Why Real Estate Is Quietly Getting Harder

Traditional real estate investing is getting harder—and most investors don’t realize why.

In this epsiode I break down why wholesaling, flipping houses, and rental properties are becoming more competitive and lower margin than ever before.

what you'll learn:
• Why the information advantage in real estate disappeared
• How global competition killed local investing advantages
• Why hedge funds changed the game
• The real reason many flippers and wholesalers are struggling today

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Transcript

Clayton Hepler (00:00)
In 2022, I owned 65 rental units and a $1.2 million Airbnb. My wife had just lost her job. We had a wedding to pay for and I had exactly $30,000 left in my bank account. I was doing everything the gurus and bigger talk pockets told me to do. And I was absolutely hemorrhaging cash.

So I did something that felt completely backward at the time. I walked away from traditional real estate entirely. And in this video, I'm gonna show you exactly why I made that call and why if you're still grinding in traditional real estate, wholesaling, flipping houses, rental properties, or even considering it, you might be fighting a battle that's already been lost.

And you want to stick around because at about the nine minute mark, I'm going to show you the specific system I use to find deals that most investors don't even know exist.

Now here's a question no one in the real estate world wants to honestly. estate investing work in the last 30 years? I'll tell you, it was two things, information arbitrage and local arbitrage. And both of them are completely dead. Let's start with information. Think of it like a slinky going down the stairs. The knowledge about what a property was actually worth used to stretch out really wide.

Sellers didn't know, buyers did. That gap, that was the game. You could walk into a deal knowing 40 % more than the person selling. And that's how you got massive discounts. That's how the passive income dream actually worked. Then Zillow happened, then Redfin, then iBuyers with billion dollar algorithms, and slowly, the slinky squeeze completely shoved.

up the value of their property in 11 seconds, even if it needs a ton of work. And so the information game is completely gone. here's what most people miss. It wasn't just information that died, it was the local game too. Now real used to be a hyper local business. All you had to do was be the best investor in your city. You knew the neighborhoods, you knew the contractors, you knew the buyers.

and you were competing against maybe 10 other guys who did the things the way you did. And that was your entire market. And then something changed. Bigger pockets blew up. Long distance real estate investing became a best seller. The burst strategy went viral. And all of a sudden, an investor in New York could buy in Memphis. The guy in California was submitting offers for deals in Alabama. Someone in Israel was competing for deals in Ohio. Instead of 10 local competitors, you're now

up against 10,000 people spread across the world, all armed with the same information, targeting the same deals with zero geographical advantage protecting you. And then Wall Street showed up hedge funds with more money than God started systematically acquiring single family and multifamily properties at scale, no matter the size cash flooded into the market. I buyers with billion dollar algorithms could pay closer to retail, closing days and still win because they were playing volume at a level

that you and I will never match. So there's no information edge, there's no local edge, they're both gone. And if you're still trying to play that old game, you're not competing with your neighborhood flipper anymore, you're competing with people in cannot be outspent, outreach or out informed.

Now, let me make this even worse, because losing the information and local edge would be enough if it was completely on its own. But that's not the only thing squeezing most wholesalers, flippers and rental property investors right now. Gross flipping returns, which used to run around 50%, have dropped to roughly 25 % in most markets before you even factor in interest rates. The margin that made the whole model work has been cut in half. And what no one's talking about is

You're not just competing with local flippers anymore. You're competing with hedge funds.

So your margins have been cut in half, your local advantages have been cut in half, you're going up against institutions with billion dollar balance sheets that can pay retail, close in 72 hours, and still win because they're playing volume at a scale that you and I will literally never match.

So after my wife got laid off and I was burning through $30,000 and watching it drain and figuring can I do to make this dollar stretch the worse? And you could be in a pretty similar situation right now. I looked at the landscape and I said to myself, this is not a game that I wanna play. This is incredibly competitive. I know who I'm up against, because I was doing this.

I had a moment of

So I very quickly noticed that the people winning were not doing what worked 10 years ago. And the ones who were running their own playbook, they're not losing slowly, they were losing fast. And I couldn't afford to lose quickly. I'll show you exactly what they're doing instead, but first let me tell you about the moment that everything came to a head for me so you can kind of really understand how I got here.

So the part that really broke me wasn't just the margins were shrinking. It was that complexity was exploding at the same time, the same market at the same moment. The wholesaling, which used to be completely standard and accepted as an acquisition strategy, started facing serious pushback during COVID and right before COVID. Attorneys were pushing back. Some states started moving to restrict assignments and double closings entirely.

The workarounds that built career just got legislated away within days. And then social media made it way worse. An entire wave of gurus pumped inexperienced investors, flooding the market, sending spammy offers, making promises that they couldn't keep, backing out of deals.

They torched the legitimacy and credibility of investors market-wide. And a lot of these gurus came because they couldn't actually

Now a real investor started showing up, and I noticed this when I was buying rental properties.

We were getting couldn't compete with the guys that bought the YouTube Guru's course and were trying to burr and raise a bunch of capital. Like this was when a lot of syndicators were raising, you know, selling courses of how to get into multifamily properties.

So as I was looking out on this landscape, I saw the writing on the wall. More regulations, less local ability, more competition. Institutions can now, through technology, run rental portfolios. They can manage complex ⁓ contractors at scale. local advantage for these smaller investors just started to extinguish. So of course I could get into this market, but

Why row a boat that I know I'm gonna be rowing upstream, Lower margins, more competition, more regulation, more complexity, and a poison buyer reputation all at the same time made me think there has to be a different way. I remember sitting at my kitchen table

in thinking to myself, there has to be another way. There has to be a clear way. as an entrepreneur, you're always thinking to yourself, well, I just need to work harder. I need to buy more rental properties. It's just rental properties weren't working, wholesaling wasn't working, flipping wasn't working, and I had been successful and flipped hundreds of houses at that point. And the numbers just weren't stacking up.

said this before very roughly, but the week before Thanksgiving in 2022, I had 65 rental units, I had $1.2 million Airbnb, over 250 flips, every metric in this space that people And I looked successful, I was fielding contractor calls. I was getting calls about HVAC emergencies and holidays. And my wife lost her job, right? I had to pay for a wedding, I had to pay for my life. And I've told this story many times, but it's really important.

I knew the numbers. I looked at this very, very clearly. I knew the competitive landscape. So re-entering this market wasn't something I was willing to do. I wasn't going to burn through what little I had left trying to grind harder in a game that had fundamentally changed. And I don't know why wholesaling and house flipping gurus don't paint the accurate picture. I also knew that the passive income story I've been sold was a lie because I was living at 65 doors, a seven figure short-term rental, and it was not passive at all. Not even close.

Every door was a potential emergency and I just felt like I was never getting traction. So that moment, it really clicked for me.

I stopped asking myself, how do I do more of this? How do I get the most out of what I currently have? And I reframed it and I said, hey, is there a vehicle that's actually simpler? Higher margin, less fragile. And the answer has literally changed my life.

When real estate investors like myself get burned by the act of nightmare flipping or wholesaling, they do one of two things. They either quit or they run towards passive income. I did this. Rental short terms, rentals, RV parks, commercial, any type of problem with this is this diversification is a coping mechanism. It doesn't fix this system. It just hides these leaks. When you scatter your attention across a bunch of different

mediocre assets, you barely understand, you don't build wealth. In addition, it's really hard to passive income your way to actually building wealth, especially in the world that we live in with the skyrocketing cost of living. Right? So what I realized very quickly was capital expenditures, vacancy, management fees, all these things that trip up passive income actually needed to come from active income. Right? So mastery cashflow wealth building came from one high leverage vehicle.

that could generate a lot of

actually land investing came in for me. know what you might be thinking, Clay, land, mean, isn't that like speculation? mean, pretty weird, like stay with me here because I'm about to kind of walk you through is the complete opposite of that.

This is the number that changed everything for me. There over 142 million vacant land parcels sitting across America right now. Most of them are completely ignored by investors. And why that matters is hedge funds, iBuyers that ate the housing market alive when I was in it, ⁓ they don't touch this. Algorithms don't touch raw dirt. They can't actually price it, and it doesn't fit their model.

which means that the information gap, the local gap, the one that got squeezed shut in housing still exists in land and it's wide open if you know how to read it. Now when I made the switch from housing, wholesaling, flipping to land, I found even more things that I loved about it. There's no ten minutes, there's no contractors, there's no HVAC calls at midnight, there's no toilets. It's simple, it's overlooked, it's high margin.

My first land deal, I remember, it netted me more profit than my previous two house flips with a fraction of the complexity. once I built a system around it, a repeatable process for finding deals, for underwriting them and for selling them fast, that's when everything started to compound. Now today my business generates over $250,000 a month with an average profit of $37,000 per deal. And we're gonna hit well over $3 million in true gross profit this year.

Now I'm telling you not to flex. I'm telling you because three years ago I was sitting with $30,000 in my bank wondering if I should quit real estate and get a job entirely. Now this vehicle changed everything. It's not the hustle because I was working just as hard in the rental property world and the house flipping world. It was truly the vehicle.

I want to be real with you about something. Switching to land investing does not make the work disappear. There's still a learning curve, there's still deals that fall apart, of course. There's still a very clear process and system that you have to build. But the difference is the system is buildable, the margin is real, and the complexity doesn't compound on you the way it does with houses. If you're sitting there thinking, all right, Clay, I...

but I don't know a first thing about finding land deals. That's exactly why I made the next video. I break down the exact system I use to find highly profitable raw land deals, the ones that took me from 30,000 in the bank to over $3 million in gross profit within three years. It's called zero to 100K in 90 days land, the system no one shows right here to watch it. It's completely free

It might be the most important time you spend this year. If this video gave you something to think about, do me a favor, hit subscribe. I put out content every single week that's built around one mission. Build American back one acre at a time. I'll see you in the next one.