• Travis Hanson bought his first two properties while in law school.
  • He now owns multiple real estate businesses and continues to invest in property.
  • He’s now sitting on cash and waiting for next year’s correction. 

In 2009, Travis Hanson was attending law school at Texas Tech University with the goal of returning to Salt Lake City to be a city prosecutor. 

It was shortly after the 2008 financial crisis when the housing market crashed. Hanson was looking for ways to make extra money while he was in school. At the time, he came across homes as cheap as $50,000 in Lubbock, Texas. 

“I remember going home and telling my wife after I was finding out some of these prices. I mean it was just ridiculous,” Hanson said. 

The couple had cash saved up and Hanson’s wife had a full-time job at the university he attended. So they began by investing in two houses, both within a month of each other, in Lubbock.

Hanson recalled paying $34,000 for one and about $40,000 for the second, with a 3% down payment. They were able to secure two mortgages with a 4% interest rate. At about 800 square feet, the houses were small but were a good start. Each was a two-bedroom, one-bathroom house. Based on other properties in the same area, Hanson estimates they are now worth about $100,000. 

By the time he graduated a year later, the couple owned nine properties, six of which were co-owned by a friend of his. All of them were rented. After the expenses were paid, which included the principal, interest, and taxes, each property cash flowed between $250 to $400.

The experience brought about a mindset shift for Hanson and he decided he was going to stay in Texas, get a job as an attorney, and use his salary to continue buying homes. 

“My mind was just blown and I just thought, there’s no way I’m going to go back,” Hanson said of his old plans to return to Utah. 

Today, Hanson has over 109 properties, according to county records viewed by Insider. Combined, they make up about 150 rental units. He also owns many real estate businesses including a property management company, a brokerage firm, and an educational platform called The Real Estate Retreat Network, which hosts in-person networking events and one-on-one coaching.

“At the height of it all, I owned 650 doors and that included apartment complexes,” Hanson said. “I sold all my apartment complexes off over the last several years. Right now, I am just shy of 150 doors and that is on purpose.”

Lately, he has been focused less on volume and more on purchasing new quality properties that require less maintenance and attract tenants with higher incomes. This makes managing his rentals easier. 

Right now, as mortgage rates continue to increase, home sales are cooling. As of September, the median existing-home median sales price had dropped 7% from its peak in June to $384,800, according to the National Association of Realtors. Ian Shepherdson, the chief economist at Pantheon Macroeconomics, estimates that prices could plunge by 15% to 20% over the next year. 

Additionally, high inflation will mean people are less able to afford buying property, Hanson said. This will further reduce demand and the competition but create good opportunities for people willing and able to buy. 

Additionally, during the financial crisis, inflation wasn’t an issue that the US consumer was facing, Hanson noted. 

“The fact that people have to make more money just to survive off of because of the inflation issue, I think I see this as a massive once in a lifetime opportunity, bigger than 2008,” Hanson said. 

“We’re insulated quite a bit from market crashes,” Hanson said. “The national median of houses right now is about $400,000. We are nowhere near that. So for my investments, everything that I buy is under $250,000. So if there’s a market crash, the risk that I take is very little, those houses just are not impacted by the rest of the country.”

In fact, he’s sitting on cash, waiting for a steep market correction in housing prices so that he could top off his portfolio. 

Tips to take advantage of the coming downturn 

Over time, real estate always recovers — and that’s what Hanson is willing to bet his cash on. Between 1980 to 2020, median home prices in the US have increased by 416%.

To take advantage of any opportunities, the best position to be in is having cash. To get there, you’ll need to learn about delayed gratification, which means resisting the temptation of spending money on things you don’t really need, he noted. For the next year, you can start saving as much cash as you can so that you can invest. Additionally, you can use this time to find ways of increasing your income.

If you’re not sitting on cash, it’s not a deal-breaker, he noted. Hanson told Insider he has bought many properties without using his own money. One way of doing it is getting a line of credit (LOC) from a bank, which is a loan that is withdrawn as needed. It’s not difficult to get approved for one, but you’ll need to have a decent credit score, he noted. 

“I know 18-year-olds getting $200,000 lines of credit. You just have to ask. I mean, most people just don’t ask. They just assume,” Hanson said. “I compete with 18-year-olds out there buying properties and I know they have lines of credit with these banks. They may have a cosigner, [or] have some people behind them helping, but I know that it’s possible.”

Hanson recently used an LOC to purchase a property for about $72,000, according to an HUD-1 document viewed by Insider. He then made some upgrades that brought the property’s value up to $130,000, based on market comparables for the same area. Hanson plans on refinancing the property for 85% of its after repair value and use that cash to pay back the line of credit. This is a practice he does often. 

Don’t be deterred by higher mortgage rates, as they can always be refinanced, he said. The cost to refinance a mortgage is usually 1% of the loan, which is what deters many people from refinancing their rate for a lower one, he said. But Hanson believes there may be a grace period once things settle down. Many banks may start to waive that fee later down the line so that they can remain competitive. 

People just need to talk to their banks because these large institutions are struggling as well, he noted. As housing sales drop, they’re not closing nearly as many loans, he added. Hanson told Insider he has had conversations with his loan officers and is confident he will be able to refinance in the future without paying the fee. 

“I think what you’re going to see is banks rolling out programs where they’re going to give people a grace period of up to 24 months, maybe longer, where they can go back and refinance those mortgages at no cost,” Hanson said. 

Next, look for properties that are well below the national median home price. This will cushion you from much of the volatility when there are market downturn. 

The Zillow Home Values Index, which measures monthly changes in property level Zestimates, notes that the typical home price in the US is at about $357,810. You also want to stay below the market median for the area you’re buying in, he added. This is why the majority of Hanson’s properties are below $250,000.

Finally, be tight with your numbers. This means for every property you look at, you’ll need to determine what your principal, interest, taxes, and insurance will cost each month. This will vary depending on the type of loan or mortgage you get. Then, determine the rent you can collect based on other similar properties in the area.