In this Real Estate News Brief for the week ending August 6th, 2022... the Fed's next move, a mortgage rate rollback for home buyers, and a new all-time high for single-family rents.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week. Federal Reserve policymakers say they are “nowhere near” the end of their fight against inflation. Four Fed Presidents spoke out on Tuesday, August 2nd, about their resolve to get inflation back down to 2%. San Francisco Fed Chief Mary Daly said that she is currently seeing a 50 basis point rate hike as appropriate in September, but she says: “If we just see inflation roaring ahead undauntedly, the labor market showing no signs of slowing, then we'll be in a different position where a 75-basis-point increase might be more appropriate.” Comments from the other three Fed Presidents were similar. (1)And then there was a screamingly strong jobs report a few days later. The Bureau of Labor Statistics reported on Friday that hiring in July exceeded expectations. Nonfarm payrolls were up 528,000, and the unemployment rate dipped lower, to 3.5%. To put this in perspective, in the years leading up to 2020 when the economy was robust, job creation was closer to 195,000 per month on average.The unemployment rate is now back to its pre-pandemic level. As reported by MarketWatch, it's tied for the lowest level since 1969. (2) Some economists see the strong jobs report as signs that the Federal Reserve will lean toward a more aggressive rate hike in September. KPMG Chief Economist Diane Swonk said in a CNBC report: “This is hot. For the Fed, this is another 75 basis point hike.” (3)The unemployment report shows a slightly elevated level of new claims. During the last week of July, 260,000 people applied for benefits which is an increase of 6,000 from the week before. The number of continuing claims was also higher by about 48,000. That brings the total number of continuing claims up to about 1.42 million, which is the highest level since April. (4)A new report on home price growth shows that year-over-year prices were up 18.2% in June. On a month-to-month basis, the CoreLogic report says they were up .6% for the 125th consecutive month of higher prices. This is more inflationary news that may convince the Fed to be more aggressive with rate future hikes. However, the report does shows that price growth is slowing down. CoreLogic expects it to drop to 4.3% by next June. (5)Higher home prices also increase homeowner equity. CoreLogic says the average borrower had $280,000 in home equity at the end of the first quarter. That's a gain of about $64,000 over the past year, and a gain of about $125,000 over five years. (6) Those folks expecting a housing crash will have to consider why homeowners with so much equity and low fixed rate mortgage payments would suddenly abandon their homes. Higher home prices are slowing sales, and that's driving up inventory levels, but they are still nowhere they need to be. According to Realtor.com, active listings are about 30% higher than they were a year ago but are less than half of what they were in June of 2019 and about two-thirds of where they were in June of 2020. The good news is that homebuyers have a few more homes to choose from and a little extra time to make a decision, but only a little extra time. The Realtor.com trends report says that homes are spending just ONE extra day on the market compared to last year.(7)New home builders are also experiencing a sales slowdown and higher inventory levels. According to the Federal Reserve Bank of St. Louis, there are more than nine months supply of newly-built homes on the market. However, it can be difficult to gauge new home inventory because many of those homes are experiencing construction delays and not sales delays. (8)Another sign of the housing market slowdown is a sharp drop in construction spending. The Commerce Department reported a 1.1% decrease in June. Private residential construction took the biggest hit. It was down 1.6%. (9) Ironically, the construction of new homes is what's needed to increase supply, yet builders are generally the first to get hit with higher interest rates. A slow down in new home construction could mean continued bidding wars on existing homes in growth markets.Mortgage RatesHome buyers are getting a break right now on their mortgage rates. Freddie Mac says the average 30-year fixed-rate mortgage dipped below 4% for the week ending August 4th. They dropped 31 basis points to an average of 4.99%. The 15-year dropped 32 points to 4.26%. Freddie Mac's Chief Economist, Sam Khater, says: “Mortgage rates remain volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth.” (10)You may be wondering why mortgage rates have gone down when the Fed fund rate is going up. Mortgage rates are generally tied to the 10-year Treasury as mortgage backed securities attract the same type of investor. With the Fed raising rates aggressively, big investors are worried it will create a recession, so they seek the safety of bonds and MBS's. These investors also may believe that we've hit a peak in inflation. Otherwise they would invest in inflationary stocks instead of bonds. In other news making headlines... Single-Family Rent GrowthDemand continues to grow for single-family rentals as more and more potential homebuyers are priced out of the market. And that's pushing rents higher. A new report from Yardi Matrix says the average single-family asking rent rose $23 in June, to an all-time high of $2,071. (11)Rent growth is slowing for both single-family and multi-family rentals. The report says that year-over-year single-family rent growth has dropped 90 basis points, to an annual rate of 11.8%.House Approves Remote NotarizationThe U.S. House approved legislation that would make remote online notarizations possible in all 50 states. The bill will make it easier to close a deal without having the notary and the person signing the agreement in the same room. During the pandemic, agents in many states had to arrange for drive-by closings, with social distancing. (12) The pandemic also inspired almost half the states to allow for remote notarizations. The National Association of Realtors pushed for a national bill to support the demand for virtual sales and closings in all 50 states, even though there's less concern now about pandemic-related safety measures. The bill is now pending consideration in the Senate. That's it for today. Check the show notes for links at newsforinvestors.com. I would also like to share some other exciting news. Within the last few weeks, we hit a big milestone for Real Estate News for Investors. It's been six-and-a-half years since our first news podcast, and we have now posted our 1200th show! We are currently posting two or three podcasts a week for real estate professionals. Set your podcast player to have them automatically downloaded, so you don't miss any! And please remember to hit the subscribe button, and leave a review!Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.bloomberg.com/news/articles/2022-08-02/daly-says-fed-nowhere-near-done-on-curbing-high-infation-rate2 -https://www.reuters.com/markets/us/feds-daly-34-reasonable-place-get-by-year-end-rates-2022-08-03/3 -https://www.cnbc.com/2022/08/05/jobs-report-july-2022-528000.html4 -https://www.marketwatch.com/story/u-s-unemployment-claims-climb-to-260-000-and-stick-near-nine-month-high-11659616784?mod=economy-politics5 -https://www.corelogic.com/intelligence/u-s-home-price-insights/6 -https://www.corelogic.com/intelligence/podcast-vodcast/oce-monthly/homeowner-equity-reached-record-level-in-early-2022/7 -https://www.realtor.com/research/weekly-housing-trends-view-data-week-july-30-2022/8 -https://fred.stlouisfed.org/series/MSACSR9 -https://www.marketwatch.com/story/construction-spending-fell-sharply-in-june-11659363237?mod=economic-report10 -https://www.freddiemac.com/pmms11 -https://rentalhousingjournal.com/average-rents-rise-to-all-time-high-in-june/?utm_source=Master+Vendors&utm_campaign=a590da3d77-EMAIL_CAMPAIGN_2022_07_20_02_10&utm_medium=email&utm_term=0_4780df7d33-a590da3d77-11392877312 -https://magazine.realtor/daily-news/2022/07/28/remote-online-notarization-is-one-step-closer
No doubt there's housing crisis in the United States. Freddie Mac is updating the guidelines - which will allow homebuyers to use rental income derived from accessory dwelling units (ADU's) to help qualify on their next home purchase. This is a small drop in the bucket but is also a step in the right direction. www.TLOPonline.com
In this Real Estate News Brief for the week ending July 30th, 2022... a negative GDP report, inflation heads higher, and the Fed's latest rate hike. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic NewsWe begin with economic news from this past week. The Federal Reserve carried out its fourth rate hike this year to slow inflation, and the second increase of .75%. That puts the top end of the overnight lending rate at 2.5%. Higher rates make it more expensive for businesses and consumers to borrow money and that helps slow the economy, and the rate of inflation. (1)The latest reading on inflation was a report on the PCE or Personal Consumer Expenditure Index. That shows a 1% increase in June to a yearly rate of 6.8%, which is the highest since January of 1982. When you eliminate fuel and food, the core PCE is 4.8%. The Federal Reserve considers the PCE to be more accurate than the CPI because it takes into account other variables, such as consumers shopping for different, lower-priced items. (2)Fed Chief Jerome Powell has said repeatedly that inflation is too high, but he said during a press conference after the latest rate hike, that the U.S. is not in a recession despite a second quarter of negative economic growth. The government says the economy shrank at an annual pace of -.9% in Q2. That's after a -1.6% loss of economic activity in Q1. Two consecutive quarters of negative growth is the standard definition of a recession, but thanks to a number of things bolstering the economy, such as a strong job market, many economists, including Fed Chief Powell, don't believe we're there yet. (3) Powell said several times that the central bank will do whatever it takes to control inflation, which may put the U.S. into a recession at some point. He suggested more rate hikes in the coming months but didn't give any forward guidance because the situation is so volatile. The Fed expects short-term interest rates to hit 3.5% by the end of the year. Some economists are predicting a 50 point hike in the next meeting followed by two 25 point hikes. (4)Initial jobless claims had been slowly rising, but were about 5,000 applications lower last week. The Labor Department says they fell to a total of 256,000. Ongoing claims were also lower. They were down 25,000 to 1.36 million. (5)On to the housing market…New home sales fell to their lowest level since the pandemic began. They were down 8.1% in June to a seasonally-adjusted rate of 590,000. The year-over-year drop is 17.4%. Many consumers can't afford a high-priced home combined with a higher mortgage rate. The median sales price of a new home was $402,400 in May. (6)Pending home sales for existing homes also tumbled in June. According to the National Association of Realtors, they were down 8.6% for the month and 20% year-over-year. As MarketWatch reports, potential home buyers are spooked by high home prices and inflation in general, higher mortgage rates, and talk of a recession. NAR's Chief Economist Lawrence Yun says that buying a home in June of this year was 80% more expensive than it was in 2019. (7)*But home price growth has started to slow down. The S&P CoreLogic Case-Shiller Index shows a year-over-year price growth of 19.7%. That's down from 20.6% in April. (8) Keep in mind that the Case Schiller index is a lagging indicator, and a lot has changed in the market since May. As for consumer thoughts on the economy…The Conference Board reports that confidence levels fell for a third month in a row to a reading of 95.7. Economists like to say that consumer spending is still robust, but the International Monetary Fund says that's at higher income levels. One member of the Conference Board, Lynn Franco, says that consumers will likely face “headwinds” over the next six months as they deal with inflation and additional rate hikes. (9) A survey on consumer sentiment by the University of Michigan shows similar results. It was up slightly at the end of July but is still near the lowest level on record. (10)Mortgage RatesMortgage rates are falling as home buyers sit on the sidelines. Freddie Mac says the average 30-year fixed-rate mortgage was down 24 basis points last week to 5.3%. The 15-year was down 17 points to 4.58%. (11)In other news making headlines...Will the Latest Rate Hike Impact Mortgages?The Fed's rate-hiking plan has created concern that mortgage rates will continue to move higher. The two are not directly related, although higher short-term rates often do influence mortgage rates. But NAR's Lawrence Yun doesn't think mortgage rates will move much higher this year. He says: “The long-term bond market on which mortgage rates are generally priced has mostly priced in all future actions by the Fed and may have already peaked with the 10-year Treasury shooting up 3.5% in mid-June.” (12)He feels that the 30-year fixed will settle down at 5.5 to 6% for the rest of the year. That's it for today. Check the show notes for links.If you'd like more news on the housing market, please go to newsforinvestors.com and check on other podcasts you may have missed. You'll also find hundreds of webinars and articles on the housing market at our website. If you haven't joined RealWealth, you can sign up for free. That will give you access to our investor portal where you'll find details on specific single-family rental markets.And please remember to hit the subscribe button, and leave a review!Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/fed-hikes-rates-by-0-75-percentage-points-and-signals-more-hikes-coming-11658944875?mod=home-page2 -https://www.marketwatch.com/story/coming-up-pce-inflation-and-consumer-spending-11659096833?mod=economic-report3 -https://www.marketwatch.com/story/coming-up-u-s-gdp-11659010141?mod=economy-politics4 -https://www.marketwatch.com/story/was-feds-powell-dovish-or-not-4-key-takeaways-from-todays-press-conference-11658965985?mod=federal-reserve5 -https://www.marketwatch.com/story/u-s-jobless-claims-retreat-after-hitting-highest-level-in-eight-months-11659012115?mod=economic-report6 -https://www.marketwatch.com/story/u-s-new-home-sales-fall-in-june-to-the-lowest-level-since-the-pandemic-11658845189?mod=mw_latestnews7 -https://www.marketwatch.com/story/u-s-pending-home-sales-tumble-in-june-11658930424?mod=mw_latestnews8 -https://www.marketwatch.com/story/u-s-home-prices-slip-in-may-from-record-high-in-prior-month-case-shiller-11658840473?mod=economic-report9 -https://www.marketwatch.com/story/u-s-consumer-confidence-declines-for-third-straight-month-in-june-11658845555?mod=bnbh_mwarticle10 -https://www.marketwatch.com/story/consumers-pessimistic-about-inflation-and-the-economy-sentiment-poll-shows-11659104044?mod=economic-report11 -https://www.freddiemac.com/pmms12 -https://magazine.realtor/daily-news/2022/07/28/2nd-historic-fed-rate-hike-unlikely-to-further-damage-mortgage-borrowers
A conservatory-trained professional bassist, Gerald J. Leonard offers a unique approach to accomplishing more in the workplace. He is the CEO of Principles of Execution, a Certified Minority Business Enterprise and consulting practice with over 20 years' experience working with federal and state governments and multinational corporations. Past and present clients include Verizon, Center of Medicaid and Medicare, Freddie Mac, Hewlett-Packard (HP), GEICO, and many more.
World's Foremost Face Reading Expert Tells Us What The Faces of the Presidential Candidates Tell Us... Really Tell Us - Rose holds a B.A. from Brandeis University, supplemented by graduate study in social work and education. She is known nationally as a Face Reader, Aura Reader and Empath. Rose is a member of the International Association for Regression Research & Therapies, Inc. (IARRT) and the National Guild of Hypnotists, Inc. (NGH). She is fully certified as a Consulting Hypnotist and a Regression Therapist. She has won teaching awards for her workshops from FIRST CLASS Adult Education Center. Fairfax County Adult Education, in Virginia, grants Continuing Education Units (CEUs) for her classes to physicians, psychotherapists, social works, massage therapists and other professionals. Rose's other clients include Long & Foster Real Estate, Law Resources, Oxford Management, USA Today, Freddie Mac, Andrews Bartlett, Coolfont, Case Managers of South Texas, Chevy Chase Land Company, Washington Inc, Washington Press Correspondents, one of Washington's leading cosmetic surgery practices, Worldgate Sport & Health, and EDS. - http://www.roserosetree.com/
In this Real Estate News Brief for the week ending July 24th, 2022... how Yellen would like to fix the supply chain, a return to 2007 housing affordability, and the latest way to make rental income off your property.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week, and reassurances from former Fed Chief Janet Yellen. She said during an interview on NBC's “Meet the Press” that the U.S. economy is slowing down, but says that a strong job market is proof that we're not in a recession. (1) Her words come before a week of important economic reports. Coming up in the week ahead, the second quarter GDP, inflation, consumer income and spending, and what is expected to be a three-quarter point rate hike by the Federal Reserve.Let's rewind to this past week. Although hiring is strong, the government reports a jump in state unemployment claims. They were up 7,000 to 251,000. Wall Street economists had expected a slight decline in those initial claims. Currently, there are 1.38 million collecting unemployment checks. (2)The housing market slowdown continues. Housing starts fell in June. the Commerce Department reports that they were down 2% in June to 1.56 million new home starts. That's also a 6.3% annual drop in starts and the lowest level since last September. Building permits were also down .6% to 1.69 million. Breaking the report down further, construction starts fell 8.1% for single-family homes while apartment starts were “up” 15%. The number for permits were similar. (3)As a real estate investor, it's important to remember that the housing market is “local” so national numbers don't tell the whole story. The National Association of Home Builders issued a report on permits showing the top ten markets for single-family construction. At the top of the list is Houston, followed by Dallas-Fort Worth, Phoenix, Atlanta, Austin, Charlotte, Orlando, Nashville, Tampa, and Jacksonville. Despite the overall slowdown, some markets are still fired up. (4)Demand is still strong for single family homes, but prices have gotten too high for some buyers. The National Association of Realtors says that existing home sales fell 5.4% to a seasonally-adjusted annual rate of 5.12 million homes in June. That's the weakest they've been since the start of the pandemic, and compared with last year, they are down 14.2%. (5) In addition to high home prices, sales are being impacted by higher mortgage rates and a lack of more affordably priced homes. (5)Housing market conditions have weakened home builder confidence. The NAHB says the monthly confidence index dropped 12 points to 55 in July. That's a larger-than-expected decline, and the second largest since the association created the index. As a comparison, the index was at 80 last July. (6)Mortgage RatesMortgage rates crept a little higher last week. Freddie Mac says the average 30-year fixed-rate mortgage was 3 basis points higher to an interest rate of 5.54%. The 15-year was 8 points higher to 4.75%. (7)In other news making headlines...Yellen on Supply Chain IssuesYellen offered a suggestion for supply chain issues. She said that allied countries could strengthen their supply chains by “friend-shoring.” The term is similar to “onshoring” which refers to production or operations within our borders. (8)She says she's not discouraging trade with any country, but says that by working more with trusted partners, supply chains would be more resilient when there's some sort of global emergency or conflict.Housing Affordability Near 2007 LevelHousing affordability is hovering near 2007 levels. A report by S&P Global Ratings shows that homebuyers will have to pay about 28% of their income on mortgage payments by the end of this year. That's the highest percentage since the first quarter of 2007. NAR guidelines state that a homeowner's mortgage payment should not be higher than 25% of their paycheck. (9)That calculation is based on a 10% down payment. The analysis also shows that it will take entry-level buyers 11.3 years to save up for that down payment. It's more than twice as long as a pre-pandemic rate of five years.SwimplyThere's more ways than one to make money renting some part of your home. A website called Swimply makes it easy to rent out your pool for hours at a time. A CNBC Make It blog profiled an Oregon resident who spent $110,000 building a luxury pool ten years ago, and over the last two years has more than made that money back. (10)He says it's important to know a lot about pool maintenance and water chemistry. He also says that he was a lot busier when there were fewer people doing the same thing because there are now a lot more pools for potential customers to choose from.That's it for today. Join RealWealth for free here. Check the show notes for links, and remember to hit the subscribe button for the latest news on real estate, the housing market, and the economy. By subscribing, you'll have easy access to all past and future podcasts. If you like what you hear, we would greatly appreciate a review with lots of stars! Thanks for listening. I'm Kathy Fettke.Links:1 -https://apnews.com/article/inflation-economy-prices-janet-yellen-948009cdbc67f5b6f9742a35f7214feb2 -https://www.marketwatch.com/story/u-s-jobless-claims-jump-to-highest-level-since-november-11658407332?mod=economic-report3 -https://www.marketwatch.com/story/u-s-housing-starts-fall-in-june-for-the-second-straight-month-11658234929?mod=mw_latestnews&mod=u.s.-economic-calendar4 -https://eyeonhousing.org/2022/07/slowdown-in-single-family-permits-in-may-2022/5 -https://www.marketwatch.com/story/u-s-existing-home-sales-fall-for-the-fifth-straight-month-in-june-11658326211?mod=economic-report6 -https://www.marketwatch.com/story/u-s-home-builder-confidence-plunges-in-july-nahb-reports-11658152827?mod=economy-politics7 -https://www.freddiemac.com/pmms8 -https://www.cnbc.com/2022/07/19/us-treasury-secretary-on-supply-chain-resilience-use-friend-shoring.html9 -https://seekingalpha.com/news/3859754-us-housing-affordability-poised-to-fall-to-lowest-since-gfc-on-soaring-prices-rates10 -https://seekingalpha.com/news/3859754-us-housing-affordability-poised-to-fall-to-lowest-since-gfc-on-soaring-prices-rates11 -https://www.cnbc.com/2022/07/21/swimply-side-hustle-making-money-renting-backyard-pool-to-strangers.html
“Sustainability is no longer about doing less harm. It's about doing more good.” Jochen Zeitz How is the topic of energy efficiency in new single-family homes addressed in the mortgage industry? What pillars of ESG (Environmental, Social & Governance) are at play in this system and who are the players? We are joined on today's podcast by Simone Beaty who is the Director of Housing Policy with Freddie Mac. Freddie Mac was chartered by Congress in 1970 to support the U.S. housing finance system and to help ensure a reliable and affordable supply of mortgage funds across the country. Freddie Mac operates in the U.S. secondary mortgage market, buying loans that meet their standards from approved lenders. Freddie Mac then pools the mortgages it buys into securities, which they sell to investors around the world. Drawing on her in depth experience in the financial services industry and strong finance related skills in housing policy strategies, Simone explains how Single-Family Green Mortgage Backed Securities support Freddie Mac's focus on financing energy efficiency in new and existing single-family homes. These activities help to preserve home affordability over time and attract capital to promote sustainable activities through mortgage financing. Simone shares with us data, statistics, and trends on topics such as remodeling and repairs, work from home impact, and solar installations. She describes the criteria necessary for qualifying mortgages including the minimum HERS score. She notes the important impact of the increase in HERS ratings and how this helps more builders relate to more consumers the ties to sustainability that come from Home Energy Ratings. To learn more about FreddieMac's Single Family Green Bonds go to this link: https://capitalmarkets.freddiemac.com/mbs/green-sfmbs Or download this framework document: https://capitalmarkets.freddiemac.com/mbs/docs/Freddie_Mac_SF_Green_Bond_Framework.pdf RESTalk: To the RESNET community, we hear you and want to engage. Learn more at www.RESNET.us Or for more info on this topic contact RESNET at INFO@RESNET.US
Industry practitioners in lending and policy discuss the research and recommendations in the recently released paper “ADU Construction Financing: Opportunities to Expand Access for Homeowners.” The joint paper, produced by the UC Berkeley Terner Center for Housing Innovation and the USC Lusk Center for Real Estate, compiles national data and stakeholder interviews to provide a picture of the hurtles to financing and what barriers could be removed to bring ADU construction to scale. Included in the discussion: Recent updates to Freddie Mac's ADU policies How friction during financing curtails homeowner commitment Appraisal gaps in accurately assessing ADU value The role contractors play in mitigating financial risk The importance of targeted consumer protections as more data emerges Paper Link: https://lusk.usc.edu/adu-construction-financing-opportunities-expand-access-homeowners Introduction and Sponsor Remarks: Richard K. Green (Director, USC Lusk Center for Real Estate) Amy Anderson (Senior Vice President, Wells Fargo Foundation) Racheal Meiers (National Leader, Economic Opportunity, Kaiser Permanente) Federal Context: Erika Poethig (Special Assistant to the President for Housing and Urban Policy, The White House Domestic Policy Council) Diane Slemmer (Single Family Affordable Lending Manager, Freddie Mac) Panel Discussion: Ben Metcalf (Managing Director, UC Berkeley Terner Center for Housing Innovation) Meredith Stowers (Branch Business Development Manager, Cross Country Mortgage, LLC) Susan Geddes Brown (Chief Executive Officer, Core SGB, LLC) Samar Jha (Government Affairs Director, AARP) More: https://lusk.usc.edu/perspectives
In this episode of the Top of Mind podcast, Mike Simonsen sits down with Len Kiefer, Deputy Chief Economist at Freddie Mac, to talk about the latest housing market and macroeconomic forecast released this week from the mortgage giant. Len explains how Freddie Mac does their forecasting, what they see for the coming year in real estate, how last year's real estate boom skews today's inflation numbers, and more. Download the latest research at https://freddiemac.com/research. About Len Kiefer Len Kiefer has served as Deputy Chief Economist at Freddie Mac since December 2012. He is responsible for primary and secondary mortgage market analysis and research, macroeconomic analysis, and forecasting. He also analyzes policy issues affecting the housing industry. Before joining Freddie Mac as a Senior Economist in 2009, Len was an Assistant Professor at Texas Tech University, where he conducted research on macroeconomics and monetary policy. Previously, he taught economics at Ohio State University and finance at George Mason University. Len is a Member of the American Real Estate and Urban Economics Association and the American Economics Association. Here's a glimpse of what you'll learn: The mechanics behind Freddie Mac's sophisticated economic forecasting What Freddie Mac's latest forecast says about the coming year in real estate How last year's real estate boom skews today's inflation numbers The impact of migration and remote work on home prices What the future holds for mortgage rates Len Kiefer's creative approach to data visualization and storytelling Featuring Mike Simonsen, CEO of Altos Research A true data geek, Mike founded Altos Research in 2006 to bring data and insight on the U.S. housing market to those who need it most. The company now serves the largest Wall Street investment firms, banks, and tens of thousands of real estate professionals around the country. Mike's insights on the market have been featured in Forbes, New York Times, Bloomberg, Dallas Morning News, Seattle PI, and many other national media outlets. Resources mentioned in this episode: Len Kiefer on LinkedIn Len Kiefer on Twitter Len Kiefer's website Freddie Mac Freddie Mac's Housing and Economic Research Mike Simonsen on LinkedIn Altos Research Follow us on Twitter for more data analysis and insights: https://twitter.com/altosresearch https://twitter.com/mikesimonsen See you next week!
This is another episode in our series with the subject matter experts at Freddie Mac Single-Family, and the guest today is Scott Reuter. In this episode we talk about how to get appraisals adjusted based on current market conditions, what changes need to be made to existing appraisal model to be sustainable, and the emerging technology tools that make appraisal values more accurate. Scott Reuter is the Chief Appraiser and Director of Property Valuation for Freddie Mac's Single-Family Risk Management division. He is a state certified-general appraiser with over 35 years of experience in valuation, appraisal and collateral risk management concerns. His team leads the ongoing development and refinement of property valuation risk management strategies, underwriting products, and establishing and maintaining a credible quality assurance process across multiple lines of business support. Scott was recently recognized as the CRN (Collateral Risk Network) 2021 Valuation Visionary and was a recipient of GE's prestigious Americas Award for Outstanding Contribution to the Business. He holds a B.A. from The Ohio State University and has completed the executive leadership program at Cornell University's Johnson School of Business. Prior to Freddie Mac, he held management positions with Bank of America, Goldman Sachs and GE. To learn more about Freddie Mac Single Family: www.FreddieMac.com Freddie Mac's Collateral Valuation Page: bit.ly/3RRVJxF Freddie Mac Market Conditions Article: bit.ly/3IU7VtR If you are enjoying the podcast, please take a second and LEAVE US A REVIEW and don't forget to connect with us on social media!
In this Real Estate News Brief for the week ending July 16th, 2022… a big surge in housing inventory, the rent growth rocket ship, and a supersized prediction for Social Security's 2023 COLA.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week, and another surprise surge in the consumer price index. The Labor Department says the consumer price index or CPI rose 1.3% last month. That puts the annual rate of inflation at a 41-year record high of 9.1%. That's up from 8.6% in May. The core rate was a little more encouraging. It excludes food and fuel because those prices are so volatile. That was up .7% for June, which brought the annual rate “down” a tenth of a percent to 5.9%. (1)Wholesale prices also jumped higher. The producer price index was up 1.1% in June, mostly due to higher gas prices. That raises the annual rate from 10.9% to 11.3% - for wholesale prices. Again the core rate offered better news. It was only up .3%. That brought the annual rate down slightly, to 6.4%. (2)Inflation isn't discouraging consumer spending. The latest report on retail sales shows a solid 1% increase in June, but people are also buying things at higher prices. When you adjust for inflation, it appears that retail sales fell slightly. Senior economist for BMO Capital, Greg Daco, told MarketWatch: “American households are spending nearly as much money as they did earlier, but largely to keep up with higher prices, not to actually buy more stuff.” (3)Initial jobless claims crept higher. The Labor Department says there were about 9,000 more claims last week than the week before, for a total of about 244,000 applications. The number of continuing claims dropped by a lot more. They were down about 41,000 to 1.33 million. (4)Mortgage RatesMortgage rates aren't sitting still. After a big drop the week before last, they were up 21 basis points last week. Freddie Mac says the average 30-year fixed-rate mortgage was 5.51%. The 15 year was up 22 basis points, to 4.67%. (5)In other news making headlines...Home Buyers Canceling ContractsMore and more home buyers are backing out of their contracts because of the high prices. A new Redfin report says home sale cancellations were just under 15% in June. That's the highest level of contract cancellations since the start of Covid, when the economy briefly shut down. One year ago, in 2021, home buyers were canceling about 11% of their deals. (7)Redfin's deputy chief economist, Taylor Marr, says we're seeing the increase for a number of reasons. One is that home buyers have less competition and more time to back out of a deal if inspections or appraisals don't go their way. They may also get a higher mortgage rate than they expected and discover they no longer qualify for a particular home. Or they may feel that home prices will decline and they could get a better deal by waiting. There's also worry about a recession, and how that could impact their paychecks.Housing Inventory ReboundMeantime, a slowdown in sales is having a positive impact on inventory, which is quickly increasing. Calculated Risk reports that it was up 3.2% over the July 4th weekend. That's unusual because it's typically a busy weekend for homebuyers, and inventory levels are usually flat or slightly lower. (8)On a year-over-year basis, inventory is up around 32%, but the inventory problem has not yet been resolved. It's still at historically low levels. While it's up year-over-year compared to last year, it's down 25% compared to the same week in 2020.Soaring Rents Could Be PeakingWith more and more homebuyers getting priced out of the market, rental demand is strong, and that's pushing rents higher. The Labor Department says the rent of a primary residence was .8% higher in June that it was in May. That's up from a .6% increase the month before. (9)Some economists say that rent growth “may” be peaking. Moody's chief economist, Mark Zandi, says: “Market rent appears to be topping out, as renters are not able to afford the higher rents and are balking.” He says: “More rental supply is also coming.” RealPage reports that 836,000 multifamily units are under construction, which is the most since 1973.Huge COLA Predicted for Social SecurityPeople getting Social Security could get a big pay raise next year. The Senior Citizens League is estimating a 10.5% cost-of-living adjustment, which is also known as a COLA. The exact amount will depend on what kind of inflation we see for the rest of the year. (10)The average monthly social security check is $1,668. A 10.5% increase would bump that up $175 to a total of $1,843That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!You can also get more in-depth information about the housing market at our website. We have hundreds of articles and webinars that you can check out for free. It's also free to join for access to resources that could help you find and purchase rental properties around the country. Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/coming-up-consumer-price-index-for-june-11657713665?mod=economy-politics2 -https://www.marketwatch.com/story/u-s-wholesale-prices-surge-again-and-signal-inflation-is-still-running-hot-11657802432?mod=economic-report3 -https://www.marketwatch.com/story/u-s-retail-sales-climb-1-in-june-but-higher-prices-a-big-reason-why-11657889085?mod=economic-report4 -https://www.marketwatch.com/story/u-s-jobless-claims-rise-to-highest-level-since-last-november-11657802226?mod=newsviewer_click5 -https://www.freddiemac.com/pmms6 -https://www.wealthmanagement.com/multifamily/rents-us-rise-fastest-pace-1986-buoying-inflation7 -https://www.calculatedriskblog.com/2022/07/housing-inventory-july-11th-update-up.html8 -https://www.wealthmanagement.com/multifamily/rents-us-rise-fastest-pace-1986-buoying-inflation9 -https://www.cnbc.com/2022/07/13/social-security-cost-of-living-adjustment-could-be-10point5percent-in-2023.html
In today's episode, we are joined by Andrew Keel, Andrew is a passionate commercial real estate investor, husband, father, and fitness fanatic. His specialty is in acquiring and operating manufactured housing communities and self-storage facilities. He graduated in 2010 from Augustana University in Sioux Falls, South Dakota where he majored in Business Administration, He started as an apprentice to a local Central Florida real estate wholesaler where he learned to flip houses. Eventually, he move to manufacturing houses, buying and selling individual mobile homes. Today he operates over 2,300 lots across more than 30 mobile home parks in 10 states and has few mobile home parks under contracts. Let's hear more about Andrew and his journey. Let's dive in! [00:00 - 07:04] 5 Storage Facilities Bought from Mom and Pop for Increased Profits Andrew Keel owns and operates 33 mobile home communities in five cell storage facilities. His specialty is buying from mom and pops and improving the bottom line. Started in central Florida flipping houses in the residential place moved into, individual mobile homes Buying storage from Mom and Pops Andrew shares that their business has a call center that anyone can call to rent their units [07:05 - 13:46] How Self Storage Can Help You Achieve Your Business Goals Storage is becoming increasingly desirable, especially in a recessionary environment There are many reasons why people use storage, and the competitive advantage for Self Storage is market research and underwriting based on what it could be, rather than what it is today Hiring is important to set good systems in place from the beginning so that when turnover does occur, it is smooth. Andrew shares his experience in running in triathlon and how it correlates to his business process. [13:47 - 18:24] Closing Segment Reach out to Andrew Keel Links Below Final Words Tweetable Quotes ”Slow down and really implement good training at the beginning instead of trying to go really fast.” - Andrew Keel ----------------------------------------------------------------------------- Connect with Andrew Keel by visiting their website: www.keelteam.com Connect with me: Facebook LinkedIn Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in! Email me → email@example.com Want to read the full show notes of the episode? Check it out below: [00:00:00] Andrew Keel: When we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management. [00:00:09] Andrew Keel: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value.. Andrew keel owns and operates. 33 mobile home communities in five cell storage facilities. His specialty is buying from mom and pops and improving the bottom line. Andrew, welcome to the show. Yeah, [00:00:46] Andrew Keel: thanks for having me, Sam. Pleasure's [00:00:48] Sam Wilson: mine. Three questions. I ask every guest who comes in the show in 90 seconds or less. [00:00:51] Sam Wilson: Where did you start? Where are you now? And how did you get there? [00:00:54] Andrew Keel: Started in central Florida flipping houses in the residential place moved into, individual mobile homes, doing what's called Lonnie, dealing where I was selling individual mobile homes on contract. And then ended up going to a bootcamp MSU bootcamp and met a investor there that was looking to deploy some. [00:01:14] Andrew Keel: Wanted a sweat equity partner like myself. So we ended up partnering on my first five mobile home parks together since then friends and family have jumped on board and wanted to invest. And we also got into self storage last year, which has absolutely crushed. So really really feeling good about our portfolio going into uncertain economic times [00:01:34] Sam Wilson: when, or what year was it that you bought your first mobile home park? [00:01:38] Sam Wilson: 2017. Wow. Wow. That's pretty that's pretty fast growth from zero mobile home parks to 33, I think is is what you said there in your bio? That's a lot. What is that? I mean, it's only five is that five years. That's six parks a year, [00:01:54] Andrew Keel: basically. Yeah. Yeah. Just about, I, the one thing I did is I burned the ships, right? [00:01:59] Andrew Keel: I left everything else. My, my home flipping business, my individual mobile home flipping business. I left everything behind. It just went all in on this. I saw the opportunity and it ended up being well worth it. Now [00:02:11] Sam Wilson: That's really hard hard to do, cause I'm sure that your home flipping business was fairly profitable. [00:02:17] Andrew Keel: It was yeah. Around the central Florida area. And then, these Lonnie deals, I was buying these individual mobile homes, fixing 'em up very little and then selling them on contract. And I was getting what's called mailbox money. Right. Which Lonnie Scruggs talks about in his book deals on wheels. [00:02:33] Andrew Keel: And, that was going great. But I, that income from those previous homes I had sold really kept me alive when I just completely went full into mobile home communities. So that's how I was able to do it. [00:02:45] Sam Wilson: I think that's important, to note there for people that are looking to scale, is that income while you do scale, how long did it take you from, Hey, I'm going long into mobile home communities in 2017. Like how many months was it before you actually got your first deal done? [00:02:57] Andrew Keel: Oh yeah. I wanted to buy a park in 2015. Right. And then , the time it took to get there and the sales funnel. [00:03:04] Andrew Keel: And so forth It took about a year and a half. So, it definitely took some time before I actually got one. [00:03:10] Sam Wilson: Right. And that's, I mean, I think that's something people overlook, when they're looking to grow and you hear the success stories where it's like, Hey man, one day I woke up and then three weeks later, I own 10 mobile home parks. [00:03:19] Sam Wilson: You're like, okay, whatever. You're not the normal person out there. The rest of us, it takes 18 months of, of blood, sweat, and tears to finally get that first one done. And from then of course, it becomes easier. It's getting the first one across the finish line. Tell me. Things are changing in the mobile home community space. [00:03:35] Sam Wilson: Like we've just seen cap rates compressed. We've seen hyper competition come in. What else has gone on in this space? And then what are you doing to still find a competitive edge? [00:03:44] Andrew Keel: Yeah, we have a lot of institutional buyers coming into the space right now, a lot of big time, private equity money coming into the space. [00:03:52] Andrew Keel: And it's tough to compete. Right? They've driven cap rates down. I think one thing that we've done to kind of. Carve out our niche is, we've gotten really specific on our strike zone, right? Like we buy properties between 50 and 99. Lots. A lot of the bigger boys wanna buy a hundred lots or more. [00:04:11] Andrew Keel: So we target 50 to 99 lots. We target public utilities in a Metro with 50,000 or more population. And, that has really been a good strike zone for us. We've had to say no to a lot of deal. But it also keeps us it keeps us on track with where our time is best used. [00:04:30] Sam Wilson: Yeah. Are you, I mean, so you gave four criteria for things that work for you guys, and it sounds like you're still able to find opportunity, even with those four criteria. [00:04:39] Andrew Keel: Yeah. Yeah. It's been great, last year was a lot better than this year. , honestly, we were able to really, our sales funnel kind of peaked and we closed on, a handful in 2021 20, 22. It's gotten tougher to find those deals that hit our strike zone. So we spent a lot of time in storage the last year because of. [00:05:00] Sam Wilson: Right. I mean, and that's also something though. I mean, you're in two asset classes that are fairly popular. I mean, I would think there's more storage facilities than there are mobile home communities. So, but even, so it's still a competitive storage, the competitive space to be in why the transition with it just cuz the mobile home communities were just, too competitive or was there a strategic move as part [00:05:20] Andrew Keel: of. [00:05:21] Andrew Keel: Yeah. We like the complimentary factors that they have with our management and oversight of them. And then also it was strategic in the fact that, self storage facilities they're they have some benefits that mobile home parks don't right. They're a little bit easier to manage. [00:05:35] Andrew Keel: However, the supply is not constrained, just, as mobile home parks are. However we can buy in certain markets from mom and pop. That we bought a property in round rock, Texas just outside of Austin. And we bought it from a mom and pop owner. We direct to the owner and the facility was only 82% occupied. [00:05:53] Andrew Keel: It's your typical mom and pop story. Right? All the other facilities in the area are 95% occupied are higher. He was operating the facility on a flip phone and he was only open three days a week. If you wanted to rent a unit, you had to be there Monday, Wednesday, or Saturday. That was. So when we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management. [00:06:18] Andrew Keel: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value.. [00:06:32] Sam Wilson: Those aren't even expensive, necessarily operational, like, like there's no major CapEx. [00:06:38] Sam Wilson: Yeah. There's some software that goes into that. There's some human, capital in the sense that you gotta pay to have a, the call center, answer the phone and things like that, but it's not, a million dollars in CapEx. You gotta dump it into your property. It's just a very simple, Hey, here's some operational tweaks and you can change the bottom line dramatically. [00:06:55] Andrew Keel: Dramatically. Yeah. And obviously in storage, one thing like probably the biggest value add component is that the mom and pops are not raising rents with market. Right. They, they just get comfortable. They think that a hundred percent occupancy is good. And that's where they're supposed to be. [00:07:11] Andrew Keel: Well, actually in storage, you actually wanna be around 90% occupied, maybe even a little bit less. Wow. Because if you're not filtering through and you're not raising rents enough, then you're not maximizing the no. Right, [00:07:22] Sam Wilson: right. Yeah. And I can't do the math fast enough on here, but I know that there's a, here on the fly, but I know there's a point where it's like, Hey, it's better to be 90% occupied at X than hundred percent occupied at Y whatever that is. [00:07:33] Sam Wilson: Yeah. So that's exactly, that's really interesting. Yeah. We're experiencing that right now on a multifamily property. We own. We just hit a hundred percent occupancy, but we are, we have raised rent so fast and it's still the demand is there. And it's like, what? Or what are we doing something wrong here? [00:07:48] Sam Wilson: Because we're we bought it last year and we're already 400 bucks a month or 400 bucks a month per unit over where we bought it at. And it's like, Wow. And we're still not, or we're still a hundred percent occupied. So I get that. That's a hard thing for a lot of people though, especially mom and pops, cuz they go, Hey, you know what? [00:08:04] Sam Wilson: I'm fully occupied. I don't have to think about it. I can collect the check and then I go home. How do you find those sellers? And how do you find an opportunity? That makes sense like that. I mean going all the way to around rock Texas is a long way from Orlando, Florida. [00:08:16] Andrew Keel: Yeah, we have a whole sales team of five cold callers that are cold calling and, reaching out to owners constantly. [00:08:24] Andrew Keel: We have three VAs that are skip tracing and scrubbing our data. And that's really been our competitive advantage is being able to go direct to these owners, contact them, cultivate relationships with them, and then, ultimately buy their proper. [00:08:38] Sam Wilson: Right. Yeah. What's that conversation like right now, when you're dealing with these mom and pop owners, are they aware of, the interest in the self storage space or is it, still the maybe five, seven years ago where you get it off market deal and it wasn't quite as difficult. [00:08:53] Andrew Keel: There's always deals out there. Right? One of my mentors, Scott Shields, he says, Hey, the deal of a lifetime comes around once every six months. There's deals to be had. But yeah, I would say sellers are aware that. Their assets are desirable and they're wanting higher prices than ever before. [00:09:07] Andrew Keel: And I think the competitive advantage is the market research that we're doing to look at the competitors, to look at the facilities and really be able to underwrite based on, what it could be instead of what it is today. Do you [00:09:18] guys [00:09:19] Sam Wilson: Have you guys taken any deals down from broker. [00:09:22] Andrew Keel: We have, yeah, I think probably three or four we've taken down from brokers. There's deals out there from brokers as well. You just have to be the right place to right time. [00:09:30] Sam Wilson: Right, right. We're you know, there's talk of us going into a recession and you are in two unique asset classes that generally bode fairly well, especially the mobile home communities in a recessionary environment. [00:09:42] Sam Wilson: Is there anything you guys are doing? To position yourself or maybe doing differently than what you were a couple of years ago as recession seems to be on the horizon. [00:09:50] Andrew Keel: Yeah. Great question. I think mobile home parks in and of themselves are the most affordable form of non-subsidized housing, right? [00:09:59] Andrew Keel: So that, in a recessionary environ, Has done pretty well. And if you look back at the previous recessions, you'll see mobile home parks have done well, right? Because typically our tenants own their homes and they're just paying a very nominal amount for lot rent to have their home on the property. [00:10:16] Andrew Keel: So, mobile home parks are molded in that aspect. Not completely completely untouchable right in, in a recession. I think everybody feels it in some aspect but mobile home parks are. Are in a good spot storage as well. It's interesting because storage has an interesting dynamic where when people are moving up, right, they're upgrading their housing situation. [00:10:36] Andrew Keel: They need more stuff when they're downgrading their housing, it's the same thing, right? They need a place to store their stuff. And in a market like today where people are preferring to rent self storage is done really. [00:10:48] Sam Wilson: Right. Yeah. There's there's and I think that's the thing that's fun about self storage is that there's the reasons for why. [00:10:52] Sam Wilson: And like you said, the reasons why people use storage varies no matter where we are in the cycle there's a certain. Section or a certain set of, of the population that needs storage for various reasons. So in a recession, businesses are downsizing like, okay, well now they gotta have a place to put all this extra stuff they have or, businesses are upsizing. [00:11:11] Sam Wilson: Well now we're building a new facility, we got a place to store our stuff. I mean, whatever it is. So I think that's that's really cool. What are, if you could rewind maybe, I don't know how long or when you started in real estate, but whenever it was, you started in real estate until. [00:11:22] Sam Wilson: And you could say, Hey, here's a mistake I made that. I think other people could avoid making. What would that be? [00:11:27] Andrew Keel: Wow. That was a great question. I would say setting better systems earlier. In terms of hiring. Right? So when you're hiring people you don't in the moment, you're like, okay, it's like, you gotta ship and you gotta hole in it. [00:11:41] Andrew Keel: You're like, all right, stick a cork in it. Let's just keep moving. Right? Well, really, if you slow down, you take the time to set up a system, set up a training. You can really help yourself down the line when you need to replace that person or when you have turnover. So I would say slow down and really implement good training in the beginning instead of trying to go really fast. [00:12:02] Andrew Keel: That's something we've had to go back and do. And, we're able now to move so much faster when we do have turnover. Because we have good training systems in place, the new person's able to get caught up very quickly. [00:12:13] Sam Wilson: Right. And that's I think that was something I read on a LinkedIn post yesterday was that the average entrepreneur really struggles with the documentation side of it. [00:12:23] Sam Wilson: Especially early on because it's fast. If I can just do it myself right now, but then documenting this process takes five times as long. And I don't have time for that. But then, yeah it's this you get caught there in the middle. So setting better systems when hiring now that's that's an absolutely great one. [00:12:39] Sam Wilson: I love, I certainly love that. Tell me this, you you're an Ironman triathlon runner. If I'm not mistaken, you do. That's right. How many of these you've done up up till this point? Are there correlations between what you do in business and how you run a triathlon? [00:12:55] Andrew Keel: Oh, a hundred percent. I would say. [00:12:57] Andrew Keel: it's less about how I run a triathlon and more about the whole process. Right? The training, the discipline you know what I put in my mouth eating wise, like, the burning drive that I have to be successful. All of. It correlates to training for triathlon and competing in Ironman races. [00:13:15] Andrew Keel: So, I would say it, it has helped my business goals and complimented them and has kept me driven, kept me on track, kept me disciplined. When I don't wanna wake up at 5 31 day, I could I'll pay for it if I don't. Right, right. So it keeps me on. Right. [00:13:32] Sam Wilson: Yeah, absolutely. [00:13:33] Sam Wilson: Absolutely. Yeah. In the, you said you mentioned something in there, but you said process, can you expound on that? Some. [00:13:39] Andrew Keel: Yeah. Yeah. Specifically with triathlon, like for example, I just competed in Kona in the Kona, Hawaii, 70.3 race last week. Wow. And the process of preparing your bike, making sure that you have, good tubes and tires on and making sure that your batteries are charged for your, GPS and your your gear shifters. [00:13:59] Andrew Keel: The whole process of being organized. And like you said, setting a system in business is the same thing for triathlon. And that's not even including the training. Right? There's a coaching program. I have a coach that, that, sets up my training regimen and. Again it all correlates to my business and how I run that as [00:14:18] Sam Wilson: well. [00:14:18] Sam Wilson: Right. No, I think that's that. That's absolutely cool. And congrats to you for finishing that that race in Kona. Was that your best time? Was that your worst time? How'd you do. , it [00:14:29] Andrew Keel: was not my best time. But I did pretty well. I got 16th in my age group. There was like 84 people in my age group. I think. [00:14:36] Andrew Keel: So, my age group's pretty competitive. It's the like 30 to 35 range. Wow. But had a great time, was a beautiful race. Literally the swim was like swimming in an aquarium. I mean, I was seeing stingrays and, colorful fish. It was beautiful. [00:14:48] Sam Wilson: that's absolutely awesome. I don't know. [00:14:51] Sam Wilson: Yeah. I don't know many people that get, get to say that when they run a triathlon, that it was like swimming in an aquarium. That's awesome. Andrew. What's what let's talk about? I had one question here. I forgot to ask you when it comes to mobile home community, something we're seeing right now is on the financing side of things. [00:15:06] Sam Wilson: Financing's changing lending is getting really kind of wonky out here. As lenders are trying to find their footing in the marketplace going, where are we going? Interest rate rise. What are you finding right now in lending? On mobile home communities. [00:15:16] Andrew Keel: Yeah, interest rates are going up for sure. [00:15:18] Andrew Keel: , but there is really good options when it comes to financing, manufactured housing communities. The best debt is typically by the agency lenders, Freddie Mac and Fannie Mae Tim typical, similar to multifamily. Where, you're able to get 10 year fixed rate debt and, interest only periods. [00:15:35] Andrew Keel: We just locked in a really awesome refinance loan before rates started ticking up on, about seven of our mobile home parks. And, we were able to get really great. We did very low leverage. I think it was 65% LTV 10 years fixed fixed interest. And. It was full term interest only. [00:15:54] Andrew Keel: So, very attractive financing terms and that's through the agency lenders, your property has to meet a certain criteria. It has to be, for there's a whole list, but over 90% occupied, less than 25% park owned homes, it has to have off street parking and some other attributes that when we buy properties from mom and pop. [00:16:12] Andrew Keel: Typically we're getting like a regional lender to finance that. And then our whole goal is to fix these properties, to get them to qualify for the agency debt. And that is like our home run. [00:16:22] Sam Wilson: Right. Cause then you can refinance it into agency debt. And then what's your plan, I guess what's your exit strategy on these? [00:16:27] Sam Wilson: Is this a hold in forever? [00:16:29] Andrew Keel: We're buying hold. Yeah. I'm 34 years old. Wanna own these assets and fully appreciate 'em. That's what our investors are looking for as well. And it's it's been a win-win for us to be able to recapitalize the asset, pay back the initial equity and then, hold them long. [00:16:42] Sam Wilson: That's awesome. I like that in comparison to, a lot of the deals we're seeing right now that are coming across my desk are stuff like, Hey, three to five years, we're gonna sell it. We're gonna, get a two X equity, multiple and move on. I think people's appetite, at least I've found is really changing dramatically. [00:16:58] Sam Wilson: They're going okay. We really don't care about the equity, multiple of the appreciation play. We just. Want to clip the coupon. I think of the last hundred investors I've talked to in the last four months, they've probably evolved the same thing. Like we just wanna collect the cash flow. So that's very cool, Andrew, thank you for taking the time to come on the show today and really talk about mobile home communities, the opportunities you're finding there and how you're finding them. [00:17:19] Sam Wilson: I mean having five cold callers and three VAs, full-time skip tracing. That's a lot of people doing a lot of outbound lead generation. I think that's super cool. You've shared with us the way, that you prep for an Ironman and how that correlates there to your business. And then also how you're finding opportunity in self storage. [00:17:35] Sam Wilson: So you guys are doing a lot of really cool stuff. Certainly appreciate you coming on today and sharing if our listeners wanna get in touch with you or learn more about you, what is the best way to do that? [00:17:42] Andrew Keel: Yeah, the best way for them to do that would be to go to keel team.com. That's just K E E L T E a m.com can fill out a contact form if you're interested in investing with us or partnering with us. [00:17:55] Andrew Keel: Awesome. [00:17:55] Sam Wilson: Andrew, thank you again. Certainly appreciate it. [00:17:58] Andrew Keel: Yeah. Thanks for having me, Sam.
In this Real Estate News Brief for the week ending July 9th, 2022... why the job market is reducing recession anxiety, the big mortgage rate turn-around, and Airbnb's contest for unique listing ideas.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week. The job market is showing a lot of muscle, despite concerns about a recession. The government reported last week that companies created a whopping 372,000 new jobs in June. That's well above Wall Street estimates for 250,000 new jobs. (1)Companies may have a hard time filling all those positions however due to a severe labor shortage. As reported by MarketWatch, there are two open jobs for every person looking for one, or about 11.3 million job openings. (2) Layoffs are also at historically low levels, including the number of people working part-time because they had their hours reduced. The report says there are 3.6 million involuntary part-timers. That's the lowest level in 21 years. (3)Despite that good news, the unemployment numbers are up slightly for last week. The Labor Department reports that initial claims were up 4,000 last week, to 235,000. That's the highest level in six months. They were as low as 166,000 just four months ago. (4) But unemployment is still at 3.6% and the big picture is that job creation and hiring are strong. ZipRecruiter chief economist Julia Pollack says: “This is not what a recession looks like.”St. Louis Fed President James Bullard is also seeing signs of economic strength. He's predicting economic growth for the year despite the slowdown we're already seeing due to the Fed's rate hikes. He says he's basing his calculations on “gross domestic income” instead of “gross domestic product.” The GDI is the income that's earned on the production of the GDP. While the GDP has already contracted in Q1 and may have done so in Q2 as well, Bullard says the GDI shows that the economy is actually expanding. (5)Mortgage RatesMortgage rates did a big U-turn this last week. Freddie Mac says the average 30-year fixed-rate mortgage dropped 40 basis points to 5.3%. The 15-year fell 38 points to 4.45%. (6) The drop in rates along with a 5.4% drop in mortgage applications is a sign that the housing market is cooling off. (7)In other news making headlines...On-Time Rent in UnderwritingFreddie Mac is making it easier for some renters to qualify for a mortgage. As of July 10th, Freddie is including on-time rental payments in its underwriting system. (8)Freddie started encouraging landlords to report on-time rental payments to credit bureaus last November. It also offered an incentive in the form of closing cost credits for multifamily loans. That apparently attracted a lot of landlords.HousingWire reports that 70,000 households within more than 800 multi-family properties are now enrolled, and that more than 15,000 renters have been able to establish credit scores. Fannie Mae began a similar program last year.Rent Growth SlowdownThe latest rent report from Zumper shows a slowdown in rent growth. It says that rent levels typically peak during the summer because a lot of people are moving but this year, Zumper's National Index is up only .5 percent for one-bedroom apartments and down a big 2.9 percent for two-bedroom apartments. That lowers the national median price for a two-bedroom apartment to $1,707, and slightly increases the median rent for a one-bedroom to $1,421. (9)Airbnb Party Ban Now Permanent Airbnb's temporary party ban is now a permanent ban on “disruptive parties and events.” That includes open-invite gatherings as well as one-night rentals for a large crowd. Airbnb initiated a ban on “party homes” after an Airbnb shooting in 2019 that killed five people. It then called for a global ban on Airbnb parties at the start of the pandemic. (10)The global ban has reduced complaints by 44% but hasn't stopped them altogether. Airbnb says that people booking remote accommodations can often invite as many people as they want without getting caught. Airbnb says if they are caught, they could face consequences, including suspension or a permanent ban from the website.Airbnb OMG! FundOn a lighter note, there's still a few weeks left to participate in Airbnb's search for the craziest listing ideas, and the winners will get a hefty sum of money to make their crazy ideas a reality. Airbnb is funding the contest with a $10 million “OMG! Fund.” That's enough money to give 100 people $100,000 each to help finance these projects.The ideas will be judged on originality, feasibility, the experience the space will provide to guests, and sustainability. The deadline to apply is July 22nd. Check for a link in the show notes at newsforinvestors.com if you want to know more! The Airbnb announcement includes a lot of examples for inspiration. That's it for today. Please remember to hit the subscribe button, and leave a review! And thank you for listening!Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/coming-up-u-s-jobs-report-for-june-11657282206?mod=mw_latestnews2 -https://www.marketwatch.com/story/u-s-job-openings-dip-to-11-3-million-but-labor-market-still-historically-strong-11657122659?mod=economy-politics3 -https://www.cnbc.com/2022/07/08/involuntary-part-time-worker-numbers-dip-to-lowest-level-in-21-years.html4 -https://www.marketwatch.com/story/u-s-unemployment-claims-rise-to-6-month-high-of-235-00-in-possible-sign-of-rising-layoffs-11657197517?mod=jeffry-bartash5 -https://finance.yahoo.com/news/feds-bullard-sees-continued-u-170206923.html6 -https://www.freddiemac.com/pmms7 -https://www.marketwatch.com/story/mortgage-rates-fall-amid-rising-concerns-over-a-recession-116572031768 -https://www.housingwire.com/articles/freddie-mac-to-include-on-time-rent-payments-into-underwriting/9 -https://realestateinvestingtoday.com/zumpers-national-rent-report-for-june-22/10 -https://www.cnbc.com/2022/06/28/airbnb-makes-its-party-ban-permanent.html11 -https://www.google.com/search?q=airbnb+omg+fund&rlz=1C5CHFA_enUS822US822&oq=airbnb+omg+fund&aqs=chrome..69i57j69i60.4025j0j7&sourceid=chrome&ie=UTF-8
Two years of a booming U.S. housing market have brought great wealth to many, while others are now locked out or unsure about their next steps. Are there similarities to the housing bubble of the 2000s -- or are these new, uncharted waters? Dr. Len Kiefer, deputy chief economist at Freddie Mac, joins the podcast to discuss the factors that led to the current state of the market. He also shares what to watch for in the future and offers advice to prospective homebuyers.
Two years of a booming U.S. housing market have brought great wealth to many, while others are now locked out or unsure about their next steps. Are there similarities to the housing bubble of the 2000s -- or are these new, uncharted waters? Dr. Len Kiefer, deputy chief economist at Freddie Mac, joins the podcast to discuss the factors that led to the current state of the market. He also shares what to watch for in the future and offers advice to prospective homebuyers.
Conservatory-trained musician, CEO of the business consultancy Principles of Execution (a Certified Minority Business Enterprise), and author of Workplace Jazz: How to Improvise – 9 Steps to Creating High-Performing Agile Project Team, Gerald Leonard joins Dr. Bunny to discuss the concept of improvisation, and so much more. Gerald tells us when his love of music began, what instruments he started on, and what led him to becoming a bass player. Being a jazz musician, Gerald learned many things along the way that helped him in his career, like: if you want to get better at something you have to practice things that you're not comfortable with, so you have to get comfortable being uncomfortable. And you have to be a lifelong learner! This is a great interview that will have you looking at life in a whole new way! Tune in and prepare to be inspired! About Gerald Leonard: A professional bassist, Gerald J. Leonard offers a unique approach to accomplishing more productivity in the workplace. He is the CEO of Principles of Execution (PofE), a Certified Minority Business Enterprise, Strategic Project Portfolio Management and Culture Change consulting practice with over 20+ years' experience working with large Federal and State Governments and Multi-National Corporations. Past and present clients include Verizon, Center of Medicaid and Medicare, Freddie Mac, Hewlett-Packard (HP), GEICO, and many more. He is also the author of Culture Is The Bass: 7Steps To Creating High-Performing Teams. He invites you to follow him on LinkedIn, Facebook, and Goodreads. Contact Gerald Leonard at https://workplace-jazz.com/ Contact Dr. Bunny Vreeland at (805) 482-8111 or E-mail: Bunny@BunnyVreeland.com Also visit: https://bunnyvreeland.com
Mary Childs—a financial journalist and co-host of NPR's Planet Money—is author of The Bond King; a biography about industry titan, billionaire bond trader Bill Gross. Bill co-founded Pacific Investment Management Co (Pimco) in 1974, where he would become the worlds' largest bond trader and revolutionise the market. Heading up the firms' Total Return fund, Bill served as managing director/chief investment officer, until a shock departure in 2014. While Bill's widely considered a market legend, beyond the surface, I had little understanding about his rise to fame and fortune; the primary reason I was motivated to invite Mary on the podcast, as she spent countless hours researching and conducting interviews to produce her book. In this episode, Mary walks through the life ‘n times of Bill and some of the standout trades that helped to put Pimco on the map—including a highly controversial position in Freddie Mac and Fannie Mae during the financial crisis of 2008. Learn more about your ad choices. Visit megaphone.fm/adchoices
The housing market may be slowing down, but new homes are still a complicated, expensive process, mostly because of supply chain issues. One Bank of America analyst, who co-authored a new report on residential construction, says it's like a game of whack-a-mole. He says: “Every time they find one thing that they fix, another one pops up.” Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.BofA just released its 2022 “Who Builds the House” report, which found that a shortage of building materials is one of the primary reasons for higher home prices. According to co-author Rafe Jadrosich, prices have risen at an “unprecedented rate” over the last few years because of the shortage of building materials. He told MarketWatch: “There's always a new category that's creating the bottleneck.” (1)"Who Builds the House?"The report says that the cost of materials to build a home went up 42% in just three years, from 2018 to 2021, and that it has consistently outpaced the rate of overall inflation. Additional costs for materials add approximately $35,000 to the price tag, and bring the total amount for raw materials to around $118,000. That's about a third of the cost of a new home. The other two-thirds of the cost go towards the land, and the labor, which can vary from region to region.Rising inflation is also contributing to higher costs for all the things needed to finish a home including window treatments, floor coverings, appliances, and household furnishings. MarketWatch reports that the index for household furnishings and operations rose .04% in May with an annual rate of increase of 8.9%.The BofA report used data from the National Association of Home Builders, and analyzed 14 different expense categories, to determine how much it costs, on average, to build a new home.Framing Lumber and Engineered WoodThe dominant category is the lumber needed to frame a home. Nine out of ten homes are framed with lumber. That can be natural wood or engineered wood, which is a mixture of wood fiber and plastic. The report says 30.2% of the material used to build a home falls into this category. The cost for this portion is about $35,500, and right now, lumber prices are falling. But they've also been on a roller coaster. Lumber futures have come off a high of about $1,700 for a thousand board feet in May of last year. They were recently down to about $580, but in April of 2020 they were half that amount. Lumber prices are moving contrary to inflation because of a drop in home sales, and a cut back in home starts by builders. Home starts dropped a whopping 14.4% from April to May due to a slowdown in construction for both single-family and multi-family homes.Higher mortgage rates are contributing to the housing market slowdown. Housing experts are predicting that lumber prices will come down farther, but builders are still dealing with high prices for other materials.Concrete for the FoundationConcrete accounts for another big expense category at almost 9% of the total cost of materials. It typically costs around $10,500 for the concrete.Windows and DoorsWindows and doors are a big expense. They account for another $10,500 or about 9% of the cost of materials, but those costs are under pressure because windows and doors are consistently hard to find. Builders have been scrambling over the last year to get what they need to finish homes.As Jadrosich explains, if you haven't installed the windows: “You can't put your appliances in, or paint your walls, or finish your floors.” He says until that situation improves, “you're gonna have a pretty slow, elongated build cycle for a lot of the home builders.” A recent New York Times article says it all in the title: “4 Bed, 3 Bath, No Garage Door.”((One of our RealWealth development projects experienced this kind of supply chain issue last year. The developer had to drive to another state to get the garage door he needed to finish the home.))Other MaterialsOther materials that builders must get their hands on include siding, plumbing, cabinets, HVAC systems, roofing, flooring, structural panels, wallboard and drywall, appliances, architectural coating, fiberglass insulation, and paint.Housing Market SlowdownChief Economist for the NAHB, Robert Dietz, said in a recent press release that the cost of building a home is up 19% year-over-year. He says it's due to “a variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown.” (4)And builders are not happy. The NAHB does a monthly survey on builder confidence, and it's been lower for six months in a row. Dietz says it's a “clear sign of a slowing housing market in a high inflation, slow growth economic environment.” He says: “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates.” He's calling on the government to create policies that support the supply-side of the housing market.Housing ShortageAccording to Freddie Mac, the U.S. needs an additional 4 million homes to keep up with demand. Since many people can't afford the high cost of homeownership, they will continue to rent. There's a problem that needs to be fixed in the housing market, but people need housing, and what's filling the gap right now are rentals.If you'd like to learn more about how the economy is impacting the housing market, check out my recent webinar. It's my Q2 2022 Housing Market Update. You'll find it at newsforinvestors.com under the “Learn” tab. And please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links:1 -https://www.marketwatch.com/story/the-cost-to-build-a-home-in-the-u-s-has-risen-at-an-unprecedented-rate-bank-of-america-says-116548973042 -https://www.nytimes.com/2022/02/15/upshot/homes-garage-door-shortage.html3 - https://www.nahb.org/blog/2021/12/single-family-home-size-continues-to-trend-higher/#:~:text=According%20to%20third%20quarter%202021,family%20homes%20increased%20to%202%2C5414 -https://www.nahb.org/news-and-economics/press-releases/2022/06/weakening-builder-confidence-points-to-economic-troubles-ahead
In our SPECIAL EPISODE this week we have David H Stevens, CMB, CEO - Mountain Lake Consulting, Inc. here to discuss the ICE/Black Knight Merger, and how it will affect everyone concerned.Want to know more about David H Stevens?David H. Stevens CMB, (Dave) is the CEO of Mountain Lake Consulting, Inc. Dave is a 38-year veteran of the Mortgage Banking industry.Dave previously served as the President and CEO of Mortgage Bankers Association (MBA) and prior to this role, Dave served as the US Assistant Secretary of Housing and Federal Housing Commissioner at HUD (US Department of Housing and Urban Development). Dave has served a variety of key industry leadership roles prior to his work in Washington including as President and Chief Operating Officer of the Long & Foster Real Estate Companies, Inc., Executive Vice President of Wholesale Lending at Wells Fargo Home Mortgage, and Senior Vice President in charge of Single-Family Lending at Freddie Mac, and Group Senior Vice President at World Savings Bank. Dave currently sits on the Board of real estate investment trust Dynex, Inc.Dave works on advisory projects in real estate finance and provides technical and strategic consultation to financial institutions and intermediariesIn 2018 David was named Mortgage Professional Of The Year by National Mortgage Professional Magazine, has been named one of Bloomberg's 50 most powerful people in real estate, and Inman's 100 top most influential leaders. He received the Founders Award from NAHREP in 2013. David is often cited in the media having appeared on CNBC, PBS, and Bloomberg TV and quoted in major media. He has testified before the US Senate and House of Representatives multiple times and continues to influence policymakers in Washington.Dave received his CMB (Certified Mortgage Banker) designation in 2015 and holds a BA in Political Science from the University of Colorado at Boulder.Opinion: The risk of ICE, Black Knight deal is in the dataLYKKEN ON LEADERSHIP PODCAST-David Stevens, CEO of MBA
In this Real Estate News Brief for the week ending July 2nd, 2022... why inflation appears to be slowing, what the GDP says about a potential recession, and the latest reports on rent growth.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week. The rate of inflation appears to have slowed a bit. The Personal Consumption Index, or PCI, was up .6% in May with a yearly rate that was unchanged at 6.3%, but the core rate was down slightly. The core rate doesn't include prices for food or fuel, and the yearly rate for that dropped from 4.9% in April to 4.7% in May. The Federal Reserve feels the PCI is more accurate than the Consumer Price Index or CPI, because the PCI factors in more variables, such as changes in consumer behavior. (1)It's now official. The economy shrank 1.6% in the first quarter, and the Atlanta Federal Reserve is forecasting a negative reading for the second quarter as well. The Atlanta Fed GDPNow tracker indicates that the economy shrank 1% in Q2. Two consecutive quarters of negative economic growth is interpreted as a recession. But MarketWatch reports that some economists are forecasting growth in the second quarter. We won't have the official reading until the end of this month. (2)(3)As concerns mount about a long-lasting recession, there are now predictions that the Fed will be cutting rates next year, not raising them. CNBC reports that most analysts expect the Fed to continue hiking rates until the end of “next” year, but global chief economist at UniCredit, Erik Nielsen, told CNBC: “Can you really hike interest rates into a recession even if inflation is high? That would be unusual.” Michael Yoshikama of Destination Wealth Management also feels that the Fed will reverse its course and cut rates by the end of “this” year. The predictions are all over the map however. The president of the Federal Reserve Bank of Cleveland, Loretta Mester, expects growth to slow but doesn't expect to see a recession. Ark Invest CEO, Cathie Wood, told CNBC that the U.S. is already in a recession. (4)Initial jobless claims were down by about 2,000 last week, to a total of 231,000, but the four-week average is slightly higher. Continuing claims have continued to fall and are now back down to pre-pandemic levels. MarketWatch economists feel that layoffs may remain low because companies have already had a tough time filling positions, and won't want to let anyone go. (5)Pending home sales have rebounded somewhat. The National Association of Realtors says they were up .7% in May after six months of declines. But there are still challenges ahead for the housing market. NAR's chief economist Lawrence Yun says: “Despite a small gain in pending sales from the prior month, the housing market is clearly undergoing a transition.” He says: “Contract signings are down sizably from a year ago because of much higher mortgage rates.” Year-over-year, they are down 13.6%. (6)Meantime, home prices are up again. The S&P CoreLogic Case-Shiller 20-city index shows a 21.2% year-over-year increase in April. That's up from 21.1% in March. The Federal Housing Finance Agency reports a slightly slower rate of growth. It says that home price growth is up 18.8% year-over-year. (7) Construction spending was down slightly in May, but remained the same for new single-family and multi-family homes. (8) And consumer confidence hit a 16-month low in June, due to concerns about the economy, high prices, and the possibility of a recession. (9)Mortgage RatesThe rise in mortgage rates took a break last week. Freddie Mac says the average 30-year fixed-rate mortgage fell 11 basis points to 5.7%. The 15-year dropped 9 points to 4.83%. (10)In other news making headlines…Homebuyers Lose Purchasing PowerA new study shows that a typical homebuyer has lost more than $100,000 in purchasing power because of high interest rates. Redfin says that a homebuyer that can afford $2,500 a month in mortgage payments can only buy a home worth about $400,000 right now, or $120,000 less than they could at the end of last year. For someone who can afford $3,500 a month, the budget cut is more like $165,000. (11)Redfin's chief economist Daryl Fairweather says: “Many house hunters now need to consider smaller homes – perhaps farther from their ideal neighborhood – or stick to renting if they're priced out of the market altogether.”Rent Growth Hot, but SlowingRents continue to rise across the country, but the pace is slowing down. The latest report from CoreLogic shows that single-family rents continue to move higher. The year-over-year rate in April was 14%. That's more than double what it was in April of last year. (12)And CoreLogic economist, Molly Boesel, doesn't see it slowing down anytime soon. She says: “We expect single-family rent growth to continue to increase at a rapid pace throughout 2022.”A new report from “Apartment List” shows similar rent growth for apartments. The year-over-year increase for July is 14.1% but the report says that apartment rent growth is slowing down. It was 17.8% year-over-year at the beginning of the year. (13)That's it for today. Check the show notes for links. You can also find out more about how changes in the economy are impacting the real estate market by listening to one of my recent webinars. It's called “The Changing Tides of 2022: How to Prepare as a Real Estate investor.” You'll find the webinar under the “Learn” tab on our website at newsforinvestors.com.Thanks for listening! And please remember to hit the subscribe button, and leave a review!I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/coming-up-pce-inflation-and-consumer-spending-11656591128?mod=economic-report2 -https://www.marketwatch.com/story/its-a-wrap-u-s-first-quarter-gdp-shrank-1-6-the-second-quarter-isnt-looking-much-better-11656506598?mod=federal-reserve3 -https://www.fastcompany.com/90766283/recession-fed-gdp-tracker-atlanta4 -https://www.cnbc.com/2022/07/01/fed-could-cut-interest-rates-in-2023-analysts-say-after-rate-hikes-this-year.html5 -https://www.marketwatch.com/story/jobless-claims-inch-lower-in-latest-week-11656592825?mod=economic-report6 -https://www.marketwatch.com/story/u-s-pending-home-sales-rebound-in-may-reversing-a-six-month-decline-11656338457?mod=economic-report7 -https://www.marketwatch.com/story/home-price-growth-continues-slows-in-april-case-shiller-says-11656422745?mod=bnbh_mwarticle8 -https://www.marketwatch.com/story/u-s-construction-spending-fell-marginally-in-may-271656686288?mod=search_headline9 -https://www.marketwatch.com/story/consumer-confidence-falls-to-16-month-low-on-worries-about-inflation-and-economy-11656425418?mod=economic-report10 -https://www.freddiemac.com/pmms11 -https://www.cnbc.com/2022/06/28/rising-interest-rates-cost-typical-homebuyers-16-percent-of-purchasing-power.html12 -https://www.corelogic.com/intelligence/april-jump-in-us-rent-price-growth-puts-pressure-on-inflation-corelogic-reports/13 -https://www.apartmentlist.com/research/national-rent-data
Orange county misread the credit market trend and experience massive losses and bankruptcy from a derivatives collapse. $1.6 billion upside down in trades, no exist, panick, forced restructuring. Buying and selling derivatives is gambling. Someone is a winner and someone is a loser. Some of the biggest users of derivatives are government sponsered enterprises (GSE): Fannie Mae, Ginnie Mae, and Freddie Mac. --- Send in a voice message: https://anchor.fm/david-nishimoto/message
Choose a Mortgage Company with a Great Company Culture Senior Loan Consultant Jay Glover with New American Funding joins the Atlanta Real Estate Forum Radio podcast to talk niche loan products, mortgages and home loan advice. Glover joins host Carol Morgan on the All About Real Estate segment. Glover stressed that consumers should choose a mortgage company with a great corporate culture, like New American Funding A member of the mortgage industry since 1997, Glover started his career with HomeBank Mortgage. He transitioned from his position there to the wholesale side and since 2005, has focused his attention on the retail side, specializing in purchase-money mortgages. New American Funding is one of the nation's top mortgage service providers and is a direct lender for Fannie Mae and Freddie Mac. A top-rated organization, the company is focused on purchase-money mortgages and helping consumers realize the dream of homeownership. Glover joined the New American Funding team last August. Glover said, “New American Funding has really opened my eyes. Their focus is on reminding the employees what we do as a company and how important it is.” Glover remarked that his favorite part of working for New American Funding is engaging with the vibrant company culture. In a team-led venture, everyone on the company roster works seamlessly together to transform a consumer's dream into a reality. In a market that is slowly returning to normal, the Buydown Loan allows homebuyers to buy the loan rate down in the first year. This phenomenal product enables consumers to purchase a home, budget and acclimate to homeowning before the rate returns to a normal figure. Glover said, “Consumers think a rate in the mid-fives may be a high rate, but historically speaking, anything below six percent is good. It's hard to talk about that when rates have been so historically low for so long.” A massive fan of adjustable-rate mortgages (ARMs), Glover remarked that this niche product is ideal for the current market conditions. The average homeowner stays in their home for five to six years, making a 30-year loan look unattractive to many buyers. ARMs are amortized over 30 years, looking and appearing like a traditional loan, but are offered at a lower term. Glover is well-accustomed to selling and offering ARMs and remarked on their re-emergence in the current market. Assigned to borrowed sums adding up to $647,000 or above, jumbo loans or jumbo financing follow guidelines determined by investors in place of Freddie Mac and Fannie Mae. Typically more restrictive, jumbo loans follow similar guidelines to Freddie Mac and Fannie Mae but have stricter guidelines regarding income, reserves, larger down payments, etc. Interested in what else New American Funding has to offer? Glover joined the Atlanta Real Estate Forum podcast earlier this year to discuss the current state of the market and dive into additional product offerings. Click here to listen to the full episode! Tune in to the full interview above to learn more about New American Funding or visit www.NewAmericanFunding.com. Click here to contact Jay Glover directly. Never miss an episode of Atlanta Real Estate Forum Radio! Subscribe to the podcast here. You can also get a recap of any past episode on the Radio page. Listen to the full interview above! Georgia Residential Mortgage Licensee, License #22564. NMLS ID #6606. Subject to borrower and property qualifications. Not all applicants will qualify. Click here to view the terms and conditions of products mentioned during the show. Corporate office 14511 Myford Rd., Suite 100, Tustin, CA 92780. Phone: (800) 450-2010. (July/2022) New American Funding is a family-owned mortgage lender with a servicing portfolio of over 216,000+ loans for $56.8 billion, 171 branches and about 4,500+ employees. The company offers several niche loan products and has made Inc. 5000's list of Fastest-Growing Companies in America sev...
Voxtur Analytics Corp (CVE:VXTR, OTCMKTS:VXTRF) is a transformational real estate technology company that is redefining industry standards in a dynamic lending environment. The Company offers targeted data analytics to simplify tax solutions, property valuation and settlement services throughout the lending lifecycle for […]
Your Financial Independence Day happens when your residual income stream amount exceeds your basic monthly expenses. Rental demand is high for three big reasons: rates are rising, stringent mortgage qualification standards, housing undersupply. I answer three listener questions: Should I make a big down payment? Is borrowing at lower than inflation profitable? What about prepayment penalties? Ridge Lending Group President Caeli Ridge joins us to discuss today's mortgage lending landscape. Today, are ARMs beginning to make more sense than fixed-rate mortgages? We explore. Learn about the cash-out refinance climate. Second mortgages on income properties are still limited. Does it ever make sense to refinance to a higher mortgage interest rate? We discuss. Caeli Ridge thinks mortgage rates will keep rising. Resources mentioned: Show Notes: www.GetRichEducation.com/404 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Freddie Mac Includes On-Time Rent Payments Into Underwriting: https://www.housingwire.com/articles/freddie-mac-to-include-on-time-rent-payments-into-underwriting/ Airbnb Enacts Permanent Party Bans: https://www.cnbc.com/2022/06/28/airbnb-makes-its-party-ban-permanent.html JWB's available Florida income property: www.jwbrealestate.com/gre To learn more about eQRPs: text “GRE” to 307-213-3475 or: eQRP.co By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: www.imaccredited.com Best Financial Education: GetRichEducation.com Get our free, wealth-building “Don't Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: GREmarketplace.com Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold Partial transcript: Welcome to GRE! I'm your host, Keith Weinhold. Happy Financial Independence Day on American Independence Day. I answer some of your most burning listener questions today. Shifts in the mortgage market could now change your strategy. Does a cashout refinance to a higher mortgage rate make sense or not? Is an adjustable rate mortgage actually feasible for you now and lots more… on Get Rich Education. _____________________ Hey, welcome in to GRE. From San Luis Obispo, CA to Saint Louis, Missouri and across 188 nations worldwide, you're back in that abundant place. And you've got to lead with an abundance mentality around here. How many places can you do that when the scarcity mentality is abundant and the abundance mentality is scarce. I'm Keith Weinhold. This is Get Rich Education. Though it's American Independence Day… is it your financial independence day. Are you drawing closer to that day… as you add income streams in your life. With 8.6% government-admitted inflation and stagnant wages and a higher cost of living… has there EVER been a more important time in your entire life to add an income stream through real estate? You can make the case that this is the most important time for you to do that. I am about to answer your listener questions here on July 4th. It's also Episode 404. There's no chance that this becomes an error 404. Some dorky humor there. First… Freddie Mac is going to include on-time rent payments into underwriting. Yes! This starts next week. This is a good thing for you. This incentivizes renters to make on-time payments to you if they ever want to become homeowners. …and… Airbnb enacts a permanent ban on parties. They & VRBO have long struggled with what to do about parties. I just shared those stories with you in Friday's newsletter. If you didn't see them, they're in the Show Notes of today's episode. Be sure to get our free “Don't Quit Your Daydream” newsletter. We've been really informing you about so much in the real estate world there. We've also been telling you about our webinars. I know that some of you enjoyed last week's Texas properties webinar. Stay up-to-date with our newsletter at: GetRichEducation.com/Letter Now, let me tell you. Back in the year 2004, eighteen years ago. Yes, I was an active REI then. My tenants were increasingly leaving. They were vacating my property and I had to find a new renter. This was increasingly happening for a few reasons: #1 is that mortgage rates were falling then. But secondly, and really the big reason is that anyone could qualify for a loan. Mortgage underwriting standards were so lax that nearly any human could get a loan, even if they had zero income. So… loans were too easy to get. Then the third reason that my tenants seemed to be vacating is that there was ample supply - and an oversupply of properties - first-time homes - for them to move into. Well, today, all THREE of those criteria are flip-flopped. First, mortgage rates are rising. Second, mortgage qualification standards are tough. Tougher than Kevlar. And thirdly, there's an undersupply of homes, especially these entry-level homes that make the best FTHB places. That's precisely why rental demand is sky high today, tenants are not fleeing to become homeowners, rental occupancy is close to 100% in many markets, and rents are rising multiples faster than historic norms. These phenomena can move you closer to you financial independence day. I had a group of financing-themed listener questions come in recently, so I want to get to three of those before we talk more about today's lending landscape later. ________________ The first question comes from Dave in Bellingham, Washington. “Keith, I thought it was good to make a big down payment on a property. That way, I'd have not only less debt, but I'd have the benefit of having a smaller mortgage payment over time. This means I'd pay less interest over the life of the loan too. Can you tell me more about how FF beats DF?” That's from Dave. Good question, Dave. Common question. In fact, there was a time in my life, before I ever owned any real estate where that same line of thinking made complete sense to me. I even thought, “If I could be mortgage-free and own a property, I'd have it made.” Dave, let me answer this in a somewhat different way than I've answered it before for other listeners' benefit. If you can borrow at a 6 or 7% mortgage interest rate, which, after tax deductions might be an effective 5% interest rate, many think that they can beat that in the market over time. One probably can. The riskiest thing that a lot of people do by making a big down payment is now they don't have much liquidity. If the cash is already in the home, then that borrower might worry about not having much cash for other disruptions or expenses that come up in life. The worst one could be, “What if you lose your job and your job was, say, 70 to 100% of your income?” Now that cash is trapped in the home as equity… and you can better believe that today, banks aren't going to let you access your equity if you don't have a job. The best way to keep equity separated from your home is to make sure it never goes in there. The other reality too, is that the more than you borrow, the more you make use of OPM. So the great question to ask yourself, Dave, is “How big of a real estate portfolio could I ever build if I limit myself to only using my own money… and NOT other people's money?” We're going to discuss this more later in the show today… but that should provide some sufficient context and food for thought to your question, Dave. Thanks for writing in. You, the listener, can always contact us with any questions at GetRichEducation.com/Contact ________________ Andrew from New York state had a question through our Contact Page. Andrew's been an avid listener for quite a while. I remember your name, Andrew. You're a veterinarian from New York state. I hope that we can meet sometime in the future. Andrew asks: “Is it a true statement to think that even in today's High "er" interest rate environment any mortgage rate under the rate of inflation roughly 8% is a bargain?? Today ..I am not getting great cash flow...$100/month or break even..on new builds...but still see the upside in RE investing due to its inflationary hedge.” Alright, thanks for that Andrew. With the first question, is any mortgage rate under the 8% inflation rate a bargain. Well, it could be. Many think that the real rate of inflation - the true diminished PP of the dollar is 15%. But let's just stick with 8%. Yes, if you get a mortgage at 6 or 7% today, you are effectively being paid to borrow. That is because with the money that you've borrowed from the bank, over time, you get to repay the bank with dollars that debase on the bank faster than THEIR interest can accrue on you. That's how it can stealthily build wealth. The risk associated with that is - besides being most attentive to your personal cash flows, Andrew - is that at some point over your loan term, there's a good chance that inflation will duck back below mortgage interest rates. We're in this inversion now where the opposite is true. So, enjoy it while it lasts. I'd think of your interest rate being lower than inflation as a short-to-medium term tailwind. Your second question was about how today, you're not getting great cash flow when you buy a new-build rental property. It might be positive $100 or just a break even. But you still like investing in RE for the inflation hedge. First, I think of RE as more of an inflation-profiting center than a mere inflation-hedging vehicle. I take you point though… and then… Yeah, a lower $100 positive cash flow or less on new-builds is lower than what we've all been used to in recent years. There's a chance that this will widen - certainly no guarantee. It like how I described a couple weeks ago that we think of the housing market in two waves. First the housing price increase wave hit hard, then there's a trough, then later the rent increase wave hits. The trough between waves is when cash flow is lowest. Though you can't absolutely count on it, rents are increasing torridly. Andrew, I can tell that you're a close listener just by the words and concepts that you're thinking over in your questions. I love that. Thanks for you longtime following. ________________ The third question comes from JW. This question came from our YouTube Channel so I don't know where you're from JW. But you ask: Keith, what are your views on PPPs on commercial loans? On my current 8-unit property I am pursuing, I am getting financing offers that all have PPPs. OK, thanks for the question JW. I think one reason that I chose your question is because I, myself, have owned an 8-unit apartment building that had a 5-year PPP attached to it. First of all, let me tell you what a PPP is. And it's funny. I have been at RE meeting in the past and some people that have never heard of them seem incredulous that a PPP even exists. A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. If you have a prepayment penalty, you would have agreed to this when you closed on your home. Now, in my experience, you don't often see these on loans for 1-4 unit properties. I commonly see PPPs on 5+ unit apartment buildings and other commercial loan types. The way that it often works is that your penalty is less severe as each of the five years transpires. It fades. For example, you'd have a higher penalty if you pay it off in 2 years than the lower penalty would be if you pay it off in 4 years. Then with a 5-year PPP, that means that your penalty disappears completely if you pay it off AFTER five years. PPP loans can obviously be a poor choice if you, say, want to add value to a distressed apartment building and do a cash-out refinance in, say two years. So, therefore, for long-term buy-and-hold strategies, 5-year PPPs often fit. I've had 5-year PPPs on numerous occasions on my own apartment buildings, and I have never paid any penalty because I have only accepted those penalty conditions when I plan to hold for more than 5 years. Now that you know about cases when you do and don't want these as part of your loan, maybe you're wondering why banks have PPPs at all. Lenders charge prepayment penalties to provide a borrower with a disincentive for paying off a loan ahead of time… because that causes lenders to lose out on interest income. Lenders have to commit considerable time to evaluate a borrower and underwrite the loan in the first place. That's how PPPs work. Thanks for the question, JW. Stay up-to-date with our newsletter. You can sign up free at: GetRichEducation.com/Letter We also make sure that you get the 5-part video course where I'm your instructor. It's one video on each of the 5 Ways Real Estate Pays. What would it look like if I wrote a short letter about weekly… written by me… sent directly to you… that supplemented this show about real estate and personal finance trends and opportunities. It can help bring you closer to your financial independence day. Get it & my free video course all in one place at GetRichEducation.com/Letter _________________ Yeah, concise, updated intell from Caeli, as always. All these markets are constantly changing: The market for housing prices The market for rents The market for mortgages Working within them can help get you closer to your Financial Independence Day - that day that your real estate income meets or exceeds all of your basic living expenses. Underwriting guidelines are staying tight, just like they have for more than 10 years now. Dodd-Frank and consumers proving that they have the ability to repay a loan has really helped with that. That's a big reason that the mortgage delinquency rate has fallen to ALL-TIME lows. In fact, that update on second mortgages on rental properties demonstrates that the market still has a pretty limited appetite for that product. You might want it but it still comes with low LTVs if you can get them at all. Some brighter new is that ARMs - Adjustable Rate Mortgages - are making more sense than they used to - when compared to your more typical long-term FRM. There are both risks and rewards to compare there. I like that the good people over there at Ridge help you with decisions like those. So many great & important shows coming up here on GRE - the return of Tax Advisor Tom Wheelwright, a 2-person housing market panel comprised of Kathy Fettke and I… and… oh geez, the return of Chris Voss - the hostage negotiator from Masterclass. Remember when I mock negotiated him for a fourplex building last year right here on the show & I lost… to perhaps the world's top negotiator? Well, here we go, Chris Voss is returning here to discuss how to negotiate in a housing market when the odds are against you. What do you think? Should I mock negotiate him again… I don't know. That's awfully entertaining for you but I don't know how many losses I can take publicly like that. Big thanks to Caeli Ridge today. It's where I go for my own income property loans. You can too, I'm happy to share that with you at RidgeLendingGroup.com Until next week, I'm your host, Keith Weinhold. Happy Financial Independence Day! Though you might quit your day job, don't quit your day dream!
In this Real Estate News Brief for the week ending June 25th, 2022... what the Fed Chief is promising about inflation, what's happening with home price cuts, and top destinations for home buyers, and investors. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week. Fed Chief Jerome Powell expressed his resolve, once again, to control inflation, but also warned that the Fed's aggressive interest rate hikes could result in some job losses. The Fed raised rates by three-quarters of a percent at the June meeting, and is planning to hike it again in July by either a half or three-quarter percent.Powell acknowledges that the Fed misjudged the risk of inflation and should have moved faster with the rate hikes. Powell said: “We did underestimate it. With the benefit of hindsight, clearly we did.” He says Fed officials anticipated a speedier end to the pandemic and supply chain issues, but that supply chain problems “remain problematic.” (1)Unemployment claims were down slightly last week, but they remain at a five-week high. Economists say it's a sign that the job market is cooling off although there's still a record number of job openings, and not enough employees to fill them. According to MarketWatch, 34 states and U.S. territories show a “decline” in jobless claims, while 19 show an increase. (2)New home sales picked up in May. The Commerce Department reports they were up almost 11% to a seasonally-adjusted annual rate of 696,000. That's a big jump from the April numbers which came in at 629,000. They are still down 5.9% for the year however. Home price growth is slowing, thanks to rising mortgage rates. The median sales price for a new home was $449,000 in May. That's down from a record high of $454.700. (3)Existing home sales were down in May, for a fourth month in a row. According to the National Association of Realtors, they were down 3.4% to a seasonally adjusted annual rate of 5.41 million. There are far fewer existing homes for sale than new homes. While the supply of new homes could last more than 7 months, the supply for existing homes is just 2.6 months. The median price for an existing home has hit a new record high of $407,600. (4)Consumer confidence is dropping as inflation continues. The University of Michigan consumer sentiment index shows it fell to an all-time low of 50 in June. 50 is considered the mid-point between positive and negative on a scale of 100. Consumers are unhappy about high prices and the impact on their standard of living. (5)Mortgage RatesMortgage rates continue to move higher. Freddie Mac says the average 30-year fixed-rate mortgage rose 3 basis points to 5.81%. The 15-year was up 1 basis point to 4.92%. (6)In other news making headlines…Sellers Are Cutting PricesWe're starting to see more price cuts for listed homes. Data real estate firm Redfin says that almost one out of five home sellers lowered their price in May. That's the highest rate of price cuts since October of 2019. (7)Zillow economist Nicole Bachaud told Market Watch that it's a sign of the housing market rebalancing. She says: “The share of listings with a price cut is creeping up, possibly a sign that sellers cannot be quite as ambitious in their pricing strategy as they coil have in recent months.” She says homes are selling as fast as they ever have, and the typical homes is selling in seven days for more than the listing price.Homebuyers Love FloridaRedfin also did a little research on current trends for homebuyer destinations. It says that buyers are chasing after affordability, and that found that two Florida cities topped the destination list in April and May. Miami was number one as it has been all year, and Tampa pushed Phoenix out of the way for second place. (8)Tampa has become very popular since the start of the pandemic. Prices are up 28% year-over-year, but Tampa remains relatively affordable. A typical Tampa home sells for around $370,000. The national median is $424,000.Redfin says that Tampa is attracting a lot of newcomers from New York and the Northeast. Redfin says it's also attracting a lot of investors, which we, at RealWealth, can attest to. It's a strong market for rental properties, including single-family homes.You can find out more about buying single-family rentals by going to our website at newsforinvestors.com. It's free to join, and free to talk to our investment counselors, and get access to our list of resources. Joining a network is also a great way to meet other like-minded investors like yourself.That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.cnn.com/2022/06/23/economy/fed-jerome-powell-house-testimony/index.html2 -https://www.marketwatch.com/story/unemployment-claims-fall-slightly-to-229-000-but-labor-market-might-be-cooling-off-11655988191?mod=economy-politics3 -https://www.marketwatch.com/story/u-s-new-home-sales-stronger-in-may-11656079765?mod=economic-report4 -https://www.marketwatch.com/story/u-s-existing-home-sales-fall-for-4th-straight-month-in-may-while-prices-skyrocket-11655820059?mod=economic-report5 - https://www.marketwatch.com/story/consumer-sentiment-drops-to-record-low-as-inflation-worries-grip-u-s-11656079725?mod=economy-politics6 -https://www.freddiemac.com/pmms7 -https://www.marketwatch.com/picks/the-share-of-listings-with-a-price-cut-is-creeping-up-5-economists-and-real-estate-pros-on-what-the-housing-market-will-look-like-this-summer-016540284728 -https://www.redfin.com/news/may-2022-housing-migration-trends/
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In our Hot Topic this week we have Shane Westra, Chief Product Officer @ SimpleNexus & Jay Arneja, Group/Growth Product Management @ SimpleNexus to discuss how SimpleNexus approaches product development, as well as recent successes lenders, have had with eClose technology.Want to know more about Shane Westra? Shane Westra brings twenty years of product development leadership experience to his role as Chief Product Officer for SimpleNexus. His past roles in Silicon Valley and Utah's local tech scene have helped companies such as Shutterstock, Workfront (Adobe), Pearson, and LexisNexis grow revenue and establish mature and scalable product development lifecycles. Westra holds a Master of Business Administration from Brigham Young University.Want to know more about Jay Arneja?Jay Arneja has spent her entire career digitizing and redesigning the mortgage closing and post-closing processes. Early on, she worked in correspondent and wholesale lending, where she specialized in Mortgage Electronic Registration System (MERS) administration for several organizations and ran the closing department of GreenPoint Mortgage's highest-producing branch before the lender was purchased by Capital One. She later joined MERSCORP, where she spent more than a decade leading product teams, then went on to consult for Freddie Mac. Today, at SimpleNexus, Arneja is helping to usher in a new age of digital closings that scale back paperwork, get loans to funding faster, and emphasize borrower single sign-on convenience.
Today's Flashback Friday is from episode 885 published last September 20, 2017. In this solo episode, Jason analyzes widespread public statistics about US home sales, the value of the US Dollar and the looming pension crisis and asks the question ‘compared to what?' The doomsayers may not be considering all the facts when predicting the collapse of the US economy and the real estate bubble. Jason breaks down the concept of price discovery and details how it is directly impacted by the interest rate. He ends the show by scrutinizing the top-heavy economies in Europe. Key Takeaways: 03:00 Wells Fargo settled a class-action lawsuit for $142 million for ripping off America. 04:01 Does social media pressure give the average consumer leverage? 10:03 Including 'Compared to what?' information can help clarify statistics. 13:21 The three types of home sale markets are the buyer's market, the seller's market and the broker's market. 22:45 War as a business plan. 24:53 The cyclical, conservatives markets aren't likely to crash. 30:09 Price discovery is directly impacted by the interest rate. 33:41 Single-family home sales predictions from the Mortgage Bankers Assoc. & Fannie Mae and Freddie Mac. 39:49 Demographics & Pensions. Mentioned in This Episode: Jason Hartman Property Tracker Meet the Master's of Income Property Venture Alliance Mastermind PragurU Youtube Channel Follow Jason on TWITTER, INSTAGRAM & LINKEDIN Twitter.com/JasonHartmanROI Instagram.com/jasonhartman1/ Linkedin.com/in/jasonhartmaninvestor/ Learn More: JasonHartman.com Get wholesale real estate deals for investment or build a great business – Free course: JasonHartman.com/Deals Free White Paper on The Hartman Comparison Index™: HartmanIndex.com/white-paper Free Report on Pandemic Investing: PandemicInvesting.com Jason's TV Clips in Vimeo Free Class: CYA Protect Your Assets, Save Taxes & Estate Planning: JasonHartman.com/Protect Special Offer from Ron LeGrand: JasonHartman.com/Ron What do Jason's clients say? JasonHartmanTestimonials.com Contact our Investment Counselors at: www.JasonHartman.com Watch, subscribe and comment on Jason's videos on his official YouTube channel: YouTube.com/c/JasonHartmanRealEstate/videos Guided Visualization for Investors: JasonHartman.com/visualization Jason's videos in his other sites: JasonHartman.com/Rumble JasonHartman.com/Bitchute JasonHartman.com/Odysee Jason Hartman's Extra YouTube Channel Jason Hartman's Real Estate News and Technology (RENT) YouTube Channel
In this Real Estate News Brief for the week ending June 18th, 2022... the Fed's supersized rate hike, mortgage rate sticker shock, and the home equity bonanza.Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.Economic NewsWe begin with economic news from this past week, and the Fed's biggest rate hike in three decades. The central bank hiked the federal funds rate by three-quarters of a percent which puts it between 1.5% and 1.75%. If inflation doesn't show signs of slowing by next month, Fed Chief Jerome Powell said they might hike it by another three-quarters of a percent. He doesn't expect that to be a common practice, but he said the Fed is determined to get inflation back down to 2%. (1)The rate hike came after two more hot inflation reports. The Consumer Price Index shows that inflation hit an annual rate of 8.6% in May, while wholesale prices came in at 10.8%. Economists are now looking ahead to the CPI report for June as they anticipate the size of the next rate hike and whether higher rates will tip the economy into a recession. As reported by MarketWatch, the Fed has backed off the idea of a “soft landing” and is running the risk of a recession to get inflation under control. (2)The Fed is currently expecting the economy to slow to 1.7% over the next year-and-a-half with inflation running at 5.2% by the end of this year and 2.6% by the end of next year. It anticipates a slight rise in unemployment, but expects the job market to remain strong.Right now, jobless claims are low while job openings are high. There have been some reports of layoffs, which is contributing to recession anxiety. Last week, real estate companies Redfin and Compass announced layoffs, in response to a slower housing market. Redfin is cutting 8% of its staff, and Compass is cutting 10% because fewer people are buying homes. Many can't afford the high price of the home combined with a more expensive mortgage. (3)The housing slowdown is also impacting residential construction. The Commerce Department says that housing starts dropped 14.4% in May to an annual rate of 1.55 million. That's the biggest decline since April of last year. Multi-family starts dropped the most - by 26.8%. Single-family starts were down 9.2%. Permits also fell but only by 7%. (4)Mortgage RatesMortgage rates bolted higher last week, for the largest one-week increase since 1987. Freddie Mac says the average 30-year fixed-rate mortgage rose 55 basis points to 5.78%. The 15-year was up 43 points to 4.81%. On a positive note, higher mortgage rates will help control the crazy home price growth we've seen lately. (5)In other news making headlines…Mortgage Rate Sticker ShockThe rapid rise in mortgage rates is giving some homebuyers sticker shock. Even though mortgage rates are nowhere as high as they were decades ago, they are at their highest level since about 2008. And that's cutting into homebuyer budgets. (6)The National Association of Realtors says that higher interest rates have chopped about 25% off the homebuyer's budget since the beginning of the year. As an example, NAR says that the typical buyer could afford a $360,000 home with a $1,400 monthly mortgage payment in January. Now, with higher interest rates, that buyer will have to shop for a $270,000 home if they want to maintain a $1,400 a month payment because a larger portion of the mortgage will go toward interest.Homebuyers Are Embracing ARMsOne way that homebuyers are dealing with the cost of the loan, is by choosing an adjustable rate mortgage or what's known as an ARM. The Mortgage Bankers Association says that the number of ARMs doubled in May, to help keep initial payments lower. They were as much as a full point lower on the MAXEX exchange. (7)According to the loan-trading platform, MAXEX is a network of 320 banks and nonbank originators, as well as 20 “high-profile investors.” It says these lenders have been seeing explosive growth in ARMs and it expects the trend to continue.Big Equity Gains for HomeownersWhile price appreciation makes it tough to buy a home, most homeowners are feeling a whole lot richer. According to a CoreLogic report, 62% of all U.S. properties rose in value with an average gain of about $64,000. (8)The states with the highest amount of appreciation were California and Hawaii with an average of about $140,000. Other red-hot states were Washington, Arizona, Utah, Colorado, and Nevada. The states with the lowest amount of average appreciation were Iowa at $17,000 and North Dakota at $19,000. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!I'd also like to recommend a new book called “The Wise Investor” by RealWealth co-founder Rich Fettke. He wrote the book as an entertaining way to share what he's learned about creating wealth both financially and personally. The protagonist is a man who realizes his life is nothing like he had planned and sets off to change that. The reader is swept along for the ride. It's a quick read, and is currently available as a Kindle book on Amazon. The hard cover and audio versions are coming out in August but you can pre-order them now. You can also read more about the book here. (at realwealth.com/grow)Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/fed-lifts-rates-by-most-in-three-decades-anticipates-policy-rate-rising-to-3-8-by-end-of-2023-11655316254?mod=mw_latestnews2 -https://www.marketwatch.com/story/as-fed-aggressively-raises-rates-here-are-4-takeaways-from-jerome-powells-press-conference-11655340311?mod=economy-politics3 -https://www.cnn.com/2022/06/17/investing/premarket-stocks-trading/index.html4 -https://www.marketwatch.com/story/u-s-housing-starts-plunge-in-may-11655383118?mod=u.s.-economic-calendar5 -https://www.freddiemac.com/pmms6 -https://magazine.realtor/daily-news/2022/06/17/surging-mortgage-rates-spook-house-hunters7 -https://www.housingwire.com/articles/maxex-report-shows-arms-doubled-in-may/?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_medium=email&_hsmi=216674568&_hsenc=p2ANqtz--7Is5ehx6QK5u6f15i-lFl9EfIiIrNoDk029qwgACHkfo3hZfA7lCOZovmqBlflCXrRa7iSat3Dq_i5TwJHWqKqwqWlQ&utm_content=216674568&utm_source=hs_email8 -https://magazine.realtor/daily-news/2022/06/10/homeowners-see-12-month-equity-gain-of-64k
In our Hot Topic this week we have Christy Moss, Chief Customer Officer, FormFree, and Christina Zulueta Randolph, Sr. Director, Single-Family Strategy & Integrations, Freddie Mac to discuss Freddie Mac's announcement that lenders can now reverify employment with direct deposit data, as well as what FormFree is doing to help lenders take advantage of AIM for income using direct deposits.Want to know more about Christy Moss? Christy Moss, CMB, is the chief customer officer (CCO) at FormFree. As head of the company's customer strategy, the 30-year mortgage industry veteran leads voice-of-customer initiatives across the organization and oversees sales.Before joining FormFree, Moss spent 11 years at Fannie Mae (OTCMKTS: FNMA), where she played a critical role in advancing business initiatives in the post-crisis mortgage lending ecosystem. From 2015 to 2019, Moss focused on the driving lender and partner adoption of technologies that improve the borrower experience and lender profitability in her role as strategic business and relationship manager.Moss has held advanced positions in the correspondent lending divisions of CitiMortgage (NYSE: C), Wachovia (NYSE: WB), and GE Capital Mortgage Services (NYSE: GE), where she gained an in-depth understanding of the primary and secondary mortgage markets. She has received numerous accolades for her contributions to housing finance and holds a bachelor's degree in public relations from Georgia State University.Direct Deposit Verification Solutions for Mortgage Companies & LendersWant to know more about Christina Zulueta Randolph?Christina Randolph is a senior director of technology partnerships in Freddie Mac's Single-Family Strategic Delivery, Data, Operations, and Technology division. She oversees software partner strategy across the origination technology continuum and is responsible for the distribution and optimization of Freddie Mac tools and capabilities within the software partner ecosystem.Ms. Randolph has been with Freddie Mac for four years, focusing on increasing the adoption and utilization of digital offerings to lower origination costs, maximize operational efficiencies and improve the overall lending experience for clients and consumers. Her team also plays a critical role in surveilling the fintech landscape for partnership opportunities that will help lower risk and further digitize and automate once manual processes.With almost 25 years of experience in both the mortgage and technology industries, she has held various roles in sales, operations, implementations, and product management at companies like Fannie Mae, FIS Global, PHH Mortgage, and Chase Home Loans. Her career has become dedicated to transforming the mortgage experience by bridging the gap between business processes and technology challenges.IN THE NEWS:Home Equity in America Hits Record $27.8 Trillion
In our Hot Topic this week we have Christy Moss, Chief Customer Officer, FormFree, and Christina Zulueta Randolph, Sr. Director, Single-Family Strategy & Integrations, Freddie Mac to discuss Freddie Mac's announcement that lenders can now reverify employment with direct deposit data, as well as what FormFree is doing to help lenders take advantage of AIM for income using direct deposits. To read more on this episode click here!!
Released plans from Fannie Mae and Freddie Mac – the mortgage corporations backed by the government – target housing barriers in underserved communities. Julia Coronado drops in how the notion that crypto is a hedge against inflation has taken a hit. In the Netherlands, we take a look at how structures are being built with organic materials.
Released plans from Fannie Mae and Freddie Mac – the mortgage corporations backed by the government – target housing barriers in underserved communities. Julia Coronado drops in how the notion that crypto is a hedge against inflation has taken a hit. In the Netherlands, we take a look at how structures are being built with organic materials.
On today's episode, Editor in Chief Sarah Wheeler talks with Senior Mortgage Reporter Georgia Kromrei about Fannie and Freddie approving the expanded use of alternative appraisal methods, including automated valuation models, desktop appraisals and hybrid appraisals. The two also discuss how the appraisal changes fit into FHFA's broader housing equity goals.HW Media Articles related to this episode:GSEs further expand AVMs, desktop and hybrid appraisalsWith landmark GSE equity plans, FHFA confronts legacy of redlining
In this Real Estate News Brief for the week ending June 11th, 2022... inflation hits a 40-year high, demand grows for single family rentals, and a popular TV show inspires a Montana migration. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. Economic NewsWe begin with economic news from this past week, and a report that shows the highest rate of inflation since 1981. The Consumer Price Index was up 1% in May to an annual rate of 8.6%. It was 8.3% last month. The increase is mostly due to rising gas and food prices. If you strip those out, the core rate was up .6% to an annual rate of 6%, which was actually down slightly from 6.2%. (1)The report is setting off alarm bells. Financial experts are now anticipating a 75 basis point rate hike at the next Fed meeting in June, and further hikes in July and September. The talk so far has been more along the lines of two 50 basis point hikes in June and July, but as one wealth advisor told CNBC, this report was a “doozy.” Tom Graff of Facet Wealth says: “The most concerning part of this report was its breadth. The monthly number wasn't driven by a few items. Most of the major categories actually accelerated price increases month-over-month.” (2)As inflation fears grow, so do worries about recession. Now the Atlanta Fed is lowering its forecast for the second quarter from 1.3% to a gain of just .9%. (3) It's interesting to note that real estate accounted for almost 17% of the GDP last year. The National Association of Realtors says it was 16.9% of the GDP or about $3.9 billion. That's about $113,000 in total economic impact for each home sale. (4) The Memorial Day weekend may have contributed to a jump in jobless claims. MarketWatch says they were up 27,000 to a five-month high of 229,000. It calls them seasonal “quirks” due to the holiday and not layoffs. (5) Mortgage RatesAfter idling for a few weeks, the mortgage rate seesaw continues. Freddie Mac says the average 30-year fixed-rate mortgage was 14 basis points higher last week to 5.23%. The 15-year was up 6 points to 4.38%. (6)The average contracted rate of interest was higher. The Mortgage Bankers Association says the 30-year went from 5.33% to 5.40%. That corresponded to a 7% drop in purchase applications. Refinance loans were also down 6%. The MBA says mortgage demand dropped to its lowest level in 22 years. (7)Freddie Mac's deputy chief economist Len Kiefer said in a tweet that the “U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006.” He said: “It hasn't shown up in many data series yet, but mortgage applications are pointing to a large decline over the summer.” He also clarified that he expects home sales to slow down quite a bit over the summer, but doesn't expect them to “grind to a complete halt.” (8) In other news making headlines... Pessimism Among Would-Be Homebuyers A new survey supports the idea of slower sales this summer. Fannie Mae's Home Purchasing Sentiment Index shows that almost 80% of the participants feel it's a bad time to buy a home right now. Almost as many people feel that mortgage rates will continue to march higher over the next year. (9)Fannie Mae expects a mild recession next year, but the agency says that inflation and rapidly rising short term interest rates could push us into a recession much sooner.Demand for Single-Family Rentals Big landlords are responding to a demand for single-family rentals. The National Association of Home Builders says that builders broke ground on 13,000 single-family rentals in the first quarter. That's a 63% increase from the first quarter of last year. (10) American Homes 4 Rent CEO, David Singelyn, told CNBC: “There are not enough quality homes for the number of American families.” He says the quantity of inquiries, showings, and applications for new rental homes is “two to three times greater today than it was two years ago before the pandemic.” TV Shows Drives Newcomers to MontanaMontana is getting a lot of attention as a great place to live, thanks to Kevin Costner's TV show “Yellowstone.” The show features the Dutton family and ranch-style living on large stretches of land with sweeping views of mountains and prairies. (11) Beartooth investment Group founder, Robert Keith, says his company has received influx of inquiries from all sorts of wealthy families who want to buy a ranch. He says: “They are looking to own really amazing large properties” like you see in the TV show. The show debuted in 2018 and has already pumped tens of millions of dollars into the Montana economy, but long-time Montana residents are worried it's attracting too many new residents and driving up home prices. The median home price was $500,000 before the pandemic. It's now almost $750,000. That's it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! If you're worried about inflation, real estate is a good way to safeguard your money. Real estate values don't fluctuate as wildly as stocks, and your rental income will carry you through any sort of a downturn. You can find out more about single-family rental investing at newsforinvestors.com. Join for free, and get access to experienced investment counselors, property teams, lenders, and more. Thanks for listening. I'm Kathy Fettke.Links:1 -https://www.marketwatch.com/story/coming-up-consumer-price-index-for-may-11654862886?mod=home-page2 -https://www.marketwatch.com/story/catastrophically-bad-inflation-report-is-boosting-chances-of-a-75-basis-point-hike-in-june-or-july-11654876860?mod=MW_article_top_stories3 -https://www.cnbc.com/2022/06/07/fed-gdp-tracker-shows-the-economy-could-be-on-the-brink-of-a-recession.html4 -https://cdn.nar.realtor/sites/default/files/documents/2022-state-economic-impact-report-us-04-28-2022.pdf5 -https://www.marketwatch.com/story/u-s-unemployment-claims-jump-27-000-to-five-month-high-of-229-000-11654778599?mod=economic-report6 -https://www.freddiemac.com/pmms7 -https://www.cnbc.com/2022/06/08/mortgage-demand-falls-to-the-lowest-level-in-22-years.html?__source=realestate%7cnews%7c&par=realestate8 -https://www.realtor.com/news/trends/the-u-s-housing-market-is-at-the-beginning-stages-of-the-most-significant-contraction-in-activity-since-2006/9 -https://www.housingwire.com/articles/almost-80-believe-its-a-bad-time-to-buy-property/10 -https://www.cnbc.com/2022/06/10/big-landlords-jump-into-the-homebuilding-as-demand-for-single-family-rentals-surges.html?__source=realestate%7cnews%7c&par=realestate11 -https://magazine.realtor/daily-news/2022/06/08/hit-tv-show-yellowstone-prompts-more-moves-to-montana
Pam Hill is a Harvard and Dartmouth-educated entrepreneur and CEO of a multi-million dollar real estate company, a business and money expert, a former Fortune-500 executive, and the founder of My Smart Cousin. Her main goal is to help people understand money, increase their accountability and build generational wealth. Today, Pam shares her story of how she became a professional real estate business owner, how she purchases homes for the price of a car and how you can start your real estate business. Episode Link: https://mysmartcousin.com/tag/pam-hill/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals. Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by a very special guest, Pam Hill, who's talking to us about my smart cousin, and how she purchases homes for the price of a car, or maybe sometimes even an expensive bike. So let's get into it. Hey, Pam, thank you so much for taking the time to come hang out with me today. I really appreciate you coming on. Pam: Thanks so much, Michael, really looking forward to engaging conversation. Michael: Oh, my gosh, me too. So, Pam, so excited to have you here. If you could give us a quick intro bio about who are you? Where do you come from and what is it you're doing in real estate today? Pam: Absolutely. So I'm Pam Hill with my smart cousin. The nifty name comes really from family coining that for me, because I am that smart cousin at family reunion to always follows up make sure that folks do what they say they're going to do on their finances on their real estate and that, of course, is now brought in to my clients as well. How I got into real estate was about 10 years ago. So during the Great Recession, my husband at the time we were dating, he was looking for his first home and he was looking in Wilmington, Delaware, and we were stupefied at just how cheap there's, there's not a better word inexpensive to the wrong word, cheap houses were in Wilmington, Delaware to the tune of 20,000-25,000. In perfectly rock solid working class neighborhoods. Once I saw it, I definitely could not unsee it and that's what led me down the real estate rabbit hole since then I've bought 21 houses totaling 25 houses totaling 31 units, and have loved every step of the journey. Michael: That is so cool and so Pam, were you living in Wilmington, Delaware or was this something that you were doing from afar? Pam: No, so I was living not too far from Wilmington, Delaware in a suburb and so I was used to six figures and not 100,000 as in six figures. But in fact, what the average price of real estate is in the United States, some 321,000, I think I've read is the average price of real estate across all 50 states. So I was used to seeing those kinds of numbers. I had already owned real estate before as a homeowner and I really couldn't believe that there was this whole other world and once I saw it, I became committed to helping others who are looking to start their real estate investment journey and feel like they just don't have enough coin to get there. Or those who are aspiring homeowners and thinking the same thing that it's got to be a generation, three decades, 30 years slog My goal is the number of fingers you've got on your hands, 10 fingers 10 years or less. That's when the house should be paid for and everything is cream after that. Michael: I love it, I love it. So was it just a function of where the economy was at that point in time that you and your husband were able to find houses for that price point or were you doing something different or looking in a different way than everyone else? Pam: Yeah, no, it's a great question, because it kind of begs whether that opportunity is still there and very much still is. There are hundreds of houses listed on any given day that are maybe not as cheap as what I got them for that takes a little bit of digging, although they are that cheap still to just not in Wilmington, Delaware. So my cheapest house was 2500 in Jersey that included the all four walls. Michael: …a roof.... Pam: Yeah, absolutely. Goal number one is don't buy anything that is best addressed through the services of a wrecking ball company. So only things that maybe they're going to take a new furnace, okay, a new furnace, but not a new every single thing you can think of and my most expensive house was 35,000 and that includes I'm really kind of a an adherent of eating your own cooking. So that includes the house of my husband and I live in the house we bought in a suburb of Philly was $35,000. So and that was in 2016. So it's still there and there are many homes in states like certainly New York, Wisconsin, Michigan, quite a number of homes that are in that 60-50-40 neighborhood and even multi families and small commercial, that price point. Michael: And so I mean, I've got to imagine at that price point the homes are in really rough areas or need tons of rehab. Are you finding that to be the case or is there something there's something that you know that that we don't? Pam: Right, so the homes are in areas, how would I think about it. areas that aren't so rough that no one at all lives there, I've yet to find a neighborhood that that is on livable, I suppose everyone needs a home that it's just a flat out the truth and so there are really three things that any person who's renting is looking for one is the neighborhood. So they aren't going to be concerned if crime, for instance, is a big problem and where it is, for some of my houses I work closely, you know, first thing I do is find out who the police captain is, and introduce myself, I asked the tenant to let me know if there's any kind of roughness going on, so that they don't have to feel like they're the one making the call that I can be the person making the call. If there's a car that has sat abandoned in front of their house or near their house, I call the licensing and inspection agency, so they will tow it. So those are the things I do to make the neighborhood better than how I found it. Then the other things that a renter is going to look for, is going to be the landlord as well as the house itself, those two things I can absolutely control. So I control the neighborhood, only at the barest of margins, but the house and the landlord, absolutely within my scope. So that's what I do and to your question of where are these houses? I think that the I think that the issue is that most folks don't look from the bottom up, they look from the top down. In other words, they're used to asking themselves or allowing their bank to suggest to them that they start at what they have qualified for and what you have qualified for is probably far more than you have to pay. So if your salary and such qualifies you for that average price of a home in the three hundreds, first thing you should do is tell your real estate agent, only show me houses that are 60 to 100,000. In fact, don't even give them a range. I don't want to see anything. That's more than six figures. If I do if it's more than $99,999, you're fired and they will quickly show you the houses that meet that criteria and that way you accustom yourself to that to that look and you tell the realtor, just a look where the neighborhoods makes sense for you school district wise and so on. Michael: Interesting. There, I've got so many questions. There's so much there to unpack, Pam but and Vicki about the price point, if someone goes to buy a $20,000 home, are they able to get financing on that home right? Pam: Going to be difficult, that's the honest truth. The easiest source of financing, if they buy a house like that is going to be if they are also looking to be a home owner, and really a multifamily home owner. So for a person who tells me, they really don't have much, much in the way of savings, but they want to do something now and moreover, they're not too satisfied with where they are living as either a renter or possibly as a homeowner, then I would help them find homes, let's say in that lower price point of that 20 that you mentioned or 30,000 that are in the areas that they are okay with, we would look at the land banks listings, for instance, sometimes there are more than 200 land banks across the US. So sometimes a land bank will have a house that is in terrible, terrible shape, but it's in a good neighborhood, that house is going to qualify for some financing that can help the homeowner if it's not that kind of house, and instead, it's something owned by Fannie Mae, by Freddie Mac, by US Department of Agriculture by Veterans Administration, all these wonderful government agencies that you didn't know we're in the real estate business, well, then that's good news because they can now become your lender, in addition to selling you the home. Michael: Interesting, okay, so someone can just google or your online search for the local land bank and whatever market they're interested in living or investing in, and it'll pop up with listings, just like the MLS. Pam: That's exactly right. Just type in name of your state. If nothing comes up name of your county, if nothing comes up name of your city. So try it in that order and if nothing comes up in your county, then look at the surrounding counties. I would also just type in something like land banks, United States map sometimes, you know, some set of words like that and then that should uncover all of the line land banks and help you see For your state, for instance, if you're in New Jersey, what are the land banks in New Jersey and then find it that way. Michael- Interesting. Wow, this is so cool, Pam and so you are you self-managing all of your properties that you own? Pam: I am, so when I first got started with this, I was working in a really demanding job in corporate America as an exec and that was not feasible to be self-managing. So I worked with a property manager and perhaps someday I will go back that route except this go round, of course, creating my own property management company. But right now, I'm right in the thick of it. So all of the units are self-managed and that includes units that are two family, three family and even four family, again, all bought for 35,000 or less. Michael: And what are the rents that you're seeing on these types of properties? Pam: Yep. So for a house, that's a four family that well, that particular one is all studios. So of course, the rents there are going to be a lot less, so that's 850 each for a house… Michael: Wait, wait, wait, wait, sorry, timeout back one second, 850 each on per unit on a four family that you bought for 30 35,000? Pam: Yeah, for 26,000, yes, that particular one. Michael: I've been thinking about people talking and saying there's you can't find properties that are the 1% that meet the 1% rule. This is like the 678 percent rule. Pam: And that's why I encourage folks to come to come to my smart cousin.com where I will hold you by the hand and help you not only find these, but much more importantly than just like, hey, that one there? How about that one? But to really evaluate them and see, does it meet? What I hope is a set of criteria that you've given some thought to? So for instance, you asked me a really important question, which is do I self-manage? That's a question that anyone should think about, do they have the ability to self-manage and moreover, do they have any interest in self managing or do they think that's going to lead them to hate all of humanity and… Michael: A one way ticket… Pam: One way ticket straight to? Why am I already 30 years of my life before I was headed downstairs? So that's how they're built. Don't do it, don't do it, turn it over to someone else, pay someone else to 10% 12%, even 15% to do the property management. But if you're built for it, then go ahead and do it. So that's one. Second is are you looking at long term rentals, which is what I do? Are you looking at short term rentals, meaning the Airbnb ease of the world? If so, well, then we need to look at a different set of properties. Are you looking to have something have tenants essentially under your feet, in other words, a to family where they're next door to you or underneath, right underneath you? So those are the kinds of questions to think about before you just run in and buy the first thing that you say. Michael: Yeah, that makes a ton of sense and such great tidbits and advice, but I'm so sorry, I interrupted you because I would just like my mind exploded. You have to forgive me. I hope it didn't get too much on the screen here. Pam: Oh, no, no, not at all… Michael: So, that was your for family lower rent at 850. A unit studio? Let's get that. Let's jump back to other side…. Pam: Yes, right. Okay, so probably the standard size is going to be your three bath, three bedroom, one bathroom, right and so that I have a lot of those and I suppose the lowest cost one is 1025 and there I just keep it there because it's, you know, a great family. They've lived there a long time and I'm not interested in changing anything for them. But I have another one where someone just moved in and that's 1500. Michael: So that you bought for 28,000-30,000? Pam: Right, that I bought for that one within a paper that one 345, 345. So yeah, it's a it's good pickings right now, but like anything, you just have to stay strongly tethered to the ground planning for other variabilities that could occur in the market for the two family that I have there. That's two beds, one bath, and that rent is 1000 for each. So I guess I just say that to say that in the north east. Generally the rents are going to be higher however, prices I mentioned a couple of states earlier, I mentioned Ohio and I think I mentioned Michigan and so certainly the Midwest is many, many more houses for the price of a car prices for rent are lower. But that said, Certainly you would target I think, the Midwest for a good solid multifamily, perhaps a three family that you might buy in that 40 $45,000 neighborhood. This is and then it won't hurt as much to have those lower rents. Michael: Right, this is amazing. Pam, what are some of the risks or the downsides that either you've seen or learned about that folks should be aware of and hope to help mitigate? Pam: Absolutely, so the risks, certainly one risk. You mentioned this earlier, when you asked about obtaining a loan and I would say more broadly, the risk is ensuring that you have sufficient cash to whether all of a sudden something is needed on that house, oops, I thought I could just put something to repair this roof and in fact, what do you know the roofer went up there, he said, it's like an eight layer cake made of asphalt shingles and so now I've actually have to replace that roof at a large cost or some other thing. So that's one risk is that you need to have the pocketbook, or access to a home equity line of credit or some other string to pull on. A second risk is how you start. I don't advise anyone to start in the deeper end of the pool, deeper and meaning, let's say auctions, auctions are site on scene, you are not able, at least not legally to go into the house and see it… Michael: I think it might be a story there… Pam: …And see it, it is Buyer beware. So I would never advise someone to do that as their very first house. Start instead with you mentioned MLS, lots listed on MLS, start their land banks, they will allow you most of them anyway, to go inside and bring someone with you to tour the home. I'd say another one, I suppose if I had this to do over again and so like a 2020 hindsight, it's think about when you're looking at homes, if something is in a much better neighborhood, or has some other vein of silver running through it, for instance, it is in a commercially zoned area. But maybe it costs a little bit more not a ton more. So for instance, it doesn't costs 55,000 Instead of cost 65. This thing that's a little better, I would have, I would say to young Pam Hill isn't worried. Those are what you should target the ones where you've got to spring for a little more and the reason why is even though that 10,000 or 15,000 will seem like a lot in the moment, the appreciation value is significantly higher. So that is something I would suggest to folks as well, to not just pick as many as you can dollar store style. But to instead look at where it makes sense to go a little bit higher, and that includes more multi families. 2-3-4 families are always going to be a little better than a single family because that is just one piece of infrastructure in the case of the roof. In the case of the sidewalk in front of the house versus two, I've also found that with multifamily is oftentimes the person who is living in unit one, as soon as unit two becomes empty, they refer you to a friend of family or someone else for unit two and that way you have a self-reinforcing mechanism for rent being paid by both parties because neither wants to see the other get into the terrible shape. Michael: That is very interesting, that's very interesting. Pam on the property that you purchased, and I think I know the answer, but I'm going to ask it anyhow. What has the appreciation been like because as investors we talk about cash flow or appreciation, it tends to not be both or that's what kind of land somewhere in the middle. So what have you seen with your properties thus far? Pam: That's a great question and it even gets back a little bit to the other question around the risks. So I would say First answering the question, the appreciation is not as high when you are buying for the price of a car and thus that is also the risk. If you are looking for a flip opportunity, you would do better to buy your standard $200,000 home, for instance, that is in a $400,000 neighborhood and needs $80,000 worth of work, you are going to be able to obtain, maybe not from a percentage perspective, you might not think, gee, that's returning as much, but absolute dollars are what matter in that example, not the percentage. So percentage wise, my houses have all appreciated quite a lot relative to others to the tune of two or three or even four times as much but think how low the base is. So those houses are really two things. Thing one is cashflow, thing two is lottery ticket for appreciation value. So as a for instance, the houses that I own in Wilmington, Delaware, I would imagine that when the Joseph R Biden library is built, I'm presuming that is going to happen in Wilmington, Delaware. Given President Biden's long experience there as a senator, that neighborhood is going to see some significant appreciation value. So that's where I see the upside, should there be a cash sale as it were of these houses. Something else that you can consider this is more of a risk. But it is something that you can consider when you buy a number of houses that have a common macroeconomic theme to them, like house for price of car, you can think about either a real estate investment trusts, so putting them under a REIT, or putting them under a hedge fund and for those investors who are interested in that higher level of return, you mentioned the 1% versus the six or seven, those investors kind of like low, low investment grade high yield bonds, might have some interest in that kind of portfolio and that can be another way to both obtain cash flow, or certainly to, to get out of the market as it were all together without selling them off one at a time. Michael: Interesting and this has been so eye opening and so insightful. We chatted before we hit record last time we spoke about some of the things that you're doing to be an advocate for some of your tenants and people might hear that and think well, how can I be an advocate as a landlord and also have a tenant relationship? It seems almost counterintuitive, so can you speak to a little bit of the work you're doing? Pam: I'd say first is that I do it, I do it because I feel driven to do it. In the same way that the community that I focus on mission wise is black and brown people, women, but certainly there's room under the tent for everyone. But I think about who has been disenfranchised, certainly by FHA and others, some many decades ago and still there's some of that rattling around in our system. So as I think about tenant rights, there are two in particular in Delaware that I'm passionate about. One of them says that you should not be able to discriminate against a tenant, because they receive a Housing Choice Voucher. In other words, because they receive section eight, it is legal to do that to advertise your home and say I do not accept section eight. That strikes me as a very strange, legal rule, since it is not legal to discriminate for other reasons, including economic source, I certainly couldn't tell a nurse your money doesn't spend here, missy, where are the firefighters? That's who I want. So it strikes me as the same with that and so I am advocating for that. A second one is a right to paid representation for very low income tenants who are facing eviction. This is a one year pilot of sorts that Delaware is looking to implement and that I approach from a perspective of fairness. It seems only fair, that folks who more than likely cannot afford not just a lawyer, but even a day off work to come to the eviction hearing in the first place. It seems only fair that some sort of representation for them just the same way that it's within my scope, should be available and second is from a landlord perspective, my hope is that with that representation, and usually it would not be a lawyer, it would be some sort of legal advocate. But the hope is that, that gives the tenant someone else to listen to, rather than thinking, Oh, Pam Hill, you're just talking your book, I do not want to listen to what you have to say, I'll just take my chances in front of the judge. But by hearing another person, look over their case and tell them, You owe the grant. It's just that simple. Let's work out an arrangement to make a payment. I think that that could help us both, so that's the reason that I am behind these. Michael: It makes so much sense and it is so interesting, and frankly startling to hear that these laws exist, and it does seem so punitive to the tenant and so I really applaud you and thank you for being such an advocate for your tenants and I'm sure that they appreciate it as well. So keep up the good work. Pam: Yes. Thank you, thank you. Michael: Absolutely. Well, Pam, this as I've been saying it the whole show, the whole episode has been so interesting, so insightful. So much fun. Thank you again, for coming on. If people want to learn more about you want to learn more about my smart cousin, where's the best place for them to do so? Pam: Come to my M Y, smart S M A R T cousin C O U S I N.com. Certainly follow me on instagram or twitter with the handle @mysmartcousin. If you go to my site, you'll be able to see a couple of things. One is a free eBook. Second are free webinars that I do and then third, paid courses. So look forward to seeing you there. Look forward to helping you on this journey. Please take action, even if you listen, and then tune out from any sort of hand holding from me or anyone else as quite alright. Just get going on your slice of this American Pie. Michael: Love it. Pam, thank you again. I'm sure we'll be chatting soon. Take care, alright! Pam: Thanks so much, Michael. Michael: Okay, everyone. That was our show a big thank you to Pam super, super interesting story and pretty amazing what she's been able to accomplish at the price points that she has really amazing stuff and really cool work that she's doing being a Tenant Advocate where she invests locally. As always, we would love to hear feedback from you all on things that you'd like to hear future episodes on and the reviews are really helpful for us. We look forward to seeing our next one. Happy investing…
Stop wasting your energy on barking orders and telling people what to do. It's far more effective and satisfying to lead by example. It's one of the greatest leadership hacks of all time because people respond better to what they see, not what they're told. I host Eric Liebowitz, CISO of Thales Americas, who shares a key insight that explains why leading by example works and an essential strategy to immediately begin leading more effectively. Thales is a global Aerospace, Transportation, Cybersecurity and Defense organization with a complex IT environment and multiple product lines. They have over 81.000 employees across 5 continents. Eric has over 15 years in the cybersecurity space. He is a strong leader who is experienced in building and maturing Information Security programs for large Financial Services and Technology organizations. Eric started his career on Wall Street where he led a global team of security professionals that implemented a 24/7 Security Operations Center to monitor threats and respond to attacks at Lehman Brothers. Eric then moved on to Freddie Mac where he built and led multiple teams in different security disciplines such as Identity & Access Management, Governance, Risk and Compliance and Security Monitoring & Incident Response. Eric's attributes include strong leadership and communication skills with the ability to translate technical and risk based solutions to senior management as well as business partners. He also has a demonstrated track record of delivering innovative Security solutions that meet corporate strategic goals while promoting a team-oriented work environment. Eric has partnered with peers in other organizations to start a CISO roundtable with security leaders from the Virginia, Maryland and DC area. He is also a 9 year contributing member of the CISO Executive Network. He holds the CISSP, CISA and CISM certifications and is a member of ISACA National DC chapter and ISC2. LinkedIn Profile: https://www.linkedin.com/in/ericliebowitz/ Company Link: https://www.thalesgroup.com/en What You'll Discover in this Episode What Eric learned at the biggest defining moment in his career. Vital strategies to strike the balance between working hard and taking care of yourself. What to do when you don't speak the language in the room. Why leaders must become PROACTIVE when it comes to employee retention. The reality of the staffing shortages in the Cyber Security industry. Why leading by example is so effective. The importance of leading with integrity and how to do it. How to have a one-on-one meeting that builds a personal connection every time. Resources: https://www.amazon.com/Habits-Highly-Effective-People-Powerful/dp/1982137274/ref=asc_df_1982137274/?tag=hyprod-20&linkCode=df0&hvadid=509245866633&hvpos=&hvnetw=g&hvrand=12380231504550548321&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9010496&hvtargid=pla-908915591470&psc=1 (The 7 Habits of Highly Effective People), Stephen Covey https://www.amazon.com/SPEED-TRUST-Thing-Changes-Everything/dp/1416549005/ref=asc_df_1416549005/?tag=hyprod-20&linkCode=df0&hvadid=312009828129&hvpos=&hvnetw=g&hvrand=208795773085388419&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9010496&hvtargid=pla-433459424349&psc=1 (The Speed of Trust), Franklin Covey ----- Connect with the Host, #1 bestselling author Ben Fanning https://www.benfanning.com/speaker/ (Speaking and Training inquires) https://followbenonyoutube.com (Subscribe to my Youtube channel) https://www.linkedin.com/in/benfanning/ (LinkedIn) https://www.instagram.com/benfanning1/ (Instagram) https://twitter.com/BenFanning1 (Twitter)