Here are Tim and Julie Harris's Top Ten 2024 Real Estate Market Predictions (Boom or BUST?) Welcome back to America's #1 Daily Podcast, featuring America's #1 Real Estate Coaches and Top EXP Realty Sponsors in the World, Tim and Julie Harris. Ready to become an EXP Realty Agent and join Tim and Julie Harris? https://whylibertas.com/harris or text Tim directly 512-758-0206 IMPORTANT: Join #1 Real Estate Coaches Tim and Julie Harris's Premier Coaching now for FREE. Included is a DAILY Coaching Session with a HARRIS Certified Coach. Proven and tested lead generation, systems, and scripts designed for this market. Instant FREE Access Now: YES, Enroll Me NOW In Premier Coaching https://members.timandjulieharris.com 1. Prices will continue to rise, on average 5 to 6% nationwide. -Some as much as 10%, some will be more stagnant. -What happens locally will depend on your inventory and the impact of new construction. -Rents will increase. -Defaults and distressed real estate isn't going to be an issue. 2. Mortgage Interest Rates will continue to trend downward. -Likely to stabilize in the low to mid 6% range. -Builders will still offer better interest rates through their in-house financing. -Assumable mortgages may become more prevalent. We are already seeing this happen. -5 and 7-year Adjustable rates will become more popular. 3. Inventory will rise as interest rates fall. -Most sellers are also buyers, so when there are more choices to move up or down to, they'll be more willing to list. 4. The number of Sales will rise. -This should climb back to the 5 million sale range, but that's still short of a 'normal' or balanced market. Increase in resale home sales by as much as 1,000,000 units. -Sellers will continue to be in control. 5. Agent Migration from small and medium-sized brokerages to larger brands. -Result of commission lawsuit -Result of shrinking profits -Brokerages like EXP are rising due to agent-centric opportunities beyond just commissions 6. Effect of the Commission Lawsuits: Too soon to tell, however... -Watch for local MLSs to 'decouple' from NAR. Membership to NAR will drop but that doesn't mean agents are quitting real estate. -Flexibility of buyer-side fees may become more normal. -Power of state and local boards will increase if NAR's influence decreases 7. New AI empowered Team (and Brokerage) models will thrive. - AI empowered agents will rule the roost. -Expect AGI (beyond AI) to be the biggest reality bender since the Industrial Revolution or even the Tech Revolution. -Soon AI will do all of your social media and other passive lead generation for you. -AI will allow individual agents to operate as if they had a big (and expensive) team. -AI will enable agents to not just lead generate but also do initial prequalification and even presales. 8. New Construction will continue to be hot. -Impact on the resale market -Don't expect builders to flood the market; they control their own inventory -Smaller floorplans -New construction prices already have adjusted down by 5% 9. New Mortgage Programs will flourish. (and new Fin-Tech) - Expect home ownership and mortgage access to become a very hot political topic. The average age of a first time buyer is now close to 40! - 40 year mortgages. Automatic rate reductions when the rates fall etc. - Homes will be securitized by the owner. Imagine being able to sell off the value of 10% of your home to an investor. Investor gets paid 10% of the homes value when the home sells. Their 10% investment could be used towards downpayment etc. - Fannie and Freddie will be purchasing MBS (mortgage backed securities) - Federal Reserve will purchase MBS. 10. 2024 will be the start of the New Roaring 20s. - 2024 is the start of a new bull run for home sales. You thought the last boom was big...just wait. 2023 WAS the worst year for total home sales in nearly 40 years. 2023 was the bottom of th market.
Today's guest is Bob Khakal. Bob has sold 2,283 buildings, totaling $21B+ — the most ever for an individual broker in the history of NYC real estate. Bob previously cofounded Massey Knakal Realty Services, which grew from 2 to 250+ employees and was sold for $100M. Show summary: In this episode, Bob Nicoll shares his experiences transitioning from running his own company to working at JLL. He discusses the challenges and opportunities in the New York City real estate market, particularly in land and multifamily properties. Nicoll also talks about the changing behavior of lenders in economic corrections and highlights the differences between the current correction and past ones. He recommends two books that have influenced his career. -------------------------------------------------------------- Intro (00:00:00) Bob Nicoll's career journey (00:01:16) Selling his company and transitioning to JLL (00:03:59) Lender Behavior in Past Corrections (00:10:52) Different Performance of Product Types (00:11:58) Opportunities in the Land Market (00:14:07) Book recommendations for productivity and delegation (00:21:44) Closing (00:22:33) -------------------------------------------------------------- Connect with Bob: Email: email@example.com Linkedin: https://www.linkedin.com/in/bobknakal/ Twitter: https://twitter.com/bobknakal?lang=en Instagram: https://www.instagram.com/bobknakalnyc/ Connect with Sam: I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns. Facebook: https://www.facebook.com/HowtoscaleCRE/ LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/ Email me → firstname.lastname@example.org SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234 Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f -------------------------------------------------------------- Want to read the full show notes of the episode? Check it out below: Bob Knakal (00:00:00) - The class back office building market is really facing a lot of challenges today, but the values of those buildings are the same at the same price per square foot that they were 20 or 25 years ago. If you believe the market is going to come back, if you believe in New York, that would seem to be a good investment. I think the land market also significantly below where it could be the peak of every cycle, is greatly exceeded the prior peak. Sam Wilson (00:00:29) - Welcome to the how to scale commercial real estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big. Sam Wilson (00:00:42) - Bob Nicoll has sold over 2283 buildings totaling over $21 billion in volume. He's the most, which is the most ever for an individual broker in the history of New York City real estate. Bob, welcome to the show. Bob Knakal (00:00:56) - Hey, Sam, great to be with you today. Sam Wilson (00:00:58) - Man, that's a crazy statistic. I'll just I'll just say that 2283 buildings, as we commented here before the show kicked off, who's actually keeping track? But that's that's actually amazing. Sam Wilson (00:01:08) - Bob. There are three questions, however. Ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there? Bob Knakal (00:01:16) - Well, I started as a college kid at the Wharton School looking for a summer job that would look good on my resume. I wanted to get into investment banking. Investment banking jobs weren't available for college kids. Ended up walking into a Coldwell Banker office thinking it was a bank. They offered me a job, took it even though I didn't want to get into real estate, loved it from day one and went back my next two summers. And then started with CCB in Manhattan when I got out of school, met Paul Massey there. He had just gotten out of a training program. We both were starting in sales day two. On the job. We said, hey, let's work together, see how things go. We'll split everything 5050. That was the start of a 30 year partnership. Bob Knakal (00:02:04) - And, you know, I've been doing it for 40 years in New York now, for 26 of those years, Paul and I had our own company, which we sold in 2014 at Cushman Wakefield. And, you know, I'm the head of New York Private Capital Group at JLL now running private capital sales in New York. Sam Wilson (00:02:24) - Wow, that's a colorful career. I mean, there's so many different parts of your story I'd love to love to dig into, but why do you let me start here? Maybe let's start with today. Why do you do what you do today? Like why are you still so active in real estate? You've got an awesome career behind you. You've built a huge company. You sold it. What keeps you going? Bob Knakal (00:02:45) - Sam, I love it. It's something that I. I truly enjoy. You know, I tell folks it's not only a job for me, it's my hobby. I have a wife and a 14 year old daughter, and they're the most important things in the world to me. Bob Knakal (00:02:58) - But if they were away for the weekend, on a girls weekend, I'd be working all weekends. So I just really enjoy it. And I think that's the thing that that keeps driving me. And with each, you know, each day brings new opportunities to get wins. I'm addicted to winning. And and that's one of the things that really drives me. Sam Wilson (00:03:22) - That's really cool. I love that answer and good for you. There's very few people I think that can say that what they do is both their built their career and their hobby. So that's that's really fun and it shines through, I think both in your in your smile when you say, hey, this is what I'm doing and I and I enjoy it and this is, this is why I'm doing it. So that's that's really cool. Good, good for you. Let's talk a little bit about the company that you sold for what was $100 million that you sold your company for. Yeah. What was that transition like? I mean, you're, you know, your knee deep into your own business, you sell it. Sam Wilson (00:03:56) - And then what did you transition into? Bob Knakal (00:03:59) - Well, you know, the we sold the business in 2014. We almost sold the business in 2007 for a variety of reasons. We didn't sell it then. We had been offered 50,000,000 in 2007, and that deal didn't happen. But what it did teach us was that when we did sell the business, we would be on five year contracts with whoever bought us. So we actually decided in 2007 that if the market was not really bad in 2014, it would be a great time to think about selling, because in 2015 Paul would be turning 55. We thought the perception would be that our contracts would have more value if we were in our 50s than if we were in our 70 or 80s. So we we get to 2014, the market's chugging along, we hire an investment bank, sell the firm. And in hindsight, it was the absolutely perfect time to sell. 2014 was the peak year. Still, historically, 5534 buildings were sold in New York in 2014. Bob Knakal (00:05:12) - That was an all time record by more than 10%. That still stands, and it was a perfect time to do it. So we we went to Cushman Wakefield and ran our, our business as a, as a division of of C and W. And then there were some moves that the company made that were not congruent with our contracts. So we shorten our contracts, negotiated some other things. And. And the you know, I left in 2018 to go to jail with 53 people that had been with me at Massey Narco back in the old days. We actually the company, when we sold it had over 250 people in four offices in New York. And, you know, I took 53 of those people with me when I went over to jail. Sam Wilson (00:06:04) - Wow, wow. That's really that's really a wild, a wild story. And you're to this day still with JL. Bob Knakal (00:06:11) - Yes. Sam Wilson (00:06:12) - What's it like over. Bob Knakal (00:06:13) - Five years now? Which I can't believe. Right. Sam Wilson (00:06:15) - It happens fast. It happens fast. Sam Wilson (00:06:16) - What what what's it like now being housed under JL versus running your own shop. And what are some things that you like and maybe, you know, just some things, maybe if you had gone back in time that you would reconsider. Bob Knakal (00:06:31) - Yeah. Well Sam, I think you, you always look at the difference between having your own shop and working somewhere else. Working at a small company, a medium sized company, a big company. And I tell people there are pros and cons to everything. You know, clearly, if you're running your own shop, you call the shots. There's a lot of freedom associated with that. But then if you're at a big company, you're you're one of 102,000 people and there's somebody who's an expert at everything within that platform. So you have tremendous resources available to you. And at the end of the day, it's all about helping our clients achieve the best results that they can achieve. And when you have all those resources behind you, it just puts you in a different position to to create more value for those folks. Sam Wilson (00:07:23) - I would imagine that. That's great. Thank you for clarifying that. That's super helpful because I know there's people out here are listening to this wondering, do I do I start my own shop? Do I go work for somebody else such as JLL or any of the other big name shops? But I guess at this point in your career, you can pick who you want to work with. I would imagine, as a client as well, because I'm sure that you are well sought out as a broker there in New York City. So what's what's an ideal client or an ideal product type maybe that you're working on right now that is exciting for you. Bob Knakal (00:07:57) - Yeah. Well, I've been a generalist selling all kinds of properties my entire career. I think now dovetailing more into doing land sales and multifamily, a lot of the office and retail stuff that were that have come my way. We have actually gone on and and handed that off to other folks in the office that have that as a specialty. But, you know, we've seen that that by specializing in one particular type of property, it allows you to leverage your time a little more. Bob Knakal (00:08:31) - And that's always a positive thing, because as a broker, you have two main assets. You have your knowledge and your time. You're always trying to to increase your knowledge base, and you have to use your time as efficiently and effectively as you possibly can, because they don't make any more of it. Sam Wilson (00:08:47) - That they don't, that they don't. Well, let's talk about that land and multifamily. What what does that look like in New York City right now? Yeah. Bob Knakal (00:08:56) - Well, as you can imagine, there's not a lot of rolling pastures available in New York City. So most of our land deals consist of of acquiring small buildings, demolishing them to create a pad on which to build a new building. And so land really consists of, of taking older buildings that are not in good condition, knocking them down and creating a development site on which a new building can be built. Sam Wilson (00:09:31) - Is that is that slowing down with the rise in interest rates? Are there any headwinds that are being faced in that particular strategy? Bob Knakal (00:09:40) - Yeah. Bob Knakal (00:09:40) - Well, you know, everything has slowed down. If you look at where the market is in terms of number of buildings sold. The market is down about 34% from where it was last year, and down almost 70% from where it was at the peak of the market. So clearly things have slowed down. But interestingly, in this downturn, every product type meaning multifamily, office, land, retail, hotel, every product type is, is performing differently based upon dynamics that are going on with respect to that particular sector. So it's a very, very different downturn relative to the past four big ones that we've had. But you just have to look for opportunity. Keep doing the fundamental things. I always tell people brokerage is a very simple business. It's just very difficult. And you have to do those very simple, mundane things over and over again, day after day, week after week, month after month. And and then you eventually get to your, your objective. Sam Wilson (00:10:48) - When you say that this downturn is different. Sam Wilson (00:10:51) - In what ways? Bob Knakal (00:10:52) - Oh well, it's different. Number one lender behavior in the past, corrections will go back to the savings and loan crisis. In the early 90s, lenders went through a 2 or 3 year foreclosure process, took title to the property, and and then hired brokers to sell it in the in the early 2000 and again during the GFC. Lenders didn't want to go through that process, so they would just sell the debt. Hired brokers does that. This time around, they've been a little more covert about the way they're dealing with their issues. Mainly, I think, you know, Silicon Valley Bank and signature Bank going down created a lot of concern in the marketplace about what their books look like for existing banks. So, you know, they'd be playing everything very close to the vest today. But if banks or any type of lender has been active making loans in the past five years, they have problems on their balance sheet. There's no way you cannot have problems on your balance sheet. Bob Knakal (00:11:58) - If you were lending in the last five years and they just, you know, are trying to do it in as covert a way as possible, so far, that may change as we get further into this, but so far lenders have been behaving differently than they have in the past. And then the fact that in the past, corrections we've had, every product type was heading downward just to varying degrees. This time, each segment, as I said, is operating and performing kind of autonomously. You look at the retail sector, for instance, I believe the retail sector is on the upswing in New York today because rents have stopped going down. Rents have been on the the downward path for over six years now, but they've stopped going down, leasing activities picking up, and an investor demand is coming back for retail. Now clearly cap rates are up across the board because lending rates are up. But each of the different product sectors is performing differently. That's the other big difference between this correction and past corrections. Sam Wilson (00:13:07) - Yeah. Sam Wilson (00:13:07) - And that's that's an interesting one I think to to discern, you know, where is opportunity? I mean that's what a lot of people I think are thinking about. Okay. Well, and we're seeing people pivot out of one thing into the next. You know, maybe they were all into multifamily and maybe they're going into retail, as you're suggesting, or anything else. But I think that's that's one of the questions I have for you is like. What do you see as the best opportunity right now? Bob Knakal (00:13:31) - Yeah, I think it really depends. You know, I think that if you look at certain asset classes like the the class back office building market is really facing a lot of challenges today. But the values of those buildings are the same at the same price per square foot that they were 20 or 25 years ago. If you believe the market is going to come back, if you believe in New York, that would seem to be a good investment. I think the land market also significantly below where it could be the peak of every cycle, is greatly exceeded the prior peak. Bob Knakal (00:14:07) - We hit a peak in in the beginning of 2022. That was less than 50% of the peak of the cycle before that. So I think there's pent up value in the land market. But I think you have to really be wise about what you're buying, how you're buying it, and really know the market. As is always the case with real estate, you have to know the market. But I do believe there's a lot of opportunity out there tonight. Sam Wilson (00:14:31) - There really is. What are people doing with office space? I mean, I've talked to a few other guests here on the show. It's been maybe, oh, probably 3 or 4 months since we've talked about New York City office space. But what are people doing with that right now? I mean, what's the what's the what's the play there, if any? Bob Knakal (00:14:47) - Well, number one thing, and I think it's important to also differentiate between new construction, Class-A office and everything else, new construction Class-A is doing pretty well. The buildings are just incredible in terms of what they offer a tenant, but it's really the secondary and tertiary space that is facing the biggest challenges. Bob Knakal (00:15:08) - Some of it is being converted to residential use. I think the city needs more of that to occur. We could very easily have over 100,000,000ft of empty office space in New York, and we desperately need housing, so conversion would be a good thing. But we're also seeing values get to the point where the value of the building and the cost to demolish the building together are less than the land value. So a lot of these buildings, I think, will be demolished to make way for new construction. So again, need to know each sector of the market, each neighborhood, figure out what drives each. And I think there is a lot of opportunity. Sam Wilson (00:15:51) - That's really, really great. Thank you for taking the time to shed some light on that. Let's talk a little bit about the private capital group that you run. What what what's the story there? I know private is probably the key word, but what's the story there. And I guess what, you know, what are people looking for today from an investment perspective. Bob Knakal (00:16:09) - Well, the private capital group in investment sales, you have institutional work which is done with the largest corporations in the city, in the in the country, and then private capital. That generally describes high net worth individuals and families who are active in the market. That's where I spend the overwhelming majority of my time. And, you know, what people are looking for is a a reasonable return in a market that, you know, has dynamics and metrics that are moving in the right direction. So we've seen our multifamily market has probably seen the biggest change. The apartment building market here is very closely correlated to public policy. We have rent regulation here, rent stabilization and rent control. And those policies have shifted so far against owner's interests that a lot of the old line New York investors that for decades only bought here are now buying in Florida and Texas and Tennessee. And you know, they won't touch anything in New York anymore. And consequently, that has driven cap rates down around the country. And folks are selling buildings in those areas and coming here to buy in New York, because for the first time ever, cap rates are actually higher in New York than they are around the rest of the country in the apartment building sector. Bob Knakal (00:17:35) - So really interesting to see how the market ebbs and flows and what folks are looking for. But, you know, people are always looking for something that will provide a good return with relatively low risk. And there are still some folks that are willing to take big risks with opportunistic type of investments. But for the most part, folks are looking for something that can provide a stable return. Sam Wilson (00:18:03) - Absolutely, absolutely. That's that's really interesting, talking about things that, you know, just watching kind of the psych, not the cycle, but the the path of the money. Like you're saying, the money leaves, it goes to the south. You know, it's heading to Texas, Florida, places where they can get a better return. And as it leaves, then cap rates in New York City, then start to climb. Then the money comes back to New York City and just kind of makes that that circuitous route of, of travel there where the investment gets the best. A turn, as you're mentioning, a place that you're getting a personal return is social media, which I think you mentioned was something that you never thought you would be involved in. Bob Knakal (00:18:39) - Yeah. You know, I'm kind of old school when it comes to technology and social media fell into that that basket. A bunch of folks are saying, hey, Bob, you really should get on. You have you have great stories to tell. You've been around for a long time, and you know you can make great connections through social media. So in January, I said, you know what? I'll give it a try for three months. See how it goes. I've been really shocked at the reach that it has, the opportunities that it's presented, the folks that I've met. Relationships that I have now. And it's really been eye opening. But, you know, the definitely technology has made the world a lot smaller. And it's been really eye opening to see what what social media affords people. Sam Wilson (00:19:25) - Absolutely. Yeah. It's one of those things that and and you have more years in the industry than I do. But it's it's it's yeah, it's something it's a discipline I think for, for some of us, you know, myself included, where it's like, well, I don't really necessarily love being on social media, but it's something that. Sam Wilson (00:19:43) - Need to invest in and need to keep engaging with. So that's really interesting. If you were to rewind your career, go back, what was it, 40 years maybe? Yeah. What's what's one piece of advice you would give to yourself starting out if you could go back and say, hey, Bob, 40 years ago, this is something you should know. Yeah. Bob Knakal (00:20:00) - Well, number one, Sam, we we did everything by trial and error in the early years and so consequently made thousands of mistakes. Didn't make a lot of them twice, which was good. But I wish that we had reached out and asked more experienced people for input on things before we dove in. At first, you know, in later years we had an advisory board, some of the the top folks in our industry and in business that really provided great insight for us and helped us steer the ship of the company in a very meaningful way. And I wish we had done that. And I also wish that we had hired folks to help, to help us do things earlier. Bob Knakal (00:20:48) - You know, it seemed like every time we hired a new position, whether it was someone to be the COO of the company or someone to be the CFO of the company, or director of HR, or, you know, someone that took one of the main responsibilities off of all of my shoulders. We seem to get a big bump from doing that. And I think we we probably waited a little bit too long to bring on that additional help, but that was that was a regret as well. Sam Wilson (00:21:19) - Yeah. Sam Wilson (00:21:19) - That's a that's an interesting point. And that's something that an email came to you this morning with that same kind of idea in there that obviously the one thing that you can't get back as your time or that your time is one of the most precious things you have. And I think that's a challenge many of us face is knowing when to bring the right people on and when to, you know, get out of your own way, if you will. So that's not. Bob Knakal (00:21:39) - Yeah, well, I'm a big fan of Dr. Benjamin Hardy. Bob Knakal (00:21:44) - I've written a couple of great books with Dan Sullivan. Um, ten X is easier than two. X is a recent one where, you know, he says, just look at what you do all day long, and you probably make the overwhelming majority of your money from 20% of the stuff you do, do as much as you can of that 20%, the other 80%, either delegate it to somebody else or or don't do it. And then another one of his books who not how that whenever you ask yourself, you know, how am I going to get this done? You're asking yourself the wrong question. It's who can get this done for me. And so I think, I wish I had those two books available to me way back when, when we started out, because I think it would have helped a lot. But, you know, never too late to to pick up new things. Sam Wilson (00:22:33) - Absolutely not. Bob, thank you for taking the time here to come on the show today. This was a lot of fun having you on. Sam Wilson (00:22:39) - You've got a wealth of experience to to share with us. We've talked about a whole variety of things here on the show today, both from your views on the market to your private capital group, to what it was like to build and then sell your own company and then go to work for JLL and just. Yeah, this is a pleasure to have you on the show today. I certainly appreciate it. If our listeners want to get in touch with you and learn more about you, what is the best way to do that? Bob Knakal (00:23:00) - Yeah, best way to get me is you can email me at Bob at JLL is CNA Michael so Bob McCall at JLL. Or you can find me on social media. I don't know what my particular handles are, but you know, I'm on just about every platform. Just put in Bob Nicole, you should be able to track me down. Sam Wilson (00:23:23) - Absolutely, Bob. But I do have your social media handles. We'll make sure we include those there in the show. Notes. Sam Wilson (00:23:28) - If you're looking for Bob's social media handles, we'll have those there. And again, thank you for taking the time to come on the show today. I certainly appreciate it. Bob Knakal (00:23:34) - You got it. Sam, it was great to be with you. Sam Wilson (00:23:36) - Hey, thanks for. Sam Wilson (00:23:37) - Listening to the How to Scale Commercial Real Estate podcast. If you can do me a. Sam Wilson (00:23:40) - Favor. Sam Wilson (00:23:41) - And subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
A sector of Real Estate that remains robust is outparcel developments. The demand for great locations exceeds current supply. Outparcels are attractive because they have great visibility, and they don't compete with dozens of other tenants. Rents are typically higher, but well warranted based on traffic counts and visibility. Typical tenants are fast food, fitness chains, car washes, and gas stations. Josh Weiner, Principal of KLNB Commercial Real Estate Services, based in Northern Virginia, works with developers, investors, and owners throughout Maryland and Virginia.
For predictable and consistent cash flow, it's hard to beat small neighborhood retail with national credit tenants. Rents are secured by some of the country's largest corporations, and there's very little to do to maintain these properties. Like most asset classes, it's still highly competitive, but there are great deals in the $1 million to $5 million range that are too big for a lot of small investors, and too small for larger institutions. Loren Ziff, a three-decade, seasoned investor with experience in most asset classes, currently specializes in smaller retail properties with great cash flow.
More squeeze on tenants as rents around the country surge over by an average of 6%. The latest CoreLogic housing stats show rental growth's running at historically high levels, rising 6.1% in the year to October. It's roughly double the average growth rate over that same period, which is 3.2%. Chief Property Economist Kelvin Davidson says high levels of migration is one of the main drivers. He says wages have risen and the supply side has been tight as investors haven't been adding more to their stock of rental properties. Davidson says this rise in rents is mainly driven by demand. LISTEN ABOVE See omnystudio.com/listener for privacy information.
Rents in New Zealand have gone up 6.1 percent since last year, almost double the long-term average growth rate of 3.2 percent. Property research firm CoreLogic also says national property values are up, and so was the number of properties sold in October. CoreLogic chief property economist Kelvin Davidson spoke to Ingrid Hipkiss.
The latest report into housing by CoreLogic has found residential rental growth is up six-point-one percent from last year. Chief property economist Kelvin Davidson says wage growth, an imbalance between supply and demand, and soaring migration are all contributors. Renters United president advocacy group Geordie Rogers spoke to Corin Dann.
A round-up of the main headlines in Sweden on November 22nd, 2023. You can hear more reports on our homepage radiosweden.se, or in the app Sveriges Radio Play Presenter: Alexander MaxiaProducer: Dave Russell
Join our free Florida income properties webinar on Monday, November 27th for 5.75% mortgage rates at: GREwebinars.com Home prices are up 4.5% annually through Q3. It's the fastest growth rate in months. Three out of ten renters are now age 55+, the most ever. Older renters are good for you: lower turnover, more quiet, more savings & income, and lower regulation compared to assisted living. Overall US population growth is slowing, from 1.2% a generation ago to 0.5% today. It's expected to grow until 2080. I discuss the DOJ crackdown on the NAR and real estate commissions. 1.6 million real estate agents could lose their jobs. Apartment building rate caps have become super-expensive. One of our real estate Investment Coaches, Naresh, joins us from Florida. Naresh tells us how to get 5.75% mortgage rates on new-build Florida income property at GREwebinars.com Resources mentioned: Show Notes: GetRichEducation.com/476 Join our Florida properties webinar, free, Nov. 27th at 8:30 PM ET at: www.GREwebinars.com For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments. You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold Timestamps: The housing market stats (00:02:52) Discussion about the current state of the housing market, including the 45% increase in home prices and the reasons for continued home price support. Home price appreciation forecasts (00:05:28) Talks about the predictions for future home price appreciation, with both CoreLogic and NAR expecting a 26% rise in home prices next year. The impact of older renters (00:10:08) Explains why older renters are desirable for property owners and landlords, highlighting their lower turnover rate and stability. The Aging Population and Older Renters (00:11:15) Discusses the benefits of older renters, such as lower mobility, more savings and income, and low regulation. US Population Projection and Immigration (00:12:30) Examines the projected population decline in the US by 2100 and the importance of immigration for continued growth. Housing Demand and Household Size (00:17:12) Explores the trend of fewer people living in each household and its impact on housing demand. The timestamp's title (00:22:05) Rising Costs of Rate Caps for Apartment Buildings Discussion on how the cost of rate caps for larger apartment buildings has become prohibitively expensive. The timestamp's title (00:25:23) Real Estate Market Trends and Slowdown Insights on the current state of the real estate market, including a slowdown in November and leveling off of home values and rents. The timestamp's title (00:28:28) Opportunity in Real Estate Market in 2024 Predictions for the real estate market in 2024, including a potential bottoming out of the market and a decrease in mortgage rates. The decline in home values and the health of the economy (00:32:58) Discussion on the decline in home values and the health of the economy, with reference to the 2008 financial crisis and current housing supply. Short-term rentals and the potential for a decline (00:34:14) Exploration of the decline in short-term rentals due to a decrease in travel and corporate expenses. The impact of mortgage interest rates on home prices (00:35:19) Analysis of the relationship between mortgage interest rates, economic slowdowns, and home prices, with a focus on potential rate cuts and their effects on the housing market. The Florida In-Migration Stat (00:43:53) Florida's astounding population growth and becoming the second most valuable property market in the US. The Rate Buy Down Courtesy of the Builders (00:44:23) Explaining the options of a 5.75% rate or the 2-2-4 program for property buyers in Florida. Disclaimer and Closing (00:46:02) A disclaimer about the show and a mention of the sponsor, Get Rich Education. Complete Episode Transcript: Speaker 1 (00:00:01) - Welcome to I'm your host Keith Weinhold told how price appreciation is up 4.5%, but there are signs that it is slowing down. Finally, learn more about our upcoming live event that you can join from the comfort of your own home today on get Rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers. Oh, at no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of hours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple text to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Day dream letter and it wires your mind for wealth. Speaker 1 (00:01:17) - Make sure you read it text to 66866. Text 266866. Speaker 2 (00:01:29) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education. Speaker 1 (00:01:45) - We're going to go from Roxbury, Connecticut to Roxbury, Wisconsin, and across 188 nations worldwide. This is get rich education. I'm Keith Weinhold, GRE founder host of this very show since 2014, longtime real estate investor and Forbes Real Estate Council member. In fact, check out my latest article in Forbes for my work in research on the housing market. What we do here is by investment property with the bank's money, pay the debt with the tenants money, and then well, that's about it. In a sense. We enjoy life mostly. There will be some bumps along the way. The devil is in the details. Yeah, all those sus vibes that you got from the housing price apocalypse, doomsday, YouTubers. All of those vibes you had are validated by now. Just in time for a sweater weather. Respected research firm CoreLogic released their report with end of quarter housing stats nationwide. Speaker 1 (00:02:52) - Home prices still haven't fallen. There was a healthy 4.5% in September of this year compared to September of last year. Yes, these real estate numbers always run behind a little bit. Well, that 4.5% increase that even includes distressed sales. And that is the fastest growth rate in quite a few months. And again, this is primarily due to a robust job market spiked inflation and housing inventory lows that just keep scraping along the sea bottom floor. So these fundamental reasons for continued home price support, I mean, it's the same stuff I've emphasized for over two years, even as I stated prominently back on television in November of 2021. And although that was avant garde at the time, it's really not in my personality to get smug until the incessant rumors today I told you so or anything like that. Well, the highest price gains this past year. They were concentrated in places that had, I suppose, the best autumn foliage this year, that is, most northeastern states. They are the big gainers now. There were some price declines in a few places. Speaker 1 (00:04:08) - They were felt in just four western states and D.C. the four western states were Utah, Idaho, Montana and Wyoming. Now, see, in the pandemic, those states prices, they stretched broader than basketball star Victor Wembanyama. And today they are mildly correcting. But back to the base case here. The 46 of 50 states which experienced appreciation oven mitts are needed to handle the three hottest states led by Maine 10%, Connecticut also at 10%, and new Jersey, with a 9% gain. And when you break that down in the metro area, it was Miami that led with soaring 8.5% appreciation. And it's interesting are core investment areas of the Midwest in southeast, which I call the stable markets. They lived up to that moniker again, they appreciated moderately during the pandemic and still appreciating moderately today. And as we approach winter, expect home price depreciation to have its seasonal slowdown. That's what tends to happen each year. In fact, there's a slowdown in sales of volume two. There are just so few homes on the market, but it has gotten really slow lately. Speaker 1 (00:05:28) - Now, I do like CoreLogic, the supplier of this information. They contribute their single family rent index to our industry. And that's so valuable because most rent data that you find out there is about apartments. CoreLogic predicts further home price appreciation over the next year of 2.6%. And similarly, the Nar. They expect home prices to rise 2.6% next year. Now, next month, you will hear me. Release gives home price appreciation forecasts right here on the show, and you're also going to learn how accurate my forecast was for this year that I made last year. Now, just last month, I made an in-person field trip to Cash Flow Country, the Midwestern United States. You've got some income property providers there that are still steadily sourcing properties to investors like you. But, you know, there are a few now where they're not even doing that lately because some providers are having trouble making the numbers work for you, the investor. Like, for example, on a single family rental that was built in the 1960s. Speaker 1 (00:06:40) - Right. A somewhat older property. Where it is commanding, say 1650 rent. And this is a real example of rehab property that I visited in the Midwest, 1650 REM. Well, these property providers can get, say, $230,000 for that property if they sell it to an owner occupant instead of an investor like you. Well, with higher interest rates on an older property, you know, 1650 rent on a 230 K purchase price. And it doesn't work so great for you as an investor, although it might on a newbuild property. So that's why a provider like that is selling to owner occupants instead of investors like you, an owner occupant, they'll pay 230 K because they don't have to make it cash flow. It's their home. So instead of selling it to an investor like you were, say 190 K is the most that it would make sense for you to pay. Well, then sure, that provider is going to get 230 K from an owner occupant, so it makes more sense for that provider to sell it to the owner occupant as well. Speaker 1 (00:07:44) - Now, one income property company that has in-house management and all that. I mean, this is a company that then is set up to serve investors. What they've done though is currently they're selling about 80% to retail homeowners, owner occupants in just 20% to turnkey real estate investors. For just that reason, owner occupants can pay more for it because of what's going on in the cycle. So in that particular Midwestern market, either mortgage interest rates must come down or rents must rise in order for it to make sense to you as an investor again. Now, later in the show today, you'll soon see that we've effectively found a way to make interest rates go back in time a couple of years when they were low, and how you can apply them to new Build income property. Today you'll learn exactly what that rate is, and this is fairly exciting. But yes, everyone wants to know where are mortgage rates going to go. And no one I mean absolutely no one knows where rates will go. Not your mortgage loan officer, not Janet Yellen, not your property provider. Speaker 1 (00:08:55) - They don't know where mortgage rates are going to go, not the president of the United States, not Charlie Ridge, not a real estate agent, not Ron DeSantis and not me. No one knows where rates are going, of course. But we did learn something just about ten days ago. Fed Chair Jerome Powell said he's not confident. Those were his words in quotes, not confident that policymakers have done enough to curb inflation. Well, that right there. That is what is known as a hawkish comment in fed vernacular. If they haven't done enough to curb inflation, then that is what has renewed fears of more interest rate increases. Now your investment properties next tenant might be a grandparent with a flip phone. Roughly three out of ten renter households are now headed by people age 55 plus. After bottoming out in 2004, older renters have become a major share of the tenant population today, and I share this with you recently. If you're a reader of Art, Don't Quit Your Day Dream letter. And by the way, welcome to all of our new letter readers. Speaker 1 (00:10:08) - We recently had a few thousand new Don't Quit Your Adrian Letter subscribers, our weekly email newsletter. Welcome here to the podcast. Now as I'll explain why in a moment you should like and embrace older renters. Now, first things first. Understand that as a property owner or landlord, you cannot age discriminate in your advertising or in your tenant screening. But all right, once you're done poking fun at their jitterbug or their track phone, understand that older renters, they are desirable. And by the way, our jitter, bugs and track phones still made us think that at least one of those two phone models is still made. At least one of them is a flip phone. Not completely sure, but anyway, yes, now that we know that there are more older renters here, about 3 in 10 American renters now age 55 plus, okay, older renters, hey, they really are desirable for a bunch of reasons. You're going to have lower turnover. Okay? Older people tend to stay put. There's a low transient rate. Speaker 1 (00:11:15) - They have a low mobility rate. That's another way to say it. Also all the renters, they tend to be more quiet. They're less likely to throw three keg ragers no beer pong, no headbutt dents in the drywall. And when it comes to savings and income, they have more of it and expect low regulation. Unlike something like assisted living, there is no special government permitting or any specialized staff that's needed. So. There are some big reasons why this growing group of older renters that is good for you as an income property owner. So to review what you've learned, that's due to lower mobility. They're more quiet, they have more savings in income and there's low regulation. And I'm going to say that personally, I've come to appreciate my older friends more as time goes on. And I recently realized that I have some of my best conversations with them. But they won't talk me into the jitterbug. They can't talk me into giving up my life without Instagram on an iPhone. Many older adults, they don't want the hassle of homeownership and others they are just feeling the weight of dreadful homebuyer affordability, just like everyone else. Speaker 1 (00:12:30) - And one major reason for why there are more older renters. If you're trying to find a reason why it's not due to some seismic behavioral shift, it's just the simple fact that the American population keeps getting older overall. Overall, we have an aging population. And by the way, is 55 that old? I mean, the 55 plus age group, that can mean a lot of things. And 85 year old and 55 year old lived very different lives with different activity levels, of course. But is 55 that old? I don't know, I know that you only need to be age 50 to be an AARP member. I guess 55 sounds old, because you can say that you're pretty likely to be in the second half of your life, but maybe if you divide life up into thirds, you could say then that 55 is in the middle third, and then therefore 55 could be seen as middle aged and not old, I suppose. And for some reason, it's systemic in American culture that people don't seem to want to be called old for whatever reason. Speaker 1 (00:13:35) - It has a mildly pejorative connotation, but it is a group of people with their own separate habits, and these people are more likely to be using trekking poles when they go hiking, I guess. And I don't agree that age is just a number. I mean, come on, age means something in 85 year old men. They are not going to qualify to play in the NBA All-Star game. They're not going to be the most agile defensive back on an NFL field. So that takeaway here is that more renters are older. Embrace it. It's good if you're a listener but still don't have our valuable don't quit your day dream letter, which wires your mind for wealth, and it updates you on real estate trends. You can get it for free right now. Just text message group to 66866. That's green to 66866. We've been talking about the aging population here on get Rich education episode 476. All right. But how about the overall US population trend. This is something that you might have seen elsewhere since it transcends real estate. Speaker 1 (00:14:46) - But I'll give you my real estate take on it too. All right. So the latest Census Bureau figures, they show that the US population is projected to contract to shrink by the year 2100, which would be only the second decline in the nation's history. And the other decline occurred in the 1918 Spanish flu and World War one. For those reasons, annual population growth rates, they have dropped from about 1.2% a generation ago to just one half of 1% today, and the culprits are declining birth rates and that aforementioned aging population. All right. The US has the world's third biggest population, and it could be demoted to fourth or fifth by Pakistan or Nigeria as soon as the middle of this century. So this anticipated population contraction, that means that immigration could become vital for any hopes of continued growth. And yet understand the US is still growing faster than a lot of other high income nations like Japan and Italy, that are already losing population. All right, so the US population is projected to shrink by 2100. Speaker 1 (00:16:02) - The more important thing for you to remember as a real estate investor that's going to need a population to drive demand, is that our population is still expected to grow every year until about the year 2080 by most every model out there. So still 50 to 60 years of population growth. And then it isn't until later 2100 that is expected to decline. And of course, birth rates and immigration rates are bigger unknowns than the death rate out there in the future. Just estimating how soon our population is going to peak, but it's going to be a. While many decades. And then, of course, even in 50, 60 years, if the overall American population stops growing. All right, well, it'll probably still grow in some regions. And, you know, I wonder if Florida will still be growing late this century. It seems like it never stops there with population growth. And also it's not just about overall population growth when it comes to housing demand. It's how people choose to live within a certain population growth rate. Speaker 1 (00:17:12) - Okay, with a population of 100, if there are two people per household, well, they can be housed with 50 homes, but if there is just one person per household, well then it's going to take 100 homes to house those same 100 people, no longer 50 homes. All right. And one trend that's made for surging American housing demand is that you have fewer people living in each household. That's how people choose to live today. So keep that in mind. You see a small half of 1% annual growth rate in more recent years, but there are a lot of numbers behind the numbers. Now, you might wonder what I think about the federal jury that recently found the National Association of Realtors and large brokerages, and how they conspire to keep commissions artificially high. What's that really mean? Well, what it means is more flexibility for buyers. I mean, under the current system, sellers pay their own agents commission of roughly 5 to 6%, and then that 5 to 6% that's shared with the buyer's agent. Speaker 1 (00:18:18) - Well, if sellers now get billion from paying buyer's agents, well, then buyers would have to start to pay their own agent if they choose to use one. And a buyer could do that at either a flat rate or an hourly rate. But first time homebuyers, they could really feel the crunch, or that could become a bigger issue for those wannabe first time homebuyers that are having a hard time amassing the savings to pay for an agent on top of their down payment and their closing costs. Just another whammy for those wannabe first time homebuyers. They keep getting beaten down, and that's what could put some upward pressure on rents. But I don't think it would really be much as a result of that alone. And another consequence of this is that there would be less commission paid by sellers. I mean, the way it works is that in order to advertise a listing on the database, the MLS, the Multiple Listing Service, are that MLS that populates real estate websites like Zillow and Redfin? Well, in order for that to happen, sellers in most markets they have to agree to pay the buyer's agent's commission as well as their own sellers agents commission. Speaker 1 (00:19:31) - Well, that's the practice that could be scrapped and that could spell trouble for real estate agents. A lot of people have estimated that $30 billion could potentially leave the industry, and some estimate that 1.6 million agents could lose their jobs. See, the way that the system had worked in the past is that one reason that the seller pays the entire 5 to 6% commission for both sides is because it's usually easy for them to do that, since sellers are the ones that have the equity in their property and the buyers often don't. So this could make homeownership even more difficult to qualify for. I mean, if first time homebuyers already had to jump over a four foot hurdle, now it's perhaps a five foot hurdle if this all happens. But there are still legal battles ongoing there in the real estate agent commissions case. Now, as I've talked about before, with this American housing shortage, it's the affordable housing segment that has high demand and is so drastically undersupplied. Now just get this understand that from 2019 until today, the price of a new car rose 22%, the price of a median home rose 42%. Speaker 1 (00:20:54) - And the mobile home price, which is about the most affordable option for housing that rose by a giant 58%. I mean, wow, that is a testament to the major housing shortage at the affordable price points. That really, really spells it out. And if you're confident that the long term play is to provide good, affordable housing like we are here at, you know, there are more reasons to look at loading up on properties like duplexes and triplexes. And for plex's where you can get fixed rates now. And if you wanted to, you could refinance to long term fixed rates later. Now to buy a rate cap for a larger apartment building. That has just balloon in expense for you? Yes, a rate cap buying the what's basically like insurance you buy that puts a ceiling on how high your interest rate can go on larger apartment buildings. You don't have to do that with 1 to 4 unit property. You can just get fixed rate certainty. Now, a couple years ago, rate caps for large apartment buildings, they were pretty affordable. Speaker 1 (00:22:05) - They were inexpensive. It took 40 K, 50 or 100 K to ensure that your rate wouldn't adjust too high. And then once it did, of course the rate cap insurance would kick in. But that same rate cap this year could be nearly $1 million. Yeah. See, a couple years ago, the $10 million loan, you could have bought a 2% rate cap for 60 to 75 K in three years coverage. Well, if you'd want to extend that this year, just a one year renewal, you could probably spend 350 K. Well, that has become prohibitively expensive for a lot of larger apartment buildings. And coming up, one of our in-house investment coaches in the race is going to be joining us from Florida, where they're building new construction duplexes and for plex's affordably. And they're selling them to investors like us at just a 5.75% interest rate. That's straight ahead. I'm Keith Winfield, you're listening to get Rich education. Jerry, listeners can't stop talking about their service from Ridge Lending Group and MLS. Speaker 1 (00:23:18) - 42056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plex. So start your prequalification and you can chat with President Charlie Ridge. Personally, though, even deliver your custom plan for growing your real estate portfolio. Start at Ridge Lending Group. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate. And I kind of love how the tax benefit of doing this can offset capital gains in your W-2 jobs income. They've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. Speaker 1 (00:24:29) - For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six. This is Rich dad advisor Tom Wheelwright. Listen to get Rich education with Keith Reinhold and don't quit your daydream. It's always valuable for you, the listener and me as well. To have a market discussion with one of our in-house investment coaches were doing that today. Naresh, welcome back onto the show. Speaker 3 (00:25:23) - Is Keith looking forward to talking? Speaker 1 (00:25:26) - Let us know what's happening from your view. I mean, give us your perspective on the real estate market today and any drivers or trends. Speaker 3 (00:25:35) - Look, Keith, I've been working as a real estate investment coach for about four and a half years now. I've been a real estate investor for about six and a half years. I've been working with for two years now, and it's great because it's almost like I'm a leading indicator on what's going on with inflation, what's going on with the housing market, because I see it in front of my eyes in real time. Speaker 3 (00:26:02) - I have it on my spreadsheets that are in front of me. Of all the different properties that were sold or inquiries that we get from clients right now, I am actually seeing a slowdown this month of November compared to the first ten days or the first 20 days of the previous month. There's definitely somewhat of a slowdown. We're getting more complaints or nagging from clients saying, oh, I'm not able to rent out my property for as much as I thought I'd be able to, or my property's been vacant for longer than usual. What this is telling me key is, at least in my state, look, home values vary based on geography. We know that home values are like the weather. The weather is not the same everywhere. For the most part, I think you're going to see that national home values peaked a month or two ago. Rents certainly peaked about two months ago. What I mean by that is we saw rents go up precipitous just going up, up, up since January 2021 nonstop. And they finally peaked. Speaker 3 (00:27:17) - And when I say peak home values, peak rents don't mean that they've crashed. I don't mean that they've gone down. They've just peaked and leveled off. So I haven't seen a decline in rents. I haven't seen a decline in home values from two months ago. I'm just saying they've leveled off. And so I actually expect this inflation or I expect inflation CPI moving forward to go back down. I know that we did see a blip up for a few months, but I think we're going to start seeing things go back down as the fed old rate study appears. They're done raising for good, and they're just going to ride it out with how it is currently. And then once unemployment crosses, probably 4.5%, if at all, that does cross 4.5%, that's when they're going to start cutting. If unemployment crosses 4%, then they're probably just going to wait it out until inflation hits that 2% target. And so what does this all mean for real estate. What does this mean for interest rates. Low interest rates I've talked about peaks. Speaker 3 (00:28:28) - We saw peak mortgage rates. Also it looks like mortgage rates peaked. And they've slowly crept back down not significantly to a point where as an investor you're like, oh let me jump in. No. But think we saw mortgage rates as well. So again, what does this all mean. This means 2024. We're almost a month away from 2024. I think it's going to be a great opportunity to jump in, because you'll be able to catch the real estate market that's going to hit some type of bottom in 2024. You're going to see mortgage rates go back down in 2024. That also means today because remember, Keith, I've come on your show before talking about incentives that providers who we work with, partners who we know personally and who we've worked with for many, many years, we've been offering incentives that make up for this high inflation, that make up for the higher interest rates. And those incentives are very likely going to be gone in 2024 as mortgage rates go back down, as the home values maybe decline slightly. Speaker 1 (00:29:39) - We want to talk about some of those incentives later, about how providers are buying down the interest rate for you on rental property, but rates, I think perhaps the most interesting thing you said, the thing that I didn't expect is that you're talking to some investors out there where they're telling you about how they have more or longer vacancies than they had expected. I didn't think that I would hear that from you. Is that a pretty small sample size, or is that passed by apartments versus single family homes or entry level versus luxury or anything else? Speaker 3 (00:30:13) - I'm talking about single homes, so can't speak for apartments. I'm talking about cookie cutter, entry level, single family homes. This is in multiple different markets. So not just in one city. This is in multiple cities states. We're seeing vacancies. We're seeing, like I said, the rent growth rate that was previously being used six months ago, eight months ago, the property managers have had to use a lower rate because there's been a decline. So it's not surprising. Speaker 3 (00:30:44) - There's just no way that the country would would have been able to survive with rents going up the way they were going up with home values going up the way that we're going up. So there was bound to be a stoppage. And so we've seen that stoppage in home values, we've seen that stoppage in rents. And when I say stoppage again, not a decline in rents, not a significant decline in home values. But they leveled off from their peaks. And that's just how the business cycle works. Every 30 years or so when we see super high inflation, it's not surprising that I'm seeing this. But this is what's going on in the market right now, from Florida to Tennessee and Alabama to Ohio, in Missouri, Kansas City. Speaker 1 (00:31:31) - For about five months in a row now, we have seen wages be higher than inflation. But of course that's just stated CPI inflation. And then there is quite a lag effect there too. If wages do exceed inflation, when will that eventually catch up to higher rents? We don't really know. Speaker 1 (00:31:50) - But one thing we do know over the long term is rents are historically very, very stable, even more stable than home prices. It was so unusual when rents were up about 15% year over year, a year or two ago. You don't typically see that rents tend to stay stable, and they sure are stabilizing lately. What do you have any other thoughts as you look around the market and race? Because you often talk to our followers in there, they get a hold of you for you to help lead them through contracts and connect them with the right properties and providers that can meet their goals. So what are our followers asking about? Speaker 3 (00:32:27) - Our followers right now are fearful, which is very common. Fear always rules people's minds and they're fearful of a crash. And look, there are certain real estate asset classes, commercial real estate, which you've talked about for a while, is going through a decline right now and could be going through a major crash as many of these commercial real estate owners default on their mortgages or their loans, their commercial loans, there is a concern that there could be a crash in the housing market. Speaker 3 (00:32:58) - Meredith Whitney, who really famous real estate banker, I believe the only woman to call the 2008 financial crisis. She called it back in seven. Meredith Whitney came out a couple of weeks ago and said, there's going to be a decline in home values, and I'm here to tell you that there has been a classic line on values. And will that continue? It could continue where there's a, again, a slight decline. So don't see a crash coming. The reason is because I feel like the economy, the banks are much healthier today than they were. And let's say at 2007, the people who have been laid off, we're going to see unemployment continue to go up. It's not the 10% plus that we saw during the pandemic or the really we reached close to that 2008, 2009 or so. I just don't see something systemic to where there's going to be a housing market crash. And it's all about supply. Housing supply is still very low. So until the supply catches up to the demand, think the real estate market is going to stay healthy. Speaker 3 (00:34:14) - And if you're looking to buy an old over a 30 year period, if you're looking to buy and rent for cashflow, it's still a great time. Right now, there's just certain asset classes. Like I said, commercial real estate. Maybe wait for the crash. They're short term rentals. The worst time to get into short term rentals would have been a year or one and a half years ago, 18 to 20 months ago. That space has declined because there has been a decline in travel, leisure, airfare, corporate expenses, the corporate trips. There has been a decline. So we don't promote those often. They're available. What? We don't promote them often, but that's another asset class that could be ripe for, I want to say, a crash, but a big decline when it comes to cookie cutter, entry level Single-Family homes. I just don't see this huge crash that people have been waiting for over the last 15 years. Speaker 1 (00:35:13) - Right. As you know, I've talked extensively about how it's virtually impossible for that to happen. Speaker 1 (00:35:19) - And yes, everyone wants to know what's coming. It surely has been a consensus among analysts and others that mortgage interest rates have peaked and or the fed funds rate is done increasing in this cycle. Many seem to think that next year, if rates come down, that that is really going to push home prices through the roof. I don't know if that's necessarily true, because typically a cutting of rates coincides with an economic slowdown or a recession. So I think a cutting of rates next year that could result in a moderate price increase. But of course, we have to remember that some of that supply is going to come once rates go down, you will have a few more people motivated to sell. You also have a lot more people motivated to buy and that can qualify as well. But the rates think a lot of people really in this cycle lately, when they've seen higher mortgage interest rates maybe than some people have seen in their entire investment life, you know, they feel like they kind of want to get some sort of break, but they sort of want to wait and see what happens with the market. Speaker 1 (00:36:20) - But we actually have something to talk about here where they can get a break. They don't have to wait and see with what's going on in the market. And that's with what is taking place in Florida. Speaker 3 (00:36:33) - That's exactly what's taking place in Florida. We work with a provider who is going to be on with us. We're hosting a webinar with them about a special 5.75% interest rate. The lowest interest rate that we see across the board with any provider we work with from Alabama to Texas, etcetera. So they're coming on our webinar. They're going to promote and discuss that 5.75% program that they have, as well as a 2 to 4 program. That's two years of free property management, 2% closing cost credit into $4,000 release fee. You might say, well, why do I need a $4,000 release a credit? Because their best properties or highest cash flowing properties. Highest returning properties are quads and duplexes. So these are huge breaks that will reduce the amount of money you need to bring to close and look. If you're a high net worth or if you're a high income earner sucking it up and paying the 9% interest rate today. Speaker 3 (00:37:37) - If that's what you decide to opt for with the 224 program, 9% interest rate, or 8% interest rate today, it'll save you on your taxes, the mortgage interest tax deductible, and in 5 or 6 years, you can just refinance, most likely at an ultra low rate, maybe even sooner than that. So still, there are some really good deals. If you work through us, then we can help you find some really, really good programs and incentives so that it's like going back to 2020 or 2021, when interest rates were super low, or when there was less cash that you had for bringing to the same level. So we have that definitely recommend that people check out this webinar. It's great webinars. Com you can register for it over there. webinars.com. I'm going to be on it's Monday November 27th. That's Monday, November 27th at 8:30 p.m. Eastern Time. So people on the West Coast can finish up work, attend the event. People on the East Coast can finish up dinner, put their kids to sleep and attend the event. Speaker 3 (00:38:43) - So I look forward to seeing everybody there. It's a special, special webinar, special deals, special promotions only through the average education. Speaker 1 (00:38:54) - So the 5.75% rate, if I remember from previously narration, it's a ten year fixed rate and a 30 year amortization at those terms. And then is one choosing between the 5.75 rate and the 224 plan that you described. Is it one or the other? Can you get. Speaker 3 (00:39:12) - One or the other? It's one or the other. Because to get that 5.75% rate, yeah, the builder is paying the lender a lot of money. And to lower those points, they're buying points to to get you the investor that rate. So it's one or the other. And by the way, that 224 program the purchase price is negotiable. So that's also why I like that 2 to 4 program. Because you can go back and forth and I can help you out negotiate the price, maybe shape 10 to 15 maybe $20,000 if it's a high ticket item off the purchase price. So makes the numbers look even better. Speaker 3 (00:39:54) - That's my favorite program, the 5.75% program. That might be right for some other people, so that's fair to. Speaker 1 (00:40:02) - Else about the property prices and types. Speaker 3 (00:40:06) - So this provider we work with has single families, duplexes, four plex quads all available. The price points are anywhere from $250,000 to $800,000. Everything is new construction. That's also in flux, as in the single family is just cash flowing much. So I would say go for a duplex or a quad. Duplexes are around $400,000, give or take 20,000 over under, and quads are somewhere between 650 to $800,000. Speaker 1 (00:40:45) - Okay, so these are brand new build properties in Florida. So yeah we're talking about entry level rental homes here. The asset type that seems to have the greatest dearth of supply in housing, entry level single family homes. You just have such a good chance to own an in-demand asset that everyone is going to want over time here. Do you have any last thoughts about this webinar trace, which you're going to help put on for people? That way the participants can ask you questions. Speaker 1 (00:41:16) - They can ask the provider questions, any question they want to, things about the physical property, things about just how they bought down your rate to 5.75% for you, or how they can do the 224 program for you. Those are some of the benefits of attending. You can have your question answered in real time there with narration. Do you have any last thoughts about this event that's taking place on Monday? The 27? Speaker 3 (00:41:39) - Well, you definitely want to register at Jerry webinars. Jerry webinars. We already have more than 50 people registered and now this episode is out. I'm sure we're going to get another 100 or so. Like you said, people can come on and ask some questions, actually talk to us, interact with us. Last time they wanted to these webinars, it went like 2.5 hours. People were having such a great time. We went into the wee hours of the night just talking to all sorts of folks, answering questions. It's super interactive, really educational. The best part is completely free and you get goodies and perks and incentives back in return for ten. Speaker 1 (00:42:17) - Now, look, I know that some of these incentives have got to sound terrific to you, the listener and viewer here. I just want to pull back and take a look at things. More fundamentally. This is truly investing. This is not speculating. You own a piece of Florida land in a house constructed of commodities. On top of that land, from wood to steel to concrete. You already know about Florida's In-migration. We've talked about that at nauseam on the show here, and it's not speculative because you're purchasing something for rent production, not a speculative endeavor. Over the long term, people will pay you in order to live in a property that you provide to them. I mean, this is the sort of thing where you could even if say, you have a spouse or a mother that has nothing to do with real estate knowledge, they don't know anything about it. You can explain this to your spouse or your mother and they would understand. So it's easy to understand where your income comes from. Speaker 1 (00:43:12) - It's really fundamental. I don't know how long the 5.75% rates are going to last, because this same provider had a lower rate a few months ago. I told you then I didn't know how long it was going to last and it didn't last. Now it's 5.75%, which is still a great rate. I really encourage you. Sign up. It's free. It's our live event next Monday night, the 27th at 8:30 p.m. eastern, 530 Pacific. Again, you can email@example.com. What a great update in race. Thanks so much for coming back into the show. Speaker 3 (00:43:46) - Thanks, skeet. Speaker 1 (00:43:53) - If you're unsure about making it on the live event on the 27th, but it interests you, sign up and we might be able to get you access to the replay, but you want to watch it soon because the properties available are limited. And again, I don't know how long the 5.75% rate will last. You think you've heard every amazing Florida In-migration stat by now? Well perhaps not. In the latest year over year, Florida saw 740,000 people moved there. Speaker 1 (00:44:23) - Yeah, basically three quarters of a million in just one year. That is truly astounding. That's clearly the most of any state in the country. And with all the growth, Florida's property market became recently the second most valuable in the US last year that bumped New York down to third place. That's according to Zillow. So this population growth is leading to a prosperity increase in the value of Florida property. So I think a lot of people get focused on these things, like wondering if the fed will raise rates another quarter point at their next meeting, and if that's going to show up in mortgage rates. And they wonder about the mortgage market in the future, and it feels like something that you cannot control. But now you can with this rate, buy down courtesy of the builders. So joining us on the webinar to learn all about it. Again, it's all new build and we make that really clear and spell it out for you. In next week's live event, you get to select from one of the two options. Speaker 1 (00:45:29) - To make it clear here, either a 5.75% rate or the 224 program, which means two years of free property management, 2% of the purchase price and closing cost credit, and a $4,000 lease up fee credit. Sign up. It's free. It's our live event next Monday night, the 27th at 8:30 p.m. eastern at 530 Pacific. Register at GRC webinars dot com. Until next week. I'm your host, Keith Weinhold. Don't quit your day. Great. Speaker 4 (00:46:02) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively. Speaker 1 (00:46:30) - The preceding program was brought to you by your home for wealth building. Get rich education.
Who can even afford to live anymore? Groceries are up. Utilities are up. Insurance is up. Mortgages are up. Rents are up. Tuition's up. What's NOT up? Disposable incomes. This episode of Real Talk is dedicated to finding solutions for Canadians just barely getting by. 3:00 | Yasmin Abraham, Cherise Burda, and Dr. Brendan Haley are taking action on affordability. The members of the IRPP's new Affordability Action Council talk solutions on our Real Talk Round Table. LEARN MORE: https://irpp.org/affordability/ 1:11:15 | Our November 16 conversation about anti-Semitism with Tasha Kheiriddin resonated with Real Talker Charlie. 1:13:50 | Real Talker Mitzi isn't sure about Manslaughter charges for Matt Petgrave, but she says something needs to be done in the wake of Adam Johnson's tragic death. 1:22:20 | Shots fired! Lance from The Pas has thoughts on the APP, Gerald's not sold on private healthcare, Kyle wants hands off his TFSAs, and Judy just wants a wave! Real Talkers are all fired up for this week's Flamethrower presented by the DQs of Northwest Edmonton and Sherwood Park! VISIT THE DAIRY QUEENS IN PALISADES, NAMAO, NEWCASTLE, WESTMOUNT, & BASELINE ROAD...tell 'em Real Talk sent you! BUST OUT YOUR FLAMETHROWER: firstname.lastname@example.org BECOME A REAL TALK PATRON: https://www.patreon.com/ryanjespersen WEBSITE: https://ryanjespersen.com/ FOLLOW US ON TIKTOK, TWITTER, & INSTAGRAM: @realtalkrj THANK YOU FOR SUPPORTING OUR SPONSORS! https://ryanjespersen.com/sponsors The views and opinions expressed in this show are those of the host and guests and do not necessarily reflect the position of Relay Communications Group Inc. or any affiliates.
Les Argentins sont appelés aux urnes ce dimanche 19 novembre pour le second tour d'une élection présidentielle particulièrement polarisée. Dans un pays plongé dans une profonde crise économique, l'ultralibéral Javier Milei, qui a recueilli 30 % des voix au premier tour, affronte le ministre de l'Économie sortant, Sergio Massa. Veste en cuir noir, faux airs de rockeur, Javier Milei veut appliquer une politique de la motosierra (la tronçonneuse). Pour symboliser la réduction drastique du budget de l'État qu'il souhaite mettre en œuvre s'il gagne la présidentielle, le candidat ultralibéral exhibe l'engin pendant certains meetings et fait vrombir le moteur devant la foule. L'objet est devenu l'un des symboles de la campagne du candidat libertarien, qui promet de faire tomber les dépenses de l'État central à 9,3% du produit intérieur brut (PIB) contre 24,3% aujourd'hui. Une baisse de 15 points que bon nombre d'économistes jugent irréalisable, en particulier en l'espace d'un mandat présidentiel de quatre ans. Admirateur des économistes les plus libéraux - il a nommé ses chiens des prénoms de plusieurs d'entre eux, dont « Milton » en hommage à Milton Friedman, l'un des pères du néolibéralisme - Milei veut réduire autant que possible la place de l'État dans l'économie. Il compte ainsi supprimer les aides sociales, les subventions, mettre fin à l'éducation gratuite, privatiser la santé... Il tient dans le même temps des discours véhéments contre les impôts : « c'est du vol », tout comme la « justice sociale » assure-t-il, avant de comparer le prélèvement de l'impôt à un héritage de « l'esclavage » et à une pratique pire que celle des voleurs de droit commun.Abandon du pesoMais la mesure phare du candidat (qui a obtenu 30% des voix au premier tour, derrière le ministre de l'Économie sortant Sergio Massa) est de dollariser l'économie argentine. « Cela mettrait fin à cette arnaque qu'est le peso, qui fond comme des blocs de glace dans le désert du Sahara en pleine journée », a assuré le candidat lors d'une interview télévisée, pendant la campagne. La monnaie nationale a perdu plus de 90% de sa valeur face au dollar depuis quatre ans et l'inflation dépasse les 140 % sur un an, au point que les commerçants changent les étiquettes de prix des produits plusieurs fois par semaine : pour Javier Milei, la solution passe donc par l'abandon du peso au profit du billet vert. Pendant ses meetings, ses partisans brandissent même des billets de 100 dollars à son effigie. Sans monnaie nationale, l'ultralibéral compte se débarrasser également de la Banque centrale. L'Argentine serait alors dépendante de décisions de politique monétaire prises aux États-Unis, sans avoir de marge de manœuvre au niveau local.À lire aussiPrésidentielle en Argentine: le favori des sondages accusé d'être à l'origine de la chute du pesoUne économie en criseDans un pays en plein marasme économique, le ministre sortant de l'Économie a - contre toute attente - réussi à se hisser en tête du premier tour de l'élection présidentielle. Sergio Massa, centriste rallié à la majorité péroniste, a obtenu 37 % des voix. Au gouvernement depuis août 2022 (avec un portefeuille élargi), il n'a pas réussi à freiner significativement l'inflation à trois chiffres. La Banque centrale argentine a les taux d'intérêt les plus élevés au monde (130 %). Près de quatre Argentins sur 10 se trouvent sous le seuil de pauvreté. Le pays est lourdement endetté auprès du Fonds Monétaire International (FMI), à qui il doit près de 44 milliards de dollars. La sécheresse historique enregistrée cette année n'a fait qu'empirer la situation : les mauvaises récoltes agricoles n'ont pas permis de renflouer en devises étrangères les caisses de l'État. ÉquilibristeÀ la fois ministre et candidat, Sergio Massa a joué durant toute la campagne les équilibristes. D'un côté, il a dévalué le peso de près de 20% en août, pour répondre aux exigences du FMI. De l'autre, il a baissé l'impôt sur le revenu et la TVA, pour montrer à son électorat qu'il tente de lutter contre les effets de l'inflation. Malgré l'endettement colossal du pays, Sergio Massa promet aussi de préserver les services publics et d'alléger les taxes à l'exportation des produits agricoles, très critiquées par les producteurs de viande ou encore de soja et de blé. À quelques jours du scrutin, les sondages ne permettaient pas dégager une tendance claire en faveur d'un candidat ou de l'autre. Quel que soit le gagnant de l'élection, il fera face à une économie argentine à l'agonie et devra sans doute renégocier la dette du pays auprès du FMI.À lire aussiPrésidentielle argentine: Massa et Milei s'opposent rudement à une semaine du scrutin
Today's guest is Shannon Robnett. With over 25 years of experience, Shannon has been involved from start to finish on over $350MM in construction projects such as multi-family, professional office buildings to city halls, fire and police stations, schools, industrial projects and mini storage. Along with his knowledgeable team at Shannon Robnett Industries (SRI), Shannon is dedicated to sharing his expertise and delivering top-quality projects that bring numerous passive income streams to his syndicate partners. Show summary: Robnett shares his journey from watching his parents do real estate deals to becoming a successful builder and investor himself. He discusses his strategies for cost control, market selection, and team building, emphasizing the importance of aligning goals and understanding the rental market. Robnett also reflects on the impact of the 2008 market reset and the current supply constraint in the housing market. -------------------------------------------------------------- Intro (00:00:00) Shannon Robinette's background and real estate journey (00:01:11) The Rents as the Starting Point (00:11:24) Surviving Interest Rate Hikes (00:12:19) Selecting Markets for Deals (00:13:07) -------------------------------------------------------------- Connect with Shannon: Linkedin: https://www.linkedin.com/in/shannonrobnett/ Instagram: https://www.instagram.com/shannonrayrobnett/ Facebook: https://www.facebook.com/shannon.robnett.1 Web: https://shannonrobnett.com/ Connect with Sam: I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns. Facebook: https://www.facebook.com/HowtoscaleCRE/ LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/ Email me → email@example.com SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234 Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f -------------------------------------------------------------- Want to read the full show notes of the episode? Check it out below: Shannon Robnett (00:00:00) - But the reality is, if I am the builder, I am in total cost control and my my 100% goal is the builder is to satisfy the developers investors. And so we're constantly in there negotiating pricing. We're constantly working on things. We also put the stopgap and the failsafe in there that my construction company signs a guaranteed maximum contract that I personally back up so my investors never have to worry about cost overruns. And so we're able to create the best of both worlds. Intro (00:00:30) - Welcome to the how to scale commercial real Estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big. Sam Wilson (00:00:43) - Shannon Robinette has been involved from start to finish on over $350 million in construction projects. Shannon, welcome to the show. Shannon Robnett (00:00:51) - Hey. Thanks, Sam. Glad to be here. Sam Wilson (00:00:53) - Absolutely, Shannon. The pleasure is mine. There are three questions I ask every guest who comes on the show. And yes, you have been on the show before, and at some point during this episode, I will figure out which episode that was and we'll make sure we highlight that out. Sam Wilson (00:01:04) - But either way, for every guest that comes to the show in 90s or less, can you tell us where did you start? Where are you now and how did you get there? Shannon Robnett (00:01:11) - Well, I started at the kitchen table with my parents watching them do real estate. From there, I grew into a merchant builder and was watching other people. I would build their buildings. They would collect the rents, the revenues. I saw how that was working. In 2001, I built my first investment property. It was an industrial project and two of my original tenants are still in the building. So it proves that the cash flow model works. 22 years later, same year, I watched my father and mother retire with cash flow and realized that real estate was the way to not only get your time freedom back, but to actually gain real wealth and time as well. And so from there, over the last three years, we began, we grew to the point where we needed to start syndicating capital and raising funds. Shannon Robnett (00:01:59) - And over the last three years, we've raised about 62, $63 million. Sam Wilson (00:02:05) - Wow. That's that's wild. Good times man. Merchant builder. I've never heard that term. Shannon Robnett (00:02:12) - Well, that's just where I go to work for other people. You've got a building that needs built. I show up, I build it, and that's my only association with the project. Sam Wilson (00:02:22) - Got it. What? When? When did you start developing or building your own? Real estate empire of cash flowing properties. Shannon Robnett (00:02:31) - I started that in 2001. Obviously, we downsized that in 2008 and started rebuilding it back in 17. Sam Wilson (00:02:40) - What happened in that period between oh eight and 17 for you? Shannon Robnett (00:02:44) - Well, we just saw, you know, we saw a huge market reset. We saw where you couldn't build a building for what you could buy one for. So we saw a huge price disparity. Housing went from, you know, I mean a house that was $1 million you'd see resold at 500. Oh, yeah. You know, as an example, my parents recently sold their house that they purchased for about 400 for 1.9 million, you know, sorry. Shannon Robnett (00:03:11) - Correction, 1.6 million, right. 15 years later. But they bought it at absolutely the bottom. And so so with that we couldn't really get there wasn't a lot of build jobs happening. There wasn't a lot of development happening. And which has led us to the problem we have today, which is a huge supply constraint where we have, you know, somewhere between 4 and 7 million housing units necessary in America today just to house the current population. Sam Wilson (00:03:36) - Right, right. So it's kind of gone full circle for you where it was. It has to build and there was lots to buy. And now there's a lot that needs to be built and maybe nothing to buy. Shannon Robnett (00:03:48) - Right, exactly. Well, you know, and the supply side is coming back online as, as people run into refinance problems, things like that, perfectly performing assets because we still have a supply disconnect. You know, we've still got supply issues out there. But at the same time we're seeing we're seeing lots of lot, a lot more product than we've seen in the last three years is coming back to market. Sam Wilson (00:04:11) - Right? Right. And it'll be interesting to see, of course, at what prices those trade based upon inflation or inflation, interest rates and capital availability. For those of you that don't know, Shannon, you show up on my YouTube feeds all the time. Not even searching for you, dude, I'm not even sure what you're doing, but I'm like, oh, there's Rob, there's there's Shannon Robinette again. So I don't know what your strategy is there, but I just had to point that out on the show. Shannon Robnett (00:04:34) - Well, it's it's basically pester you till you talk to me, you know, and it seems to be working, right. People like, how do I get off this YouTube feed? And then we get to talk about investing, right? Sam Wilson (00:04:43) - Right. Oh, that's really cool. So if you're if you're out there raising capital, go follow Shannon Rob, don't even follow him on YouTube. It just keeps showing up. So see what he does there. On his social media strategy. Sam Wilson (00:04:55) - It's pretty. It's pretty wild. So what are you building today? What makes sense in today's environment? Shannon Robnett (00:05:01) - You know a lot of what we've done. So my past my my first project was industrial. And right now industrial is one of the shining stars in the investment world. And I'll explain in a couple of seconds why. But it's it's really inflation resistant and it always has. But it's never been sexy. Right. And the reality is cap rates on industrial have always traded a couple of points higher than multifamily in any market. The other thing that you have is you've got tenants with balance sheets, tenants that are running businesses. You've got tenants that signed personal guarantees, and you've got tenants to sign five year leases on top of that triple net, which is how industrial is leased because of the long term lease. Make all of the taxes, all of the insurance, all the maintenance, all the management, you know, everything to do with the building, a pass through the tenant. So your rent is truly your rent. Shannon Robnett (00:05:59) - And as we see right now that property taxes are continuing to go up, even though the market has softened, as we see that, you know, insurance is doubling in some areas, tripling and others, this has put a huge crush on NOI in a lot of areas, except for industrial, because that is truly a pass through to the tenant. So it's really been a resilient asset class. And especially in inflationary markets like this, they perform very well. We've got a 37,000 square foot industrial warehouse that we're building for an international stone dealer in Florida right now, looking to build another 40,000ft² for an aerospace company in the Florida market. We've just acquired something in Houston, Texas that was a fully stabilized, triple net leased industrial product that needed needed some proper management and some rent escalations in the in the expiring rents. And so that's really where we've been focusing right now. We're finishing up two apartment complexes that will come to market here starting Q1 of 23. And both of those should be stabilized and and permanent financing on by by the end of next year. Sam Wilson (00:07:09) - That is a lot of moving pieces. I like what you said there about the industrial, the attributes of industrial, such as that you get to pass through all of those expenses. Of course you know that. Is incumbent upon having good tenants that can afford those increases. Shannon Robnett (00:07:26) - Yeah. You know, and the reality is, when you look at it, Sam, when you have somebody that's that's living in your apartment, they are the only way to produce the money. It is their exchange for time that gets them paid. But when you look at business owners, business owners have already figured out how to leverage, right? They have employees that leverage that. They have distribution cycles and centers that that that leverage that. And when you pass through a 15% or a 10% increase in their total rent, they just figure it out. And usually that just passes on down the line. And now what you're buying on Amazon cost you 15% more and you don't really notice it because you still need it. So there's a huge difference in what a industrial flex space user will do versus what a what a tenant will do. Shannon Robnett (00:08:16) - Because if you if you hand him a 10% rent increase, he's got to go give 10% more time that he's already giving 40 or 50 hours to provide what he's got. And he's also dealing with inflationary prices of chicken and fuel and everything else out there that's gone up two and three times. Sam Wilson (00:08:33) - That's a really clear explanation that I probably would not have articulated as well. That's awesome, I love that, and that makes a heck of a lot of sense. You got two complexes you're finishing up. Are you building any more multifamily complexes or is that. Shannon Robnett (00:08:48) - You know, we've got a couple on the books that right now, current interest rates versus rent rates have held us off. But I think that you're going to see there's not enough product out there. There's a glut of it kind of hitting the market right now and stuff that was begin that was began in 22 and 23 or 20, 21 and 22. So you're seeing some of that where you're seeing some some price softening a little bit, but we're really not seeing occupancy shift much. Shannon Robnett (00:09:17) - And so we think we're going to bring those projects back to the drawing board in probably the second or third quarter of 24. Sam Wilson (00:09:24) - Got it, got it. Cool. Love this. Shannon I like the way you're unique in that. You're both some. Shannon Robnett (00:09:33) - People do and some people don't, you know. Sam Wilson (00:09:35) - What do you mean like like how you. Shannon Robnett (00:09:37) - Like the uniqueness. Yes. Sam Wilson (00:09:39) - Right. Yeah. You're unique. Like never I don't know, could probably. Shannon Robnett (00:09:43) - I even like the way you put it. I'm unique. Other people use different words. Sam Wilson (00:09:48) - A pain in the anyway neck. Shannon Robnett (00:09:51) - Yeah. Yeah. Exactly. Exactly. Sam Wilson (00:09:53) - Right. So, man, I don't even know where I was going with this. Oh. You're unique, I was here, I was here making you feel good about yourself. You're unique in the way that you guys syndicate your assets in that generally, the builder isn't also the syndicator, right? Right, right. Tell me about that model, how it works and what are some of the maybe benefits and complications of it? Shannon Robnett (00:10:18) - Well, let's talk about it from the investor's perspective, right? I mean, if if I'm going to build something for you, then I'm going to have my price and then you're going to have yours. Shannon Robnett (00:10:28) - And there is there's going to be this battle between you and me for me to make as much money as possible and for you to get it's done as cheap as possible. That's where change orders come in. And they can really play havoc on your project, right? Yes. But the reality is, if I am the builder, I am in total cost control. And my my 100% goal is the builder is to satisfy the developers, investors. And so we're constantly in there negotiating pricing. We're constantly working on things. We also put the stopgap and the failsafe in there that my construction company signs a guaranteed maximum contract that I personally back up so my investors never have to worry about cost overruns. And so we're able to create the best of both worlds. Not everybody loves that model, because if something happens to me, something also happens to the syndicator. And so, you know, there is there is some of that, but a nice insurance policy, make sure that the right people will be hired to take my place. Shannon Robnett (00:11:24) - Not enough that it makes me a target, but enough that it makes me, you know, expendable with the replacement. So so there's some of that that we've managed to do. But the other thing that we do, Sam, and when we start our process, we start a process with the rents. We want to know what the rents are in the area. And then we build our total model backwards so we're not buying something going, hey, the NOI is $500,000 a year. What can we do to increase that? I look at it and go, I'm going to get an NOI of 500,000 a year. It's going to allow me to build only this much. And so then we build the budget backwards. Know that when we're done, we've got a cost model that will work so that we can execute on the business plan. Once we've done that, if rents have gone up like they have on these two complexes that we're looking at, we're able to survive the interest rate hikes, which we also modeled at 7.5% on our take out loans for conservative nature. Shannon Robnett (00:12:19) - So we're able to come through it with 2 or $300 better rents than what we're projected ahead of the game and finance that where we wanted to. Sam Wilson (00:12:27) - That's awesome. I love that, and I think that's that's really it's just a unique product that you're bringing to the market where you can handle both, both sides of that. So you're finishing up two complexes. I know one of those is at least there in the Boise market as the other one also there. Shannon Robnett (00:12:45) - And the both of them, both of them are here in the Boise market. Yeah. Sam Wilson (00:12:47) - Boise market okay. But you also mentioned that you guys have some assets you're taking down in Houston, some you're taking down in the Florida markets. You're kind of all over the country now. Shannon Robnett (00:12:57) - Well, you know, and what we look at to with that, Sam, is we look at the market first. Right? I mean, there's a lot of people that you've met that they look like a fly in a cow pasture. They're running here, they're running. Shannon Robnett (00:13:07) - They're they're going here, they're going there, and they underwrite this thing. And man, what a magical product it is. It's I mean, it's got the cash flow. It's got everything. And then they go look at the market and they realize that the market isn't an appreciation market or it's not a growth market. There's there's not a lot of upside potential there. And so then they realize, well, I can't do this deal because it doesn't fit my buy box. Right. And what we've really done is we've looked at it and there's eight markets across the nation that. We will do deals in and only those eight. And so when we're looking at things, if it doesn't fit in that market, we've already eliminated a huge swath of what comes across my desk because we want to be in markets, we want to do a good deal in a great market, then a great deal in a good market. And the reality to that is just simply this, Sam, there's only so much you can do to improve the value of the product that you're working with. Shannon Robnett (00:13:58) - There's a lot of things that are external factors like taxes, like politics, like job growth, like people moving in and out of the area that you cannot control. But why would you want to do a great deal? I mean, we're talking a 12 cap. We're talking about owner financing. We're talking about everything that makes every syndicator salivate right in Detroit. Right. So. But you chase this deal down and then you realize the market. So we start market first. Once we've identified those markets, it helps us to be coordinated in our efforts. So while it does look like we're in four different markets across the nation moving into three more, they're very select markets. And then we go in and acquire multiple assets in that area so that we have a concentration in the area. Sam Wilson (00:14:43) - How do you build team and manage each of those? I'll just stop the question there. Think how does that work. Shannon Robnett (00:14:52) - Well, you know, my 30 years in construction experience has really helped me to identify when we're going out of out of state for construction projects, I will go hire a local general contractor, but I will put him through the same process that puts him on my team. Shannon Robnett (00:15:08) - Right. So we've got a general contractor in Florida that's doing that deal, and I have set up a revenue share with him where every day that he saves me, I will give him 25% of the interest that I would have paid. And I will also give him 35% of the cost savings on the overall budget. So if this contractor is now on my side, he realizes that he can make an 8% profit by giving me a change order or a 30% profit by saving me money I wasn't going to save if he didn't help me. And so I wind up with the best of both worlds. He's on my team and we go in and we start that model with conversations and get down to who is the good contractors in the area that have the great relationships, the great reputations, and then we firmly bring them on the team by making it a revenue share so they can actually make more money saving me money than giving me a change order. Sam Wilson (00:15:58) - Right? Right. Which boy? That's the that's the name of the game, isn't it? To absolutely change. Sam Wilson (00:16:04) - Change. Order the heck out of out of a deal. So you've brought the local general contractors on your team. What's that process like for you vetting another GC? I mean, you know. Shannon Robnett (00:16:17) - It reminds me of, you know, two bulls meeting in a cow pasture, you know, but but at some point you realize that, look, we're on the same team. And and when you stop and, you know, think about what my business model is, it makes the most financial sense for everyone involved. And the minute that they see that it is a win win and it's designed to be a win win, all of a sudden they're all on board because they know that regardless of what happens to this job, they're going to make money. If they can make this job go very smooth and execute ahead of schedule and under budget, they're going to be even more profitable. If this job goes long. They'll make what they were supposed to, but it won't be a win. It won't be as big a win as if they put better resources on it. Shannon Robnett (00:17:02) - So then we find them going back to their preferred plumber and going, hey, listen, we need you to work on your price a little bit because we really want to work with you on this job because we know you're not going to screw us over. We know you got the manpower, and it really helps our schedule and gets our timing down to where it needs to be. Sam Wilson (00:17:17) - Got it? No, that's really cool. What about your internal team? So we've talked a little bit about the external teams, the local general contractors and people like that you're working with around the country. But you need I mean, you guys are you're involved in a lot of different things. Developing a multi family complex is very, very different than taking down an industrial asset in Florida. Shannon Robnett (00:17:36) - Well it is and it isn't. Right. I mean, Sam, you're you're involved in different asset classes than where you started out. If I remember correct, you guys were doing a lot of RV storage and parking lots and now you're doing, you know, you're doing laundry mats and some other cash flowing assets. Shannon Robnett (00:17:53) - But, you know, 70% of the underwriting is still the same, right? 70% of the data collection is is very similar. And so when we're looking at that, we're able to take the team that we have. And this is the other thing that I have, and I would love to say this is all me. It's all the Shannon show, but that would be a total lie. I have some of the most amazing team players that are in it to win, and what I figured out how to do is to get them to see what their goals are and magnify those into their job so that they're actually achieving their personal goals while they're doing everything around here. And so they're able to see the wins all along the way, and then you really get the motivation up in the in the office, you get everybody firing on all cylinders. Everybody's willing to jump in and help each other, and you create a team culture that's pretty phenomenal. That can't happen if you're not meeting the goals of every person in here, and not all of them are money. Shannon Robnett (00:18:48) - And so putting that together and and being aware and, and reciprocating to your staff is some of the best motivation that we're going to have. And they'll not only go the extra mile, they'll run an extra marathon for you. Sam Wilson (00:19:01) - That is really powerful, what you've just described there. But that takes that takes a little bit of or a lot a bit of empathy, of awareness, of really dialing into the people that are working for you. How do you how do you balance the need to get stuff done? And the time that it takes to invest in those employees and say, hey man, like Shannon, what are you like? What's your goals? Like, where are you? Where are you? Where are you going with this? And then how do you catalog it and make sure that it kind of fits with what they're doing? Shannon Robnett (00:19:35) - Well, the first thing I do, and this is funny because it throws everybody off. If you've if you've made it through an interview and or a second interview and we want to work with you, the first or the last question I'm going to ask you is, what do you want for compensation? And compensation is all about money, right? Do you want do you want heavily? Or do you want a better insurance plan? Do you want more time off? Do you want, you know, flexibility? Do you want. Shannon Robnett (00:20:05) - What is it that motivates you? And then the next thing we do is we set out to 12 months goals of where you want to be. In that plan. So if you know, I've got I've got people that are they're all about time off. I got people that are all about flexibility. I got people that are all about money got I got people that are blended in the middle. But when they realize now that the only thing standing between them and their goals is this silly little project, it's amazing how the attitude shifts and the mindset shifts and the and the creative juices start flowing so they figure out their own problems, because that's the only thing standing in the way of them. And six weeks of vacation or them and the flexibility to work from wherever they want. Sam Wilson (00:20:50) - Bright man. That's brilliant I love that, I love that indeed. Very, very cool. Shannon, thank you for taking the time to come back on the show today. I didn't I was so enamored with our conversation, I didn't actually get to look up the episode. Sam Wilson (00:21:02) - But for those of you who want to look it up, this would be, gosh, at least two, two and a half years ago. Maybe the last time you. Yeah. Shannon Robnett (00:21:07) - It was a while ago. It was a while ago. Sam Wilson (00:21:10) - Certainly appreciate you taking the time to come on today. If our listeners want to get in touch with you and learn more about you and your projects, what's the best way to do that? Shannon Robnett (00:21:16) - Just Shannon, Rob Netcom. We keep it simple. All of our information is on our website. You get to all our social channels or YouTube, even my calendar. If you'd like to book a call and chat more about what we do and how you can be involved, it's just Shannon, Rob Netcom. Sam Wilson (00:21:29) - Shannon, Rob Netcom. We'll make sure we include that there in the show. Notes. Shannon, thank you again for your time today. I certainly appreciate it. Shannon Robnett (00:21:35) - Thank you. Sam. Sam Wilson (00:21:36) - Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. Sam Wilson (00:21:40) - If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts. Sam Wilson (00:21:46) - Whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
Wow! What a month it's been. There's been some strange movement in property prices and big predictions for 2024, so join Rob & Rob as they give you the latest on rents, mortgages, government shenanigans and more! (1:07) House prices are on the up! (6:36) The first predictions for 2024 (8:40) Rents are rising faster than ever before (11:39) What on earth is going on in the House of Commons (15:41) Hub Extra Links mentioned: House Prices Halifax house price index Nationwide house price index Hometrack house price index Rightmove house price index UK house prices to fall until 2025, predicts Lloyds House prices forecasted to dip further but 5% recovery expected in 2024 Property is crashing hardest HERE Rents Edinburgh declares housing emergency amid homelessness crisis Mortgages Weekly rate watch: Fixes continue to fall Politics Landlords: It's finally happening... Landlords: Rent controls are coming! The King's Speech Tory MPs to challenge government if leaseholds ban does not apply to flats Enjoy the show? Leave us a review on Apple Podcasts - it really helps others find us! Sign up for our free weekly newsletter, Property Pulse See omnystudio.com/listener for privacy information.
Episode 102 Host(s): Jonathan Saar from Market Me Social and Mark Howell from Howl Creative Concepts Guest: Rick Ellis from Ellis Consulting Show Highlights In an era of rising inflation, property management professionals face the daunting task of balancing the need to raise rents with the imperative of retaining valuable residents. The economic landscape continually … Raising Rents and Keeping Residents Longer Read More » The post Raising Rents and Keeping Residents Longer appeared first on JuvoHub.
Rents stabilising in Dublin that's according to a Daft report out today. Ronan Lyons, Associate Professor in Economics at Trinity College Dublin and author of the report explained what is the national picture here.
There's a lot of speculation right now about the state of the real estate market and the outlook for multifamily apartments. Will we see a steep drop in value, or will sales pick back up once interest rates stabilize? And what direction will we see rents go? My guest today believes we will see a rise in demand for multifamily housing along with higher rents. As a builder, developer, and investor, he's in a position to know. Eric Garrett is the Founder and CEO of The Garret Companies, ranked as one of the fastest-growing privately held companies in America. Since 1999, Eric has owned, developed, and delivered over 73 projects in 17 states totaling over 16,000 units and in excess of $3.5 billion in valuation. Today Eric discusses the type of apartment developments he builds, what he looks for in his site selection, and how he's able to control costs by controlling his labor and material supply. Eric will also share why he believes the simple supply and demand equation will lead to higher rent increases. Find out more: https://www.thegarrettco.com/ Today's episode is brought to you by Green Property Management, managing everything from single family homes to apartment complexes in the West Michigan area. https://www.livegreenlocal.com And RCB & Associates, helping Michigan-based real estate investors and small business owners navigate the complex world of health insurance and Medicare benefits. https://www.rcbassociatesllc.com
Explore the world of property investment in this episode featuring Mark Homer, a seasoned property millionaire. Mark shares his unique experience of owning 20 investment properties while residing with his mother, highlighting the financial benefits of this unconventional living arrangement. Delve into the debate between renting and buying a home in the UK as Homer dismisses renting in favour of homeownership. The discussion extends to recent tax changes, including Section 24 and increased stamp duty, impacting the property market. Mark contends that these changes contribute to a shortage of rental properties and increased rents. Gain insights into the current property market dynamics, including falling prices due to higher interest rates, making it an opportune time for potential property buyers Rob Reveals The Government's handling of the COVID-19 pandemic and the impact it had on businesses Tax changes have made the cost of living more expensive for tenants and homeowners. The increase in rental prices due to landlords leaving the market. It is better to invest money in properties rather than buying your own home Why the idea of renting your own home instead of buying it is better BEST MOMENTS "There's a severe lack of rental property because the planning system is broken and because of Section 24 and because they've put the stamp duty up to higher rates of 3% on top." "Clearly, interest rates going up, yes, but a huge amount of it is landlords leaving because of all this stuff, less rental property." "Rents are just going absolutely nuts off the back of this." "If you're only going to stay in a year or two, it's definitely better to rent." "You just need to sort of adapt, don't you, to adapt your business, you know, an issue comes along, you just set the sail of your sailing boat to take advantage of the new direction of the wind." VALUABLE RESOURCES https://robmoore.com/ bit.ly/Robsupporter https://robmoore.com/podbooks rob.team ABOUT THE HOST Rob Moore is an author of 9 business books, 5 UK bestsellers, holds 3 world records for public speaking, entrepreneur, property investor, and property educator. Author of the global bestseller “Life Leverage” Host of UK's No.1 business podcast “The Disruptive Entrepreneur” “If you don't risk anything, you risk everything” CONTACT METHOD Rob's official website: https://robmoore.com/ Facebook: https://www.facebook.com/robmooreprogressive/?ref=br_rs LinkedIn: https://uk.linkedin.com/in/robmoore1979 disruptive, disruptors, entreprenuer, business, social media, marketing, money, growth, scale, scale up, risk, property: http://www.robmoore.comThis show was brought to you by Progressive Media
Rents in “poor, but sexy” Berlin continue to skyrocket as the inventory of apartments remains low. But buying a home may not be the answer, either. Host Soraya Sarhaddi Nelson explores whether the German capital's housing crisis can be solved with Wibke Werner, director of the Berlin Tenants' Association and Konstantin Kholodilin, senior researcher and housing expert at the German Institute for Economic Research in Berlin.Produced by Dina Elsayed.
durée : 00:15:31 - Le monde d'Elodie - par : Elodie SUIGO - Tous les jours, une personnalité s'invite dans le monde d'Élodie Suigo. Vendredi 10 novembre 2023 : l'auteur, chanteur et parolier Vianney. Il sort aujourd'hui son quatrième album "À 2 à 3", composé de duos et de trios avec des artistes incontournables.
In today's self-storage industry, one of the biggest challenges we have today as small self-storage entrepreneurs is the rising disconnect between the rates quoted by Real Estate Investment Trusts (REITs) and the actual rental prices in the market, including their own effective rental rates. Let's look at how that affects small self-storage investors like us and a few solutions. **Online Courses at The Quickstart Academy** https://TheQuickStartAcademy.com/ **Listen on Apple Podcasts** https://podcasts.apple.com/us/podcast/creating-wealth-through-self-storage/id1588425875 **5 KPIs we measure** https://creatingwealththroughselfstorage.lpages.co/top-5-kpi-ebook/ **My blog** http://creatingwealththroughselfstorage.com/ **Facebook** https://www.facebook.com/markhelmselfstorage/ **Twitter** https://twitter.com/MarkHelmSelfst **The Storage World Analyzer** http://storageworldanalyzer.com/ **The QuickStart Academy Store** https://quick-start-academy.myshopify.com
We all know the thrill of watching property prices soar and imagining the wealth it builds up, But let's have a real talk: It's rents that keep our ship steady when the waters get choppy. While many of us have been riding the wave of property appreciation over the last few years, it is obvious that our community is now focused on understanding how rents will perform if there is an economic downturn.That's why Gregg Cohen, co-founder of JWB, is pulling back the curtain on the dance between rental property prices, rents, and occupancy from 2006 till now. Here's a sneak peek at what's in store:- How property prices, rents, and vacancy rates behaved during the worst recession of our lifetimes (the '08 crisis)- What matters most during hard economic times that varies from what moves the needle in good times- Why it's not just about the numbers, but the psychology behind the investing decision that can help you understand if rental properties are still a good fit for you Save your spot and join us live! Let's keep challenging the average mindset, and level up our game together.Hope to see you there!
Voici un extrait du 58ème épisode de Tipping Point. Pour découvrir l'épisode en entier tapez "#58 - Gilles Vialard - Ensemble et Différents - Nos enfants nous élèvent" sur votre plateforme d'écoute. Bonne écoute !
Gilles Vialard est l'invité de ce nouvel épisode de Tipping Point. Le point de bascule de sa vie, l'arrivée de son deuxième enfant, sa fille Lucile, qui ouvre les yeux et le coeur de toute une famille d'abord puis de tous ceux qui la rencontreront. “On a l'impression d'élever nos enfants mais ce sont aussi eux qui nous élèvent, qui nous font grandir”. La France est régulièrement mise à l'index pour son retard dans la prise en compte des droits des personnes porteuses de handicap. Gilles nous raconte comment il s'est engagé de tout son être pour faire reconnaître les droits fondamentaux de son enfant et lui permettre de vivre une vie digne, une vie où Lucile pourrait être au monde en y apportant sa singularité et ses talents. "Accueillir un enfant avec handicap en France aujourd'hui c'est un problème, on va regarder tous les problèmes, tout ce qui ne va pas au lieu de regarder la personne qui arrive.” Si le regard porté par les institutions de Santé et de prise en charge enferment rapidement Lucile, celui porté par ses parents sur la différence, la dépendance, le handicap nous invite à remettre plus de conscience et d'attention sur l'espace du coeur. Gilles nous raconte comment ils ont écouté la parole de Lucile jusqu'à créer les Amalias, le premier habitat inclusif des Alpes-de-Haute-Provence soutenu par l'État, inauguré en 2021 par l'association Ensemble et Différents à Forcalquier. Une colocation partagée par trois amis, à proximité d'un logement social et accueillant dans la salle Arc-en-ciel un espace d'échanges et de rencontres fertiles. “Même si je parle peu ou difficilement, merci de me parler directement, la personne qui m'accompagne n'est pas une prolongation de moi”. Ici, chaque personne est en équivalence et, grâce à des outils de communication alternative et améliorée, chacun peut exprimer ses ressentis, ses émotions, ses pensées et contribuer à la gouvernance du lieu. Ici handicap ou pas, ce qui est au centre est le devenir des personnes, et ses élans de vie. “Je crois que notre ambition transformatrice c'est de reconnecter la sociétés, les femmes et les hommes au vivant, de faire reliance avec l'ensemble du vivant, de régénérer les liens à partir d”une ouverture à l'invisible et à la vulnérabilité.” Estelle P, colocataire aux Amalias. Lucile est décédée 6 mois après avoir emménagé chez elle aux Amalias, après avoir porté le projet jusqu'à sa réalisation et le transmet aujourd'hui à d'autres. Cet épisode est une ode à la vie, à l'ouverture du coeur et des yeux, un élan de vivre ensemble touchant et profondément inspirant. “La véritable mission des personnes handicapées est d'apporter un bien être aux gens qui souffrent de troubles de la normalité” Joseph Schvanec On en parle dans cet épisode : Anne-Marguerite Vexiau, La communication facilitée Vidéo pour découvrir les Amalias : https://www.youtube.com/watch?v=kY05H1Y52Ss Association Ensemble et Différents : https://www.ensemble-differents.fr/ Faire un don pour aider Estelle et Robin à rester chez eux accompagnés malgré le décès de Lucile : https://fr.ulule.com/vivre-chez-nous-avec-nos-handicaps/ou https://www.helloasso.com/associations/ensemble-et-differents/formulaires/3 Pour écouter l'album de Lucile sur Spotify : Les Passeurs de Silence ; sur Deezer Les Passeurs de Silence
Opinion: Homeowner lives in a car while squatter rents his house as an Airbnb. Jason Roth, who lives in Rainier Valley, is an example of how overly aggressive rental laws are destroying the housing rental market and raising rents. https://tinyurl.com/3n3rrwkp #opinion #columns #commentary #MarkHarmsworth #WashingtonPolicyCenter #homeowner #squatter #Airbnb #JasonRoth #RainierValley #KIRO7 #aggressiveRentalLaws #housingRentalMarket #WashingtonState #VancouverWa #ClarkCountyWa #ClarkCountyNews #ClarkCountyToday
While home buyers contend with higher costs, apartment renters have benefited from lower rent growth in 2023, with recent coverage of the housing market describing how rising mortgage rates and still-elevated home values have led to soaring costs of home ownership compared to the price of rent. Sources discussed in this episode: The Wall Street Journal: There's Never Been a Worse Time to Buy Instead of Rent - https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9 RealPage: “Which Markets Could Be Most—and Least—Impacted by Apartment Construction?” - https://www.realpage.com/analytics/markets-most-impacted-by-apartment-construction/ Freddie Mac: “Millennial household formation—potential for another 3 million households” - https://www.freddiemac.com/research/forecast/20231020-US-economy-continues-to-grow-at-a-pace-closer-to-long-term-trend For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/ Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Au Gondwana, la démocratie est un jardin et les votes, ses fleurs. Il peut être fier, Son Excellence Président-Fondateur, le jardinier en chef de la démocratie en très démocratique république. Son jardin est beau, fleuri, les couleurs y sont exubérantes et insolentes.
durée : 00:24:09 - L'invité de 8h20 : le grand entretien - par : Simon Le Baron, Anne-Laure Sugier - Bernard Rougier est l'invité du Grand Entretien de France Inter ce lundi. Le spécialiste du Moyen Orient, professeur à la Sorbonne Nouvelle revient sur la guerre entre Israël et le Hamas et les perspectives de ce dernier.
durée : 00:24:09 - L'invité de 8h20 : le grand entretien - par : Simon Le Baron, Anne-Laure Sugier - Bernard Rougier est l'invité du Grand Entretien de France Inter ce lundi. Le spécialiste du Moyen Orient, professeur à la Sorbonne Nouvelle revient sur la guerre entre Israël et le Hamas et les perspectives de ce dernier.
Faites le test : demandez aux personnes de votre entourage ce qu'évoque le nom d'Excalibur... elles vous décriront probablement une épée fichée dans une enclume (ou dans un rocher). Pourtant, la matière de Bretagne n'est pas aussi catégorique ! À l'origine, l'épée du rocher était même une arme totalement différente ! Learn more about your ad choices. Visit megaphone.fm/adchoices
Today's guest is Grant Pruitt. Grant has over 18 years of experience in commercial real estate brokerages and has collaborated with top global brands like CapitalOne, UBS, NEC and was able to transact worth $800 Million of real estate transactions. Show summary: In this episode Grant Pruitt, co-founder and president of Whitebox Real Estate, discusses the growth of his company and the future of commercial real estate. He shares his insights on the changing dynamics of office and industrial real estate markets, attributing the company's success to their clients and dedicated team. Pruitt also discusses the overbuilding of office space and consolidation in the multifamily sector. He provides valuable advice on staying in tune with market trends and sticking to fundamental principles in real estate investing. -------------------------------------------------------------- Intro [00:00:00] The growth of Whitebox Real Estate [00:01:01] Opportunity in the commercial real estate market [00:02:50] The state of the office space market [00:07:03] The boom in population and headquarters relocations [00:11:24] The potential for repurposing class B suburban assets [00:13:34] The growth of industrial real estate due to e-commerce [00:16:30] The overbuilt office space [00:22:27] Sticking to fundamentals [00:23:06] Closing [00:23:42] -------------------------------------------------------------- Connect with Grant: Linkedin: https://www.linkedin.com/company/whitebox-real-estate-llc/ https://www.linkedin.com/in/grantpruitt/ Facebook: https://www.facebook.com/WhiteboxRealEstate/ Twitter: https://twitter.com/WhiteboxRE Instagram: https://www.instagram.com/whiteboxre/ Connect with Sam: I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns. Facebook: https://www.facebook.com/HowtoscaleCRE/ LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/ Email me → firstname.lastname@example.org SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234 Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f -------------------------------------------------------------- Want to read the full show notes of the episode? Check it out below: Grant Pruitt (00:00:00) - Five years ago, all the headlines were retail is dead. There is no retail. Shopping malls are going by the wayside, and we're never going to have shopping malls ever again. And there's all these dead malls that nobody wants. But you know what? People have figured out ways to repurpose them, to knock them down and build industrial on them, to renovate them, to build experiential retail. And that is completely changed. The, the, the, the talking points. And that's what's going to happen with office. I just don't know what it's going to look like. Intro (00:00:34) - Welcome to the how to scale commercial real estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big. Sam Wilson (00:00:47) - Grant Pruitt, who is the co-founder and president of Whitebox Real Estate, has over 18 years of experience in commercial real estate brokerage. He's also transacted on over $1 billion worth of real estate transactions. Grant, welcome to the show. Grant Pruitt (00:01:01) - Thank you for having me. Sam Wilson (00:01:02) - Absolutely. The pleasure is mine. Grant. There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now? And how did you get there? Grant Pruitt (00:01:13) - That's not 90s, but I'll keep it to that. I started working for my father in San Antonio, who's also in commercial real estate. Broker, developer, owner. I never wanted to get into commercial real estate, but it was literally the only thing I was good at when I went to college. I, um, I thought it was a good way to make money on the side. Turned out that it ended up being a career. I saw an opportunity in in the markets, and I ended up starting Whitebox Real Estate seven and a half years ago. So that's where I am. That's where I got to be. And in the future, I want to continue to grow it and we want to be in, in, you know, at least by the year 2030. Grant Pruitt (00:01:55) - I want to be in the in seven markets around the United States. Sam Wilson (00:01:59) - That is amazing. Seven and a half years ago, you launched this firm of yours. And if I, if I got this right off, off air, you said you guys are in Dallas, you're in Fort Worth, you're in Houston and you're in DC and Austin. Grant Pruitt (00:02:13) - We got a little office in Austin, too, in Austin. Sam Wilson (00:02:15) - I mean, that's that's a lot of growth in a very short period of time. Grant Pruitt (00:02:21) - We've been very fortunate. We made the Inc 5000 list this year. You know, it's can't do it without our clients. And so I really owe it to them and the people of this company for sure. Sam Wilson (00:02:32) - No, absolutely. Though I think it also takes some vision and some stuff on the leadership side to even see the opportunity, which is one of the things that you mentioned. You said you saw an opportunity. I guess it's seven and a half years ago. What what was the opportunity and why was that the time to take advantage of it? Grant Pruitt (00:02:50) - Well, in the commercial real estate world, there was a lot of consolidation and there was a real change in the business model as I saw it, and that the consolidation ultimately was to take many of these companies public, say ten, 12 years ago, you had a limited number of publicly traded real estate companies, specifically on the the office in the industrial side. Grant Pruitt (00:03:17) - On the brokerage side, Wall Street doesn't jive with the brokerage business as well as as as privately held companies do, or people that that are involved in privately held companies. And they started getting out of the idea of working with middle market clients, some fortune 200 clients, some institutional clients. And while there was and still continues to be a great appetite to work with very large institutional groups, everybody who wasn't that they couldn't sell 4 or 5 different service lines was kind of left out there hanging. So I saw that as an opportunity for us to go out and take and seize that niche. Sam Wilson (00:04:10) - Right. So if I'm hearing you right, there's Wall Street and you're saying that that if they weren't of a certain size, Wall Street wasn't interested in it. I said, look, you know, I see an opportunity to start our own brokerage that really is going to serve us the things that maybe they aren't interested in, and there's plenty there for us to take. Grant Pruitt (00:04:26) - Yeah, all my clients were in in still continue to be I mean, some of them are publicly traded, but for the most part they're going to be some fortune 200, some fortune 500. Grant Pruitt (00:04:37) - You know, they're going to be good large middle market businesses. And if you look at what is defined as a middle market business, you know, you can talk to any M&A guy and they're talking about five, six, $7 billion businesses being in that middle market space. Because when you look at the, you know, the big guys, you know, you're talking about at this point, $1 trillion valuation on Google and Amazon and Tesla. And there's a lot there's a lot to be serviced that feeds a lot of mouths. It's a lot of bulk. It's a lot of volume that, you know, a boutique like us, we're not really cut out to handle. But if they have 300 locations across the United States or if they're looking to deploy, you know, capital into real estate assets, we're a great conduit for that. That's a great client for us. And, you know, we don't have to have all their business. We just need a little bit of it. Sam Wilson (00:05:33) - Got it. Sam Wilson (00:05:33) - That yeah absolutely. Absolutely. And when you're when you're of that size a little bit goes certainly a long way. That's so what was what was the first asset class you really focused on. And how did you present and get your kind of foot in the door to present that then? To those. Uh, companies. Grant Pruitt (00:05:51) - Uh, I laugh because when you start a business and you start it from scratch, you're looking for anybody that will work with you. Sure. If if, if if they'll work with you. That's the ideal client. And fortunately, it happened to be in the industrial space. So it was a warehouse user. That was the first client that I worked with. But quite frankly, if it would have been, you know, if it would have been triple net lease buildings or retail or multifamily or just about anything that we could have transacted on, that probably would have been our first client and we probably would have been focused on that. But fortunately, it landed in my sweet spot in the office in the industrial space. Sam Wilson (00:06:37) - Man, that's that's really cool. Yeah, I love that. But let's talk about office space. I mean, that's kind of one of those things right now. That is it's the dog everybody's kicking and I bet you've got some insights that would say one while it's while it's still why may be a good investment now and then maybe if you can give us a little insight into where you think office is heading. Obviously it's local. I would love to hear kind of what you're seeing in your corner of the market. Grant Pruitt (00:07:03) - Absolutely. So it's it's a really it's it's funny because we see it on two fronts. You know, we're working with the, the the tenant and the user. We're also working with the buyer and the investor and the. Tin it, and the user market is much more active than what people think it is. And I understand why they, they, they feel that way. And then when we talk about that from an investor standpoint, um, there's always a little bit of a credibility check when, when we're saying that we're seeing that activity. Grant Pruitt (00:07:47) - Um, what we really see, and I think you see this across a lot of markets in the country for the office space, is you have a tale of two cities. You have your class A, class A, um, you know, very well located, highly amenities, desirable product that does exceptionally well. And the vacancy rates are very often sub 10%. And then you have your class B and under assets that are 2,530% vacant, sometimes more than that. And so it's it changes my market. And I'll, I'll point that out as well. And that, you know, I was talking to a buddy of mine in Chicago. And in Chicago he said, well, you know, it's all the class that's in the suburban environment that people are considering and want to be in. I said, well, it's really what I feel is the opposite of the market that I'm in. It's the class B urban assets that have the ability to be reconfigured, that have some sort of, you know, re adaptive use that you can retrofit the building as that are more desirable. Grant Pruitt (00:09:01) - You know, in this particular market, if you're 3 or 4 straight, 3 or 4 streets off the main drag. And in this market we have a lot of freeways. So if you're 3 or 4 streets off an interstate or a freeway and you know, it's a 1980s, three story, two story atrium building, that's surface parking, that's probably brown brick. That's a really, really, really tough building to own. And that's going to be a difficult building to to operate. And I think that's the great unknown as to what that looks like moving forward and how we work with those assets moving forward. If you have the class B asset that's in an urban environment, we do see a lot of change in use to hotels, multifamily, mixed use development. You know, I've even been seeing people have been talking about I haven't seen in this market, but probably will as soon as we get done here. You know, even doing urban farming in some of these class B assets that are out there. Grant Pruitt (00:10:08) - So I think that you're going to see a lot of redemptive. Reuse type projects. But, you know, as as long as it's well located, it's a class asset. It's doing exceptionally well. And I'll tell you the driver for that, we've had a lot of, you know, historically speaking, and this really is buck the norm. Historically speaking, the class B asset has been the safest asset to invest in. The idea was that when the market went down, the businesses were looking at ways to cut costs. So the people that were or the tenants that were using class A space would go to a class B asset to save money. So it stayed full. When the market did well, they moved out to a class asset, and the people that were in a class C asset wanted to upgrade their space, and so they moved into a class B asset. So it more or less was recession proof and it always stayed leased. Fast forward to today. The tastes have change, the workweeks have changed, and what we see is if they have 30,000ft in a class B asset that has, you know, 40% utilization, 50% utilization, and on Mondays and on Fridays it's not being used. Grant Pruitt (00:11:24) - They just say, forget it. We're going to go to a class asset. We're going to take 10,000ft². The people that want to come work here, great. They can work here. The people that don't want to work here and want to work from home, great. That's fine. And by going from 30,000 to 10,000, they're going to a nicer building. But they're cutting their rent. And so it keeps those class A class assets filled. The other thing to keep in mind, and I speak to this from a local standpoint, is in-migration and and headquarters relocations. So one of the the guy that runs my industrial group here in Dallas has a great analogy for for In-migration to DFW. And he says, look, every day a 747 comes in lands at DFW airport and all the people get off, but they never leave. And that happens 365 days a year where you keep having these 747 land and they get off, but they never, ever leave. And so that's how much of a population boom we're seeing. Grant Pruitt (00:12:30) - And in addition to that, we're still seeing very significant headquarters relocating to this particular market. So I always talk about Toyota. Toyota moved here from Torrance, California. They announced it in 2014. They moved in 2016. They bought 4000 jobs. But it wasn't the 4000 jobs that Toyota brought. It was all the other jobs that came with Toyota to service Toyota. If you go to Plano and Frisco on the northern end of the metroplex, not so far north at this point, but at that point very far north, they built that market. They built a city with all the companies that went there to service them. And I tell people that that was 4000 jobs. I can look out my window and I can see Goldman Sachs new headquarters going in. They're bringing 5000 new jobs. And if I look maybe with binoculars, not too far in Irving is Wells Fargo. That's 3000 new jobs. So that's 8000 new jobs. That's twice what we saw with Toyota that have yet to come and and and take residence here. Grant Pruitt (00:13:34) - And that completely is going to continue to change the dynamic. So, you know, from an investor standpoint, you always talk about location, location, location. Well where's the population growth? Where are the companies moving to, what businesses are going to need other businesses to come service them? And then what are the asset classes that are still desirable? Now I'll back up a little bit and I will I'll tell you and everybody else that I talked to had this conversation with an institutional family office that does real estate investing last night. I don't know what's going to happen with these class B suburban assets. Something will I don't know what's going to make the most sense. Whoever figures it out is going to make a lot of money. I just don't know what it is. And from a historical context, I'll give you an example of that. It doesn't take that it's not that hard to think. Back five years ago, all the headlines were retail is dead. There is no retail. Shopping malls are going by the wayside, and we're never going to have shopping malls ever again. Grant Pruitt (00:14:36) - And there's all these dead malls that nobody wants. But you know what? People have figured out ways to repurpose them, to knock them down and build industrial on them, to renovate them, to build experiential retail. And that is completely changed. The, the, the, the talking points. And that's what's going to happen with office. I just don't know what it's going to look like. Sam Wilson (00:15:02) - Yeah, I think that's a great point. And that's um, it is interesting to see, I mean, shoot here and here in the Memphis market. I was just and again, I'm not in the office space. I don't have any investments in office. But even just here in the Memphis market, talking about that class B kind of asset, that was I was taking one of my daughters to the doctor here a couple of weeks ago, and I was driving by, and it's a class B late 80s build, that same brick build. You're talking about nobody. I mean, this entire campus completely vacant, like, I mean, if I used to be in the single family foreclosure space, I'm like, this just looks like one massive 50 acre foreclosure. Sam Wilson (00:15:40) - Like, what in the world is. It looked like a nice building. Like if it were maintained and taken care of at some point, the investor probably just said, city. You can have it. I mean, I don't know what happened, what is happening with that, but there is a gold mine sitting there when someone figures out what to do with it. That's right. That's that's really, really wild. I love and thank you for taking the time to break that down, because I've had, you know, several different people talk about office and it is either, you know, you'll look down upon, but you've given some real clear insight into what makes still a very compelling office investment. And it sounds like a couple of things. One is market dependent, obviously, but then type of asset within that market that, you know, people are still looking for. So, you know, come to you and check out check out what you guys have going on there in the Dallas Fort in Fort Worth markets to see what what opportunities still are out there in the office space. Sam Wilson (00:16:30) - I think that's really, really fascinating. We've seen kind of that on the on the inverse of that though, you know, and you said you cut your teeth on the industrial side. I mean, industrial has just been off the chain for an untold amount of time. Where has that going? Grant Pruitt (00:16:45) - So I also think that some of that has to do with being market specific. And we are seeing, you know, we saw unprecedented demand for three years and it is quelling okay, I think it's going to continue to be strong. But take a market like Charlotte, they were seeing 13 to 15% annual rent growth that it's it's unsustainable to have that. And our market we've been seeing 10% rent growth. And when I tell people that it's quelling I go, well we're going to see 3 to 4% rent growth, which is extremely good for us because this is a market that, you know, there's some markets like east, east, east of Dallas, the Garland market. You know, I have an uncle that's a developer as well. Grant Pruitt (00:17:33) - And he was given this talk and he said, you know, in the 1970s we were developing warehouses in Garland and lease them at two bucks a foot. And he said, you know what? Rents are now, this was about 2008, 2009. He goes two bucks a foot. And so it took really 35, 40 years for us to see rental appreciation in some of these markets because we just built so much product here in Dallas Fort Worth. You're seeing the inverse, the industrial demand, even starting prior to Covid, Covid accelerated e-commerce, which, you know, everybody talks about e-commerce last mile. But even prior to that, the the drivers of industrial demand were on shoring of manufacturing. An e-commerce. We we, you know, the third driver of demand that we've seen has been increased inventory levels, which is typically about 30% increase inventory levels. I call it the toilet paper effect that you don't want to run out of toilet paper. So you stock up on 30% more toilet paper than you need in your warehouses. Grant Pruitt (00:18:36) - Um, it's it's the the increased inventory levels more or less is played out through the system. What is continuing to play out is on touring or manufacturing and even more so, e-commerce, because only about 17% of our retail sales are e-commerce. And I don't know about you, but my home has more Amazon boxes that show up than every day. There are more Amazon boxes that show up at my house than the day before, because we're we're embracing the idea of e-commerce in our household. And I think that's only going to continue to accelerate. You know, the last mile is going to get more and more and more complex because that speed to the rooftop speed to market is going to become more and more important, and technology is going to enable us to be able to do that. So when I say it's market specific, you know, we're in Dallas-Fort worth, you can reach any the majority of the country within a thousand miles. So that's a two day drive for a truck driver. One day. If you have two truck drivers, what changes? That is automated trucking, which is here. Grant Pruitt (00:19:43) - We're going to continue to see an acceleration of different markets that grow because of what technology is inspiring. And so your question about seeing the inverse. Yes, we are seeing the inverse. We're seeing spaces that were functionally obsolete that didn't lease for 30 years, that were in markets that were in the doldrums, that are now some of the hottest markets in the country. Great example is the valid market here in DFW. We were doing $3 gross deals on buildings that now are probably going to get 10 to $10 net, and that market went from a very undesirable market because it was smaller, smaller products, shallower bays, older product, functionally obsolete class for sprinklers and. When people started trying to identify what was close to rooftops. Well, I'll be darned. It is right there by all the rooftops. And you know, Amazon has completely disrupted the distribution model. You know, if you remember ten, 15 years ago, they started with million square foot facilities in in most metropolitan areas, you know, in DFW they built 2 million square footers. Grant Pruitt (00:21:06) - And if you the idea of e-commerce was that you weren't going to have as much need for industrial space because it was literally going to come in and out and you weren't going to have to warehouse anything. And what happened was it did the opposite. So it grew the inventory levels and it grew the need and demand for industrial space. So then Amazon went for 1,000,000ft, and then they started leasing 500,000 square foot. And then it went to 250. And I'll never forget they at least 70,000ft in a like a 14 clear, completely functionally obsolete building in central Dallas. And it was like everybody that was real estate professionals had exploded and said, why on earth are they doing that? What are they thinking? And it was because they needed a presence to be able to quickly deliver goods and, well, goods to households. And it broke the model. It absolutely broke the model. So you're going to continue to see that. But I do caution people and that everything in real estate is a pendulum. It swings this way, it swings this way, it swings this way, it swings this way. Grant Pruitt (00:22:09) - And I don't see a reason at this point in time. But there will come a day when we overbuild and we don't have a need for as much industrial space. And we're going to having we're going to be having the same conversation we're having about office that but it's going to be about industrial because I had that conversation 15 years ago. Sam Wilson (00:22:27) - Isn't that the way it is, though? I mean, this is something I was on a panel here a couple of weeks ago. We were talking about just being opportunistic in that it is the way real estate runs. Like you're saying, we were overbuilt maybe on office space right now. We went through an incredible run in the last decade on the multifamily consolidation on just, you know, like you said, increasing increasing rents, prices just cap rates compressing, prices, skyrocketing. And now we're seeing that seeing that cool off to a certain degree and again in certain markets. But I think it's one of those things where it's just it's stay in front of that, being in tune with what's happening in the market and really staying true to fundamentals. Sam Wilson (00:23:06) - And I'm sure it's one of the things you guys preach to your investors is really stick to your fundamentals, because not everything lasts forever on the bad side or the good side. So I. Grant Pruitt (00:23:14) - Think that. Sam Wilson (00:23:15) - Yeah, that's really, really cool. Grant, this has been awesome having you come on the show today. You've broken down really two really key asset classes that many people are interested in, both probably on the sidelines watching office and then actively investing in on the industrial side, giving some great insight, both what's happening in your market and then also around the country. This has been absolutely fascinating. Thank you for your time. If our listeners want to get in touch with you and or your firm, what is the best way to do that? Grant Pruitt (00:23:42) - You can go to? You can go to Whitebox Real Estate, or you can send us an email at contact at whitebox. Sam Wilson (00:23:50) - Real estate.com Whitebox Real estate.com. We'll make sure we include that there in the show, notes. Grant. Thank you again for coming on the show today. Sam Wilson (00:23:57) - It was certainly a pleasure to have you. Grant Pruitt (00:23:58) - Thank you for having me. Sam Wilson (00:23:59) - Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
Failed deals. Capital calls. Lost investor money. A dreadful and sobering conversation ensues for many some commercial real estate sectors. Residential (1-4 unit) and commercial (5+ unit) real estate fortunes are decoupling. Multifamily commercial loans are at the mercy of interest rate resets. Residential is stable due to low supply and sustained demand. Neal Bawa from MultifamilyU and I outline the multifamily problem. Values have plummeted 25%. The magnitude of the multifamily problem is about 1/80th of the 2008 Global Financial Crisis. There are two reasons for the office apocalypse—both declining income and increasing expenses. Only 3% of office buildings in downtown cores have a floor plan that can be converted to residential. Dreadful. There will be possible discounts in the hotel industry due to a lack of funding and loans. Retail has surprising bright spots. We discuss the future of rents through 2026. Will multifamily problems create contagion into 1-4 unit residential? We discuss. Timestamps: Multifamily industry changes and challenges [00:00:46] Discussion on the new difficulties faced in multifamily, such as failed deals, capital calls, and banking industry challenges. Opportunity arising in the multifamily market [00:01:12] Exploration of the current opportunity in the multifamily market due to a 25% reduction in prices from the peak, caused by distressed transactions and high interest costs. Anatomy of the problem with floating rate debt [00:05:57] Explanation of the issues faced by apartment building owners or syndicators when they have floating rate debt without rate caps, leading to potential deal blow-ups. The rate cap issue [00:08:29] Discussion on operators neglecting to buy a rate cap or buying a rate cap set too high, leading to negative cash flow. Magnitude of the multifamily reset problem [00:09:47] Comparison of the current multifamily reset problem to the global financial crisis, highlighting the challenges faced by operators. Challenges in refinancing properties [00:12:10] Explanation of the challenges faced by properties in refinancing due to decreased net operating income and increased mortgage costs, leading to potential loss of investor money. The availability of multifamily loans [00:16:50] Neil discusses the availability of commercial real estate loans, particularly in the multifamily space, and how it differs from other asset classes. Lending challenges in the commercial real estate space [00:18:03] Neil talks about the severe lending challenges faced by asset classes like office, retail, and self-storage, while expressing confidence in the stability of multifamily lending. Contagion and the impact on the 1 to 4 unit space [00:20:56] Neil discusses the limited level of contagion that could affect the 1 to 4 unit space due to problems in the multifamily market, highlighting the healthiness of the single-family market and institutional interest in it. The Troubled Office Sector [00:25:35] The speaker discusses how the office sector is facing a long-term demand crisis due to the decrease in office occupancy and the challenges of converting office buildings into residential units. The Ten-Year Problem in the Office Sector [00:27:06] The speaker explains that the office sector is about to face a ten-year problem, with defaults and declining values affecting the downtown core and other assets. Bright Spots in Retail and Hotels [00:29:21] The speaker highlights that retail occupancy is higher than multifamily occupancy, and despite the Amazon effect, retail is doing well. They also mention that hotels have seen strong recovery post-pandemic. Hotels and Multifamily Discounts [00:32:55] Discussion on the current cash flow opportunities in hotels and multifamily properties, potential discounts in the next 12 months. Retail Reinvention and Rents in a Recession [00:33:57] Exploration of how retail can sustain itself through experiential offerings, the resilience of rents in past recessions. Artificial Recession and Rent Growth [00:35:33] Analysis of the possibility of a recession and its impact on rents, the strength of the US economy, and the expected short duration of the recession. The recession and its frequency [00:40:56] Discussion on the frequency of recessions and how they are a normal part of the business cycle. Learning opportunities at MultifamilyU.com [00:41:31] Information on the webinars offered by multifamily ewcom, covering various topics including single-family and multifamily projects. Appreciation for Neil Bawa's insights [00:42:22] The host expresses gratitude for Neil Bawa's informative contributions and welcomes him back on the show. Resources mentioned: Show Notes: GetRichEducation.com/473 Neal Bawa: MultiFamilyU.com and Grocapitus.com For access to properties or free help with a GRE's Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY' to 66866 Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold Complete episode transcript: Speaker 1: Today's guest is well known as the mad Scientist of multifamily. He's a data guru, self-described self-described process freak, and an outsourcing expert. He's a ten figure man with his billion dollar plus multifamily portfolio and his 900 plus investors. He's also the CEO at a multifamily education company because he's a really good teacher. It's been about a year and a half since you were first here. Welcome back to Neal Bawa. Speaker 1 (00:00:40) - Well, thanks for having me back on. It's it's a delight to be back. Had a fantastic conversation with you last time. So I'm looking forward to this one. We did. Speaker 2 (00:00:46) - The last one was so fun and spirited. But my gosh, since then, Neal, about a year and a half ago, so much has changed in the multifamily industry. We know that a lot of new difficulties have come into multifamily, like failed deals and capital calls and the need to raise bridge debt and banking industry challenges. Speaker 2 (00:01:06) - So where would you like to start to help give us some perspective on all that? Speaker 1 (00:01:12) - Well, think opportunity is finally here. You know, when when we talked a year and a half ago, I was I said things like, well, prices are too high. I said things like, I don't know where the margins are. I don't know how people make deals work. I don't know how they make them pencil out. Right. Um, in some ways, I'm still saying some of those things, but it's certainly not because of pricing anymore. So, you know, the single family market is a perfect sort of benchmark for the world that live in multifamily. As far as I know, in the last 12 months, single family prices have either been flat or up 1% or down 1%, depending upon which analyst you pick. But it's certainly been an extremely, extraordinarily stable market in terms of prices, where it's it's you know, the volume, of course, has cratered. It's down a ridiculous percentage. Speaker 1 (00:02:00) - Whereas multifamily was an industry that has hurt more because of the portion of multifamily that was purchased or traded in the 2020, 2021 and 2022 time frame. Almost all of those trades happened using bridge loans which were floating, whereas almost all single family transactions were 30 year fixed loans. Right. So so two completely different things have happened. Normally the single family and multifamily market tend to be in lockstep. And that's certainly been the case for ten years. But over the last 18 months, single family and multifamily have separated from each other. And the big reason for that is almost all of the distressed transactions that you're talking about, that you're alluding to all of those cash calls. They are related to bridge loans, which had floating debt. And that floating debt has gone from, you know, 6% to ten, eight, you know, 11%, even for for some of these, these operators making it extremely difficult to make numbers work, making it very difficult to pencil. But on the good side, we've now seen compared to the peak, which was probably about 20, 21 months ago, we've seen a 25% reduction in prices, which is huge because we mean multifamily usually as an asset class, doesn't go down 25% simply because it its value is based on rents, you know, and rents rarely go down. Speaker 1 (00:03:22) - They hardly went down for 6 or 7 months in 2008, so we didn't see much of a decline there in 2008, simply because, you know, the, the, the income was strong, but this time, the much, much higher cost of interest means that our overall post mortgage income is down. And that's why prices are down 25%. So both opportunity and distress in the multifamily space. Speaker 2 (00:03:46) - That's such a staggering number. So let's frame that. Multifamily prices down 25% since their peak or year over year. And then just to be clear, we're talking about five plus unit residential apartment buildings with that figure. Speaker 1 (00:04:01) - Yes, I'm glad you asked the question that way because I do need to qualify a few things. So so first thing is down from peak and depending upon different markets, the peak was either the last quarter of 2021 or the first quarter of 2022. And in a couple of markets, even the second quarter of 2022. So it's I'm not saying year over year, it's basically they're down 25% in the last 18 or 20 months. Speaker 1 (00:04:25) - Um, so the second piece is that the down 25% is predominantly, let's call it hotter markets in the United States. So if we're talking about a steady Midwest market like Kansas City or Indianapolis, then you're probably seeing a decline of half that amount. So maybe 12.5, 13, 14%, where if you're talking about a very fast growing market, you know, all the Texan markets, the Floridian markets, then you might be seeing declines of that 25% level, since a lot of the transactions that did happen in the last two years were in the faster growing markets, that 25% number is still reasonable. And some people listening to this show might say, no, I don't think 25% is right. It's more like 20, it's more like 18. So I'll. Be at that by saying it's a pretty wide range. We're seeing as little as 18% in some of these fast growing markets, you know, hot markets. And we're also seeing markets like Phoenix, where we're seeing 27, 28% declines in price. Speaker 1 (00:05:23) - Also, the the range is dependent on the number of units. We are seeing smaller declines if you've got less than 100 units. Right. So smaller properties, we're seeing a smaller decline maybe 15%. And then when we are seeing properties that are 300 units or more, just the whoppers, we're seeing 30% declines in those assets. So so a lot of it is really dependent upon, you know, because the bigger the size, the harder it is to finance it these days, the less the banks want to take a risk on it. So the bigger the property, the harder, harder it's hit at this point of time. Speaker 2 (00:05:57) - The bigger the property, the less liquidity. So maybe, Neil, to help the listener get a full understanding, maybe you can take us through the anatomy of where a common problem is with what happens to an apartment building owner or syndicator when they got this floating rate debt and they didn't get a rate cap and rates spiked? What exactly happens that makes these deals blow up? Speaker 1 (00:06:24) - Right? First, want to, you know, set the size of the of the problem. Speaker 1 (00:06:28) - Right. So when you compare it to 2008, it's not comparable in 2008, the total size of distress or you know, potential distress was 8000 billion or $8 trillion. So it was it was a it was an absolutely staggering event. Luckily, not a lot of that distress actually happened. So that was good. But the the total size of distress was in that $8 trillion or $8000 billion range, the total size of distress in the multifamily market appears to be in the $100 billion range, so about 1/80 of the size of the distress in 2008. So keep that in mind. Also, as a percentage of the overall multifamily industry, there's about 100,000 multifamily properties in the United States that are on the bigger size. Let's call them more than 50 units. There's 20 million apartment units total. 100,000 are the bigger properties. Of those 100,000, the distressed portion of the portfolios is about, from what I can tell, about 3000 properties. Maybe it could be as much as 4000, but 3000 is a very common number. Speaker 1 (00:07:30) - So about 3% of the properties are distressed. And why are they distressed? Multifamily has been doing incredibly well. Rent growth has been phenomenal, especially in 2021 where it was 15%. Just so you know, they the 50 year average is about 2% rent growth. So 15% is you know, champagne time. So so we've certainly had positive trends. And we continue to see positive trends. You know there's there's less and less people can afford a mortgage. So there's basically a you know brand new renters being created every day because of mortgage rates being this high. But the, the the downside was that a portion of those 100,000 properties were purchased in late 2020, 2021 and then, you know, 2022, and they were purchased using floating debt. And the the so we're talking about those 3000 properties. Those 3000 properties either didn't have a rate cap. So when when you you're purchasing using, you know, bridge debt or floating debt, you want to buy a rate cap. So if rates do go up they hit that cap. Speaker 1 (00:08:29) - And then anything above that cap is something that the rate, you know, cap selling company reimburses to you. So that way you're not affected by but by going above that, well, some of these operators neglected to buy a rate cap, which was a really bad thing to do. But then there were others that other operators that bought a rate cap, but their rate cap was set too high. So, you know, they basically didn't think that rates would go up. So they did put a rate cap in. But instead of buying a rate cap at 6% or 7%, they may be bought a rate cap at 8 or 9. They were basically looking for the worst case scenario, and so they bought the cheapest rate cap that they could find. And now, you know, rates have gone up and they've already hit that rate cap. Maybe it's eight and a half or 9% and it had eight and a half or 9%. That mortgage is still too high for that property to cash flow. So now the property has negative cash flow. Speaker 1 (00:09:18) - So there's I personally know of a few dozen properties where the negative cash flow is between 20,000 and $200,000 a month. And that negative cash flow means that the syndicators, the the general partners are basically putting that money in themselves, or they're taking short term loans and they are now looking for a solution there and their solutions are limited. I can give you a list of those, but their solutions are limited because the property is is negative cash flow and nobody wants to touch a property that's negative cash flow. Speaker 2 (00:09:47) - Did we say that he's a data driven guy or what? That was some great perspective that the magnitude here of the multifamily reset problem has been about 1/80 of what the problem was in real estate during the global financial crisis. That was a great way to put things in perspective. Yeah, Neal, you know, it's such an interesting mindset that an operator would have the awareness to buy a rate cap with their floating rate debt, but yet not have the cap be low enough in order to keep them out of trouble. Speaker 2 (00:10:20) - That's really unusual to me. Do you have any idea what percent of operators have bought a rate cap with their floating rate debt? Speaker 1 (00:10:30) - I think a majority of them have. So I'd say more than 50% of the properties that were purchased during this time did have caps, but a lot of the caps were set high. So that that was a very common thing, where the caps were set to 8% or higher, as opposed to them being set at, you know, 6 or 6.5%. So it's more of a high cap issue rather than a no cap issue. And I think the bigger the secondary challenges, let's say let's say they had a good rate cap, right? So I bought it. Let's say you bought a property in the, um, let's call it the final quarter of 2020. And you bought a two year rate cap. And the rate cap was good. It was 6.5%. Yeah. Good for you. Right. But that rate cap was a two year rate cap. So now it expired basically last year. Speaker 1 (00:11:14) - And so since last year you're now up at 10 or 11%. And, you know, a year's gone by. Your property is bleeding. Maybe it was doing well, but now that it's been bleeding for a year and you've been paying all of that bleed out of your operating expenses, now you're in trouble. And maybe you bought it. Three rate cap. Well, if you bought the property in the final quarter of 2020, then in about a month or two months from now, we're in the final quarter of 2023. Well, that rate cap is going to be gone. And then maybe in the next three, 4 or 5, six, seven months, all of your operating budget, all of your operating, you know, fund is going to be, you know, gone because you have this much higher mortgage. So what's happening is that this is one of those situations where there isn't a trigger on any one particular day, and a huge number of properties come to market. There were a lot of properties purchased in the final quarter of 2020, all four quarters of 2021 and the first three quarters of 2022. Speaker 1 (00:12:10) - Right. So you're looking at a total of eight quarters. So each quarter, a certain percentage of those properties get to the point where either their rate cap is gone. Right. So it's finished because you bought a one year or two year rate cap, or they're they're at the point where even without the rate cap, their loan is expiring. So a lot of these bridge loans were two year loans and three year loans. And so the vast majority of the challenges that the multifamily industry is going to face are going to be in 2024, because that's when a vast majority of either rate caps or mortgages expire. And because because the net operating income of these properties has gone down and the and the mortgage cost has gone up, most of these properties cannot be refinanced. So I'd say out of the 3000 properties, you could probably refinance using some mechanism, a thousand of them, maybe a third of them. And that could be, you know, do a cash call, get, you know, money from your investors. Speaker 1 (00:13:07) - Or you could do what is known as a pref lending, where you basically take money from an outside party and that outside that extra money helps you refinance into into perm debt. So those are your options. And the third option, which is likely to be most common, is that you go out and sell your property. But from what I'm seeing, the vast majority of these properties that don't get refinanced. So out of 3000, the 2000 that don't get refinanced are likely to come to market, and the vast majority of them will end up losing all of their investor money or a majority of their investor money. And so you, you know, if it's a $100 billion problem, that's, you know, we're talking about 30 to $40 billion of investor money, and a majority of that 30 to $40 billion could be lost. Speaker 2 (00:13:48) - Yeah, that is troubling and really concerning as far as those LPs, those limited partners, those investors in someone else's syndication, hopefully that syndicator, that operator is communicating with their investors. Speaker 2 (00:14:03) - But for investors, is there anything they can do to identify cracks in the arm or where they might be losing their deal, where they might be losing their money, where they might be throwing good money after bad if a capital call is requested? Speaker 1 (00:14:18) - I think it's a very difficult thing to do for a limited partner because you have, you know, you have more, you have much more exposure to the deal than you would when you invest in the stock market, where you know, there's almost no exposure unless it's a public company. Um, but and these are all private syndications. But I think that a lot of investors simply don't know how to read the, the budgets versus actuals. They don't necessarily know how to read the Performa. So it's it's challenging. So if you're somebody that is. Comfortable doing that. I suggest you dive in and basically ask a lot of the questions of the syndicators. I have one such property, so, you know, I was lucky in that during that time a lot of my colleagues had I have people who I know colleagues that bought 10 to 12 properties during that time frame. Speaker 1 (00:15:02) - It was very normal. I bought one and a half. So one of those properties was my own property, exited one of my partners. So I call it a half a property because it was already mine. Um, and then I bought purchased one other property in a military metro. So I was able to get it for a lower price because it was a military metro. And usually the prices are lower for, for for military towns and, and that property, you know, I'm having the same challenges that I've described. So, you know, the the rate cap issues and the fact that basically prices have gone down by 25%. And I'm dealing with it by constantly communicating with my investors, giving them, you know, options. You know, here's, you know, how when, when we were when we were all selling these these shares to investors, we gave them a, um, a sensitivity analysis showing them, you know, worst case scenario, best case scenario, you know, in a middle case scenario. Speaker 1 (00:15:55) - And so now we're basically doing a sensitivity analysis based on what we are seeing in the marketplace today. And and giving them feedback on what our options are and think a lot of it comes down from the the general partners communicating with the limited partners. And if the your general partner is not very communicative, is not giving you information, ask for one on one meetings, ask for you know, more information in their webinar or in their updates. I think this is a time for limited partners to be vocal. Speaker 2 (00:16:25) - You've learned about the problem in the larger apartment space. You've learned about how operators and apartment syndicators are dealing with the problem. And then, Neil, where do you think that we're going next and think maybe we should ask and look at it through the lens of where do you think we're going next with the availability of multifamily loans, could this help the source of capital dry up? Speaker 1 (00:16:50) - And so I think the answer is we are going to a very dark place with availability of commercial real, you know, loans. Speaker 1 (00:16:57) - Multifamily is in a privileged asset class. So, you know, the the term commercial real estate is sometimes meant to include multifamily, sometimes not. So I'll assume that multifamily is part of commercial real estate, but there are many other asset classes. So there's office which is the next biggest asset class. There's retail hotels, there's self-storage, you know, and and a few others like mixed use. And of those commercial real estate asset class, there's only one that's privileged and that's multifamily because there are not one, not two, but three lenders who are government or quasi government organizations whose only job it is to keep lending in the multifamily space liquid, and also the single family space liquid. And they are Fannie Mae and Freddie Mac and hard. Right. So Housing and Development Authority. So these three lenders right now are extremely, extremely active. And what has happened is that in in good times, call it 20 early 2022. You had life companies. You had all these private, you know, bridge capital, you had all kinds of capital that was lending to the multifamily space. Speaker 1 (00:18:03) - Now some of that capital has backed off. There's still a huge percentage, I'd say probably 40, 50% of all loans that are being done today are these kinds of private, you know, groups. But think the government or quasi government groups are much more active today and their lending. So I don't think multifamily lending dries up at all. I don't think that that's the case. I think it dries up for the non privileged asset classes, hotel, retail, self-storage, office. These are the classes that are likely to see, you know, near lending dry up especially because on a fundamentals basis there's absolutely nothing wrong with multifamily. In fact as I mentioned I think we're a lot better off than 2019 to 2023 given that home prices have gone up 40%, incomes are only gone up 15%. So there's a very large number of Americans that simply cannot qualify for a single family home anymore. And so those people have to go to apartments. So the the fundamentals are really good for apartments. That is not true of office. Speaker 1 (00:19:02) - So office is an asset class that is experiencing the worst fundamentals it has seen in its entire history. And so I do think that there's going to be very severe lending challenges in the commercial real estate space. But I haven't really seen that multifamily, and I don't anticipate seeing it in the future as well. Speaker 2 (00:19:20) - Well, I don't know if any of that could have as much fun as last time. There were rather gloomy subjects to discuss here with Neal and come back. Can this problem in the multifamily space create contagion for the 1 to 4 unit space? And like with what Neil touched on, what about other commercial sectors like office and retail? How troubled are they when we come back? This is get recession. I'm your host, Keith Weinhold. Speaker 2 (00:20:14) - Welcome back to Get Rich Education. We're talking with the mad scientist of multifamily, a big brained visionary. He's also an excellent teacher. I'm sure you can tell as you're listening to him here. And if you're listening in the audio only Bawa is spelled b a w a new. Here on this show, we talk an awful lot about investing in the 1 to 4 unit space and the advantage of the 30 year fixed that long term fixed interest rate debt. Do you see any areas for contagion with problems in the multifamily five plus unit space bleeding over into the 1 to 4 unit space? Speaker 1 (00:20:56) - Yes, but to a limited level, I think that the the 1 to 4 unit space is the healthiest that I've seen in a very long time. Speaker 1 (00:21:05) - And there's reasons for that. One of the biggest reasons is multifamily, which is the most well sought after asset class for institutional investors who don't typically don't usually like the 1 to 4 unit space. There's a few companies in that space, let's call them half a dozen, but there's several thousand companies that invest in the multifamily space. Some of them are right now looking at single family as a, you know, as a, you know, safe haven to park some of their money. Right? So there's, you know, more institutional level interest in the single family space because of its access to those, you know, those those 30 year fixed loans. So there's and the fact that single family prices basically haven't declined. So I think that there's there's a lot of interest in the single family space. Um, keep in mind that millennials are reaching their peak years of household formation. So they started in 2019. So until 2025. So from 19 to 2025, those are the peak years of household formation for millennials. Speaker 1 (00:22:01) - And that's also putting a cushion under the single family space there. Contagion is some form of contagion is inevitable. I think that the office market is going to see spectacular levels of contagion, similar to 2008. I think that the other associated markets, like hotel and retail, are going to see some level of contagion, though I certainly don't expect it to be as bad as office. And then multifamily is going to see some contagion, as we mentioned, because of these 2 or 3000 properties that have to be basically sold into the marketplace and prices are down, which always creates contagion. Why? Because think about it. You're a mid-level bank. So a mid-level bank in the US is $250 billion or less in assets. Well, a lot of these assets are these banks are the ones that loaned out money to multifamily and retail and hotel and in office, and now are being forced by the Federal Reserve through a process known as mark to market. They're being forced to write down the value of these assets because these assets, you know, there's still you know, there's still active loans, but maybe they they loan $20 million. Speaker 1 (00:23:00) - And now basically they're $20 million is only worth 18 or 16 or 15. And so now the fed is saying, hey, you know, you got to mark these assets down in value. And as they mark them down to value, that can lead to the banks becoming or mid-sized banks becoming less stable. I don't think this affects any of the large banks in the US, but the midsize ones are affected. And some of those mid-sized banks do lend to the single family space, but not a lot. I find that the single family space, when I look at their source of lending, not a lot of those mid-sized banks are involved. There's a little bit they do some brokerage work, but then they're selling those loans back to Fannie Mae and Freddie Mac and a bunch of other, you know, governmental type organizations. So I don't see a sense of contagion in the single family space. I do see potentials of some price declines because until about two months ago, mortgages were predominantly in the sixes. They, you know, they spiked up once to the sevens and then they pulled back into the sixes. Speaker 1 (00:23:56) - Now they've gone into the sevens and they may stay in the sevens for a substantial amount of time. When that happens, that can affect the single family market as well, simply because, you know, you can get to the point where supply is higher than, than demand. So I wouldn't be surprised if there's a pullback in single family prices. Let's call it 5%. But I'm not predicting the kind of challenges where the office market think we could see 40% declines in prices from peak, whereas single family you might see 5%. I think that's still an incredible outcome for the single family market compared, you know, just looking at the outrageous increases in prices since Covid don't I don't think that's a even a pullback. I would just say that's a balancing out. Speaker 2 (00:24:44) - Who know the residential housing market. Really, it's something that's non-discretionary on a human need basis. Everyone needs to live somewhere and they will either own rent or be homeless. And you talked about some of those affordability challenges before. The lower the homeownership rate gets, the more renters you have. Speaker 2 (00:25:05) - So long term, we will have some demand baseline for both multifamily and properties in the 1 to 4 unit space, of course, but the same thing cannot be said about some of these other commercial sectors, especially the troubled office sector space, where you have more and more abandoned buildings downtown. And a lot of these office buildings cannot be easily converted from offices to residential units. So why don't you talk to us about some of those other troubled commercial sectors, starting with office. Speaker 1 (00:25:35) - Office is in a apocalypse. I think that this is far, far worse than 2008 and far, far worse than than 2001, because 2008 and 2001, they were liquidity crisis. They were short term, you know, demand crisis. This is a long term demand crisis because, you know, I read very important documents from companies that are in the key swiping business. You know, when you enter an office in a downtown core, you're swiping your card. And so those companies actually have phenomenal day by day data of how many people are actually going into offices today. Speaker 1 (00:26:11) - It's been more than a year since companies started calling back, you know, people to the office and think that by now every company, whether you know, they're they're forcing five days back to the office or four days or three days or two days, everyone's sort of, you know, put their line in the sand. And we're at the point where, you know, this, this is what offices look like going forward. And if I'm right and this is what it looks like going forward, it is simply catastrophic for the office market in the United States, because we're still seeing key swipes at 50 to 60% of the people that used to swipe in before Covid. And that number is staggeringly, staggeringly low. And if this is what it settles at, you know, some companies are two days, some three, some four. I think we're in for a world of pain for the office market. You also, you know, there's a lot of people that in these podcasts basically will often say something like, no, the office stuff will get converted into residential. Speaker 1 (00:27:06) - And I have news for you, only 3% of office buildings in office in downtown course have the floor plate, the floor plate necessary for residential conversion. Why? Because residential conversion by law requires that every every single room have a window. So what is happening is most of the time you basically can only convert the buildings on the edge, the, the square footage on the edge of a building, but that's central core but then becomes worthless. And if you don't have a use for it, then you still have to buy that office building to convert and you have to buy it at a reasonable price. The math doesn't work. I mean, you'd you'd need to see office values down 80% for, for, you know, a somebody who's converting to multifamily to say, fine, I'll just leave the 60% in the middle empty and I'll just convert the size. So 80% declines in value are needed for that kind of conversion to happen. So we are about to see a ten year problem in the office sector. Speaker 1 (00:28:03) - And it's also dragging down all of the other assets in the downtown core. So we are seeing we just saw a $727 million default on two hotels in San Francisco. We saw a $558 million mall default. Also in San Francisco, we're seeing defaults across the board in New York, Boston, Seattle, San Diego, Miami, sort of heavy markets where this these challenges are happening. We're seeing a lot of these and it's happening in a very, very slow way. Keith. And the reason for that is the office market, their average lease is, you know, five years long. Some leases are ten years long, and a lot of these companies haven't gone out of business. So if the company is in the lease, they're continuing to pay even though the office is empty. But the moment that lease comes up for renewal, either the company doesn't renew it or they renew maybe half the space. Right. And so we we already know that this is an incredible debacle, but it doesn't seem like it at any given point of time because it's happening in a very slow motion way. Speaker 2 (00:29:02) - Well, that's such a good point about how there will be this slow drain, this slow leak when these office leases expire over time. What about other areas of the commercial space, any other particularly troubled areas or bright spots that you see going forward? Speaker 1 (00:29:21) - Ironically bright spots. And this is where I've been proven wrong in the past. You know, I've often maybe 4 or 5 years ago talked about the retail apocalypse, right, where Amazon would basically, you know, lead the retail market to become illiquid. Well, none of those things have happened because of two reasons. One is the retail apocalypse with people like me, you know, being on on 200 podcasts, talking about it, a lot of development of retail that was scheduled to happen simply didn't happen. So the very. Speaker 2 (00:29:48) - Late podcast, people lost confidence. No. They were invested in retail. Speaker 1 (00:29:52) - Exactly right. So so, you know, I fulfilled that prophecy. Think. But bottom line is that there's there's been very responsible levels of new construction in retail. Speaker 1 (00:30:02) - So, you know, they haven't built a lot. Very few models have been built in the United States in the last few years. And even some of the malls that have been repurposed, some of their square footage is being used up for, for multifamily. And so that was one. The second reason is that retail is being very careful with pricing. So, you know, over, over the last 5 or 6 years, the retail market has adjusted to new forms of pricing, where, you know, you go into a mall and you see a gym where before the pricing of that mall never really allowed for a gym to be in a mall. It just gyms, you know, they want, you know, a lower price per square foot. And so malls have adjusted, strip malls have adjusted. And so today we have a surprising event where retail occupancy in the United States is higher than multifamily. This is the first time ever that multifamily is about a little under 95%. Now it's 94% occupied. Speaker 1 (00:30:52) - Retail is 96 or 97% occupied, which never happens, right? Normal. Normally retail is right around 90%, 88%, something like that. But the high level of occupancy shows that that retail is doing well. Now, having said that. So so on the occupancy side, they're doing really well. There's there's really no pullback in terms of demand. But on the other side, because of the fact that interest rates are so high, retail cap rates are very high, which means prices are low. So prices are very reasonable there for retail. And so I think that real opportunity that I'm seeing I wouldn't invest in office at this point, Keith, because you don't know the end of this process. You don't know how long it takes. I think it takes a decade. So I might get 50% off in office and I don't want it. I just don't want to touch that asset class. It's tainted. Now, if I get 40% off in retail, I think I'm interested because fundamentally I don't see a demand issue if this is the highest occupancy that retail has seen ever. Speaker 1 (00:31:53) - And at the same time, I'm getting a 40 or 50% discount simply because of lack of lending. Well, that is to me a classic opportunity to look at because once again, fundamentally, nothing is wrong with demand. And I realize that the Amazon effect is extremely real. But what I'm seeing is that that people want that experience of shopping. And so even amongst the young people, sure, each year Amazon, you know, goes up a little bit. But now Amazon's growth is no longer a hockey puck. Amazon's growth is sort of like this. You know they're growing by 10%, 15% a year, which is still great for Amazon. But I think when you when you project that across a 300 million person market that the US is retail no longer has to fear for an apocalypse. So this is actually a pretty good time to take advantage of the 40% discounts that I think will happen in 2024 for retail. Same thing. Everything I just said also applies to hotels. Hotels came out of the pandemic very strong, with huge increases in ADR or average daily rates and huge, huge increases in occupancy. Speaker 1 (00:32:55) - So hotels right now are a very robust cash flowing business. If you've got good hotels and good locations, you're making a lot of money. They're cash flowing like crazy because their orders have gone up and their occupancy has gone up. So they've taken two positive hits. But once again, I expect there to be discounts simply because of a lack of funding, a lack of loans. And you can you might we might easily see 30%, maybe not 40, but 30% discounts in hotels in the next 12 months. So think both of those are really good opportunities, along with multifamily discounts at 25%. So this is an opportunity. This is a case of distress creating unusual levels of opportunity. I don't think we're quite there yet, Keith. We're beginning to see some distress in multifamily. We're certainly seeing distress in office. We haven't heard anything about the distress in retail or hotels yet. That's because a lot of their their loans don't don't trigger until 2024. Right. So that's we'll see what happens next year when these loans start to trigger and you can't really refinance them. Speaker 2 (00:33:57) - I completely believe that inflation has thoroughly soaked in to hotels. You talk about their ADR, their average daily rate. I've recently stayed at hotels in Denver, Omaha, Chicago, Toledo and Boston, so I've gotten a pretty good sample size and sure feel the hit there. And interestingly, the last time I shopped at a mall, it was the biggest mall in this city, and I noticed a bowling alley that I had not noticed there before. And I went bowling and noticed an ice skating rink was there. So I just wonder how much retail can reinvent itself if it tilts enough into the experiential part, rather than just buying items off a shelf at a store, maybe that can help sustain that retail sector, to your point. Well, Neil, maybe we should wrap up really on what supports an awful lot of values in multifamily, and that is rents and the direction of rents, especially if we have almost hate to say this. R-word, a different R-word, a recession, because it seems like this thing has been around the corner forever. Speaker 2 (00:35:03) - I know historically that rents are quite resilient in a recession, something that you touched on earlier back even during the 2008 global financial crisis, when I was a landlord, I owned fourplex buildings. Then I noticed that I had a pretty good steady stream of renters. My rents didn't really go up much, but they were really resilient. They didn't go down, and that's because people couldn't get a loan. So that was an affordability problem. Then we have another affordability problem now. But if we do tilt into recession, what do you think that is going to do to rents? Speaker 1 (00:35:33) - I think we are going to see a decline in rents if a recession happens. Now, that's a question. By the way, six months ago, if you told me, you know, a recession wasn't going to happen, I'd say, no, that's not possible. We are going to go into a recession. However, I must admit that the US economy has truly, truly, truly outperformed beyond anyone else, beyond anyone's imagination. Speaker 1 (00:35:54) - So today, the chances of a recession are certainly not 100%. Might be 50%. But let's assume that it happens and a recession happens. I think what is very, very likely is that this recession will be very short. So once again, if you're not paying attention to to to what's happening in the marketplace, this is a time that, you know, I was born in India and this is my adopted country. I feel very proud of the US economy today. If I compare the US economy to the Canadian, the eurozone, the Germans, the Japanese, we are outperforming every one of those economies. We're at the point where we're outperforming China, which almost never happens, by the way. And so we have an extraordinarily resilient and strong economy at this point. So if it falls into a recession just because the fed keeps hitting it over the head with this interest rate hammer, I think that recession will be fairly short, because as soon as the economy does go into a recession, the fed usually figures that out within a few months. Speaker 1 (00:36:47) - Then they can stop hitting us with a hammer. I'm not saying that they'll just cut interest rates back to zero, but they certainly will provide some cushion. Maybe they cut rates by one one time, two times, just to make the market breathe a little bit easier. Because this is an artificial recession, there is no shortage of demand in the US economy. There's an incredible number of open jobs. There were as many as 11 million jobs now. Now there's about 9 million open. So there's there's a and wage growth has been so strong. Right. Because we have so many people retiring that at this point, for the first time since the early 60s, I believe, or late 60s, we actually have pricing power. So anyone who wants to be employed can ask for more money and get it. And so wage growth has been about four, 4.5%, which is really good for rents, by the way. It's phenomenal news because we needed wage growth for future rent growth. So we have a artificial recession if it does happen. Speaker 1 (00:37:38) - And that artificial recession is being caused by the fed because they want that wage growth to come closer to 2% from the 4% that it's at, because everything else has come down. Right. So commodities have come down with the exception of oil, and so has, you know, so have the supply chain issues are gone, rents are down. So in the US the last 12 months, rents were flat and in some markets they might be down 1% or 2%. Austin I think was the only market that was down a lot. But most other markets were down very, very small amounts. So rents have been flat, which is, I think, really credible because if you look at rents over the last two years, they're up 16%. So in 2022 they were up 16%. In 2023 they were up basically zero. So if you average that out now you're looking at 8% rent growth, which is phenomenal compared to the long term average of 2.5%. So we've been outperforming on rent and we needed to take a breather in the last 12 months have been that breather. Speaker 1 (00:38:32) - Now, if the recession happens, I do expect rents to go down, but not normally they don't. So in a in a in a six month, three month or six month average recession, you know, the average US recession is two quarters. So six months normally you don't get rent drops. You might get, you know, the rents plateau out. Or maybe their rent growth drops from 3% to 1%. That's that's much more common this time. We might see rent growth in a short recession drop by maybe 1% or 2%. And the biggest reason for that is supply. The largest supply of apartments in the history of the country is delivering, starting basically the beginning of 2023 until the end of 2024. So these two years, 2023 and 2024 are massive apartment supply years. And obviously, as you supply 500,000 apartments into an economy that overall is not outperforming, is is doing okay, but and it starts to go into a recession, then you're going to see some concessions. And that concession drives down the price of multifamily, which then drives down the price of single family rentals. Speaker 1 (00:39:36) - So we could see a decline in rents. I'd say probably 1% to 2% is is possible, but that decline is likely to be short. So I think let's assume that the recession starts in the final quarter of 2023, which might not happen. I think it's more of a Q1 and Q2 of next year. If the recession does happen, those are the two most likely quarters. As soon as the economy rebounds and becomes positive, we should see very strong and stable rent growth. Well, I would say stable rent growth for the rest of 2024 by 2025, a lot of that incoming supply is done. So now supply supply and demand are in balance. So in 2025 I expect strong rent growth as much as 4 or 5%. And in 2026 I expect very, very strong rent growth. We might we might see 6% rent growth in 2026. So 2024 is that year where rent growth is a little bit shaky because of this. Word, the recession word. And, you know, whether it happens or not is we don't know. Speaker 1 (00:40:37) - And when it happens, we don't know how long it lasts. But I think because it's an artificially induced recession, it's likely to be the vanilla US six month recession, which basically drives wages closer to that 2% target for the fed, and gives the fed the room to start easing up on interest rates. Speaker 2 (00:40:56) - Recessions are not good. Perhaps the one positive about a recession is that then we can all stop talking about and speculating upon when does eventually happen, because on average, it does happen every five years. It's just a normal part of the business cycle. Well, Neal, this has been very informative around the multifamily world and beyond, including projections for the future. You've always got such great insight in stats on the pulse of the market. If someone wants to learn more about you and your resources, what's the best way for them to do that? Speaker 1 (00:41:31) - Come join us at multifamily. That's multifamily, followed by the letter EW.com we get about 20,000 registrations in our webinars. We do about a dozen webinars each year. Speaker 1 (00:41:41) - We do them on single family multifamily. We do them on other asset classes like office. We just did one on on on the office apocalypse and people like that because there's no education fee, there's no subscription, there's no upsell. People come join us. They learn a lot. And occasionally during one of these webinars, if you have a multifamily project that we are doing, we mention it for about 30s. And if that sounds like it's interesting, you can, you know, jump in and you know and participate. But otherwise, you know, there's a lot of tens of thousands of people that have never participated with us in any of our projects that come and join us at this ecosystem of learning called multifamily EW.com. Speaker 2 (00:42:22) - Neal Bawa, Gro Capital and multifamily EW.com. It's been informative, just like it was the last time you were here. It's been great having you back on the show. Speaker 1 (00:42:32) - Thanks for having me on, Keith.
Noah Beer joins us to talk about his new business! He is renting MN Wild jerseys to fans for their trip to the game. A concept that has already proven to be successful! See omnystudio.com/listener for privacy information.
With high living costs and rising rents, governments are going after Airbnb and Vrbo. British Columbia is the latest, along with New York and Quebec. How much are short-term rentals to blame? Will this action be enough? David Wachsmuth, a researcher and professor at the School of Urban Planning at McGill University, joins us. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts Transcripts of each episode will be made available by the next workday.
What are some key strategies for creating value in the industrial real estate space? In this episode, Shannon Robnett dives into the world of industrial real estate investing. He explains what industrial properties are, how to create value through development, and the common misconceptions surrounding the industrial space. He touches on American manufacturing and industrial space usage, which is not as declining as many think. Shannon emphasizes the importance of never giving up and suggests looking into major brokers for more information on industrial real estate investments. This episode is a must-listen if you want to learn more about building passive wealth with industrial real estate investing! [00:01 - 07:19] Opening Segment • How industrial real estate investing is a unique asset class that is all around us Shannon explains how industrial deals are different from multifamily deals • Adding value to an industrial deal involves raising rents or building a new property • Rents in industrial deals are paid differently than in multifamily deals [07:20 - 14:58] Industrial Real Estate Investing in Changing Market Conditions • Industrial properties have triple net leases The tenant pays for rent, property taxes, insurance, maintenance, and repairs • What creates a stable cash flow stream • Industrial properties trade at a 1.5-2% higher cap rate than other asset classes. [14:59 - 22:37] Exploring Opportunities in Commercial Real Estate • How to properly underwrite deals and take advantage of market changes • Cap rates will continue to expand, and prices will soften • Market is still strong due to solid demand and shifting demand into areas with less product • Industrial real estate sector is slower than multifamily but has higher cap rates and more protection [22:38 - 30:09] Closing Segment • Best investment: Being important to important people • Worst investment: Quick deal in a tertiary market without proper due diligence • Most important lesson: Keep going and create a repeatable process for learning and investing Quotes: "Some of the main things that really make industrial different than multifamily is how the rents are paid." - Shannon Robnett "Real estate is never a short game. It's a long game. It's not a get-rich-quick." - Shannon Robnett "Be important to important people, but also look for opportunities to level up your importance to important people." - Shannon Robnett Connect with Shannon: Website: https://shannonrobnett.com/ Apply to Invest with Taylor at www.investwithtaylor.com Track your wealth for free with Personal Capital, go to www.escapingwallstreet.com Please leave a review and help others escape Wall Street and build wealth on Main Street!
Spoiler alert, it's cheaper to rent than it is to buy in many markets and Chris, Saied and Haroon are here to break it all down. They use the Austin market, which was a major growth market during the pandemic, as a prime example of the stress that may be forcing rental rates further down. They take a break to celebrate some of the nation's top colleges eliminating student loans entirely, but then get back to the apartment market by citing Miami's downward rental trends. Finally, to cap the show, Chris and Saied talk a whole lot of trash about novice syndicators like Brad Sumrok and Grant Cardone. Oh, and apparently Haroon opens up apple juice jars with his rear end.Sponsored By Transcend Company:TRANSCEND your goals! With a telehealth physician directed personalized treatment plan you can get a PERSONALIZED PLAN for Hormone Replacement Therapy, Cognitive Function, Sleep & Fatigue, Athletic Performance and MORE. Their online process and medical experts make it simple to find out what's right for you. Click the link and start today: http://www.transcendcompany.com/THSPResources:Mortgage Cost Surge Makes It Cheaper to Rent in Tough US Market (Bloomberg)Austin has over 120K apartments in pipeline (The Real DealSome of the nation's top colleges are eliminating student loans (CNBC)Miami's Rental Market Roller Coaster Is Headed Downhill (Wall Street Journal)Multifamily mentor Brad Sumrok built an empire. Now, the cracks are showing (The Real Deal)Disclaimer: Please note that the content shared on this show is solely for entertainment purposes and should not be considered legal or investment advice or attributed to any company. The views and opinions expressed are personal and not reflective of any entity. We do not guarantee the accuracy or completeness of the information provided, and listeners are urged to seek professional advice before making any legal or financial decisions. By listening to The Higher Standard podcast you agree to these terms, and the show, its hosts and employees are not liable for any consequences arising from your use of the content.
Ce soir, "Jour J" vous explique la fiche S. Découvrez dès à présent un extrait de l'émission et rendez-vous ce soir à 20h sur RTL pour écouter la suite de ce nouveau numéro de "Jour J". "Jour J", c'est l'émission des grands entretiens d'actualité. Chaque jour, Flavie Flament explore les coulisses et les détails de l'info d'hier et d'aujourd'hui avec un témoin-expert. Une heure d'analyse et d'archives pour comprendre l'actualité avec recul et nuance.
While state officials and shelter providers work to avoid displacing longtime motel residents to make space for unhoused families, housing advocates say they are aware of cases where people have been pushed out of motels and into homelessness.
Jason discusses the national debt, unfunded liabilities, and the practicality of a gold standard. He also explores the idea of a balanced budget amendment and its potential impact on the economy. While acknowledging the inflationary effects of debt, he believes the U.S. will continue to kick the can down the road for years. Additionally, Jason emphasizes the importance of investing in real estate and warns that rents are too low and will likely rise, making it an opportune time for investors. Today Jason welcomes Chance Finucane from Oxbow Advisors. They discuss the economy and markets, highlighting concerns about inflation and rate hikes. With a potential economic slowdown on the horizon, banks are facing challenges with higher interest rates affecting their profit margins. As for real estate, office space is collapsing, but the housing market remains resilient due to low inventory and high equity for homeowners. For investors, dividend-paying stocks in various sectors like telecoms, oil pipelines, and REITs offer attractive opportunities in the current market. https://oxbowadvisors.com/ Check out Jason's RENT (Real Estate News & Tech) YouTube Channel today! https://www.youtube.com/@realestatenewstechrentjaso2550 #NationalDebt #GoldStandard #BalancedBudget #RealEstateInvestment #Inflation #RentalMarket Key Takeaways: Jason's editorial 0:47 The US national debt and a gold standard 2:22 Former President Ronald Reagan and the Balance Budget Amendment 7:19 Join the Empowered Investor Pro 8:15 Real Estate News & Tech YouTube channel 9:19 "RENTS are too damn low!" Chance's interview 13:50 Inflation and interest rate hikes 15:52 A mission to increase the unemployment rate 17:11 Low inventory and high interest rates 17:50 Housing crash needs a massive supply of inventory 19:17 The poison pill the FED placed in the housing market 21:42 Bank distress and hold-to-maturity bonds 25:16 Bank failures 26:33 Forcing the FED to pivot by tightening credit 27:44 Collapsing of the commercial real estate 28:54 Food and energy 30:22 Public market portfolio Follow Jason on TWITTER, INSTAGRAM & LINKEDIN Twitter.com/JasonHartmanROI Instagram.com/jasonhartman1/ Linkedin.com/in/jasonhartmaninvestor/ Call our Investment Counselors at: 1-800-HARTMAN (US) or visit: https://www.jasonhartman.com/ Free Class: Easily get up to $250,000 in funding for real estate, business or anything else: http://JasonHartman.com/Fund CYA Protect Your Assets, Save Taxes & Estate Planning: http://JasonHartman.com/Protect Get wholesale real estate deals for investment or build a great business – Free Course: https://www.jasonhartman.com/deals Special Offer from Ron LeGrand: https://JasonHartman.com/Ron Free Mini-Book on Pandemic Investing: https://www.PandemicInvesting.com
As the Bank of England artificially hikes up interest rates, the bank scam continues to wreak havoc on the housing market. In this quick episode, Rob explores exactly what is happening right now in the housing market and talks about why the banks are responsible. KEY TAKEAWAYS Low interest rates lure people in but then when the rates increase rapidly, people can no longer afford mortgages or rent. If the government and banks are operating this way, then you need to start playing their game and investing in the right ways into the right assets. Rob can help you take advantage of the current economic climate and educate you on how to not just survive, but thrive in it! BEST MOMENTS"The Royal Bank of Scotland said they want to be the biggest landlord in the UK” “They are giving with one hand and taking with another” “I've been waiting for this crash for the last 15 years” VALUABLE RESOURCES https://robmoore.com/ bit.ly/Robsupporter https://robmoore.com/podbooks rob.team ABOUT THE HOST Rob Moore is an author of 9 business books, 5 UK bestsellers, holds 3 world records for public speaking, entrepreneur, property investor, and property educator. Author of the global bestseller “Life Leverage” Host of UK's No.1 business podcast “The Disruptive Entrepreneur” “If you don't risk anything, you risk everything” CONTACT METHOD Rob's official website: https://robmoore.com/ Facebook: https://www.facebook.com/robmooreprogressive/?ref=br_rs LinkedIn: https://uk.linkedin.com/in/robmoore1979 See omnystudio.com/listener for privacy information.This show was brought to you by Progressive Media
Muslim societies are more likely to be authoritarian and marred in civil war. The big question is why? Faisal Ahmed presents a new theory: “Conquest and Rents”. He suggests that where Islam spread via military conquest, political authority was consolidated under a dictator. Political authority was then consolidated under a dictator, with elite slave soldiers, who were compensated with non-hereditary land grants. Absolutist rule was then legitimised by clerics. Authoritarianism persists if propped up by rents (oil or foreign aid). Where rents declined, these societies erupted in civil war (like Somalia). Where Islam spread through trade, these societies remained more cohesive. So when rents declined, they democratised. It's one of the most fascinating books I've read in 2023. I strongly recommend it and hope you enjoy our podcast.