home or rent a home and look at what happened to housing prices. Do you think that I timed that out right? Cause I sold that home for 770 and that home is probably worth a million dollars ⁓ when the market peaked a year or two ago. So I didn’t price it out very right. Fortunately I was able to, I didn’t get priced out of the market but.

you know, I also do all right. If I was somebody who, you know, had a standard income, that would have been pretty painful to me. My recommendation is leave timing them to the market to, you know, guys like Warren Buffett and hedge funds and, you know, people that are experts and know things that you don’t know. ⁓ Every time that I’ve tried to time any market, including the real estate market, I’ve gotten screwed. And I’ve regretted that decision. So if you want to try to time the market, hopefully you do better than I do.

Cody Crabb (13:46)
Yeah.

And you’re

an economics major. mean, that really goes to show. Like lot of people, a lot of times we think certain things are going to happen and vice versa. they, you know, we can’t.

Davis Bartels (14:09)
It was

going to happen, but the, but the U S government stepped in and decided that they weren’t going to let it happen. So it’s not that I was wrong. It’s that I, I was trying to play God and I’m, and I’m not, and I’m not the guy to make that, that judgment call. It doesn’t, doesn’t usually doesn’t turn out well. What I can tell you is that I work with very large investors. ⁓ you know, I work with an investment firm that does, you know,

Cody Crabb (14:16)
Sure, you couldn’t predict the future, yeah. Yeah, yeah.

Davis Bartels (14:37)
anywhere from 2000 plus, ⁓ you know, homes a year and, and resale. And, you know, it’s a cyclical market when they’re selling homes that are not performing well, when they’re not getting good returns from those homes that they’re selling, they’re buying homes at that price too. And those homes will perform well in time. Right. And so the market moves like this. And if, so if you’re just, if you’re consistently doing business, you’re going to do better on some than you are. And

You know, the most important thing, if you’re an investor and I’ve, I’ve flipped a lot of homes, I own a handful of rentals myself. ⁓ I don’t love flipping homes, honestly, but I’m in a business where like, I don’t need a, I can sell homes to flippers and make money. I don’t have to flip homes to make money in real estate. And it’s oftentimes a much better proposition for me to sell them to an investor than it is for me to be the investor. and so like, if you’re, if you buy right, that’s ultimately like,

what I would recommend doing that rather than time the market right now. There’s a lot of people that are, I want to say desperate to sell their home, but desperate to sell their home and you can get a good value.

Cody Crabb (16:22)
Yeah, yeah, for sure. Okay, well, ⁓ I thought we were gonna get deeper into the AI stuff, but this turned out to be pretty interesting. ⁓ So if someone wants to work with you, ⁓ or here, maybe your thoughts on AI somewhere else, ⁓ who should they be, what should they be doing, and how can they get in touch with you?

Davis Bartels (16:40)
So you can reach me at my email address, which is DavisBartels.com. You can also find us our handles across the board. @DavisBartelsRealEstate So that’s YouTube, Instagram, Facebook. I’m the most active on Instagram. So you’re welcome to reach out and I’ll respond to you too.

Cody Crabb (16:58)
Awesome. Yeah, that’s it. I always say if you get an offer like that take it because he knows what he’s talking about clearly and I think a few little words ⁓ From there could be super helpful. Thank you so so much for offering that and thanks for your time today And also thank you to our listeners for joining us today If you liked today’s episode and I’m sure you did Please go ahead like subscribe do all the things and make sure you follow us so that you can get more conversations with awesome people like Davis thanks one more time Davis for joining us and ⁓

Davis Bartels (17:10)
Yeah.

Cody Crabb (17:28)
and have a good one.