Hearing pundits talk about real estate over the last year, you’d think the sky had fallen several times over. Don’t get me wrong. The real estate sector has seen its share of challenges over the last year. Home prices in some markets have fallen after years of skyrocketing at unsustainable rates. Rapid interest rate increases left many would-be sellers feeling “stuck” in their homes, pinching supply, and left some investors with variable rate loans with thin or even negative cash flow. But I sti...
Aug 25, 2023•11 min•Ep. 1045
The leader of the bank for central banks—the Bank for International Settlements (BIS)—is sounding the alarm. Just this week, BIS general manager Agustín Carstens told reporters that “The global economy is at a critical juncture.” And according to the bank’s just-released annual report, if inflation isn’t tamed and consumer prices remain high for much longer, banks could see credit losses of a “similar order of magnitude” to those of the 2008 financial crisis. The comments are jarring, particular...
Aug 24, 2023•6 min•Ep. 1044
Buying a home hasn’t been easy for the past few years. Besides increasing interest rates, a decrease in purchasing power, and a housing shortage, cash buyers have also put a squeeze on some would-be buyers. Nearly a third of U.S. home purchases were made with cash in April, a nine-year high, according to data from Redfin that looked at the 40 biggest metropolitan areas in the U.S. That’s in line with data from February, which saw cash purchases reach 33.5% and continuing a trend that started dur...
Aug 23, 2023•7 min•Ep. 1043
A recent report published by the National Association of Realtors reveals that the housing shortage and affordability crisis in the U.S. would be alleviated if there were sufficient homes available for buyers at all income levels. Currently, 51% of American households have an income of $75,000 or less, meaning they can only afford houses that are priced at $250,000 or lower. Data shows that of the 1.1 million homes listed for sale, only 25% are listed within that price range. To balance the mark...
Aug 22, 2023•10 min•Ep. 1042
Where have all the cash flowing properties gone? With high interest rates, low inventory, and purchase prices not budging, it’s becoming harder and harder to find your margins. It’s even harder to find a cash flowing property when your investment budget is modest. That’s why we loved Dave Meyer’s recent Instagram post covering his top five cash flowing market picks with average purchase prices under 200k. Sometimes all you need is someone to help you stop boiling the ocean when you’re looking fo...
Aug 21, 2023•6 min•Ep. 1041
For high-earners raking in between $150,000 and $650,000 annually, a move from New York City to Miami provides the opportunity to save thousands through a reduced effective tax rate and a decrease in the cost of living, according to a SmartAsset study. San Francisco residents can realize similar savings by relocating to Miami. It’s not that Miami is cheap—the cost of living is 22.8% higher than the national average, and the median sale price for homes in Miami is about 34% higher than the nation...
Aug 20, 2023•10 min•Ep. 1040
It’s been generally accepted in real estate that a “balanced market” has about six months of inventory. In other words, the sales for that month equal one-sixth of the number of listed properties, so, all things being equal, it will take six months to clear that inventory. As Norada Real Estate Investments puts it, “As a general rule, 5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have a buyer’s market. If it is less than 5 months an...
Aug 19, 2023•8 min•Ep. 1039
The big news to come out of last week’s Federal Open Market Committee meeting was the group’s choice to forgo another rate hike. Previously, the central bank had increased interest rates at every meeting since March 2022 (with 10 rate hikes in total). The June decision marks the Fed’s first rate pause in over a year. Fed. Chair Jerome Powell revealed as much in his post-meeting briefing with reporters. He also delved into key real estate topics—including the impacts of a potential commercial rea...
Aug 18, 2023•7 min•Ep. 1038
Understanding and applying these three sentences could make you wealthy: “In bad times, securities can often be bought for prices that understate their merits. And in good times, securities can be sold at prices that overstate their potential. And yet, most people are impelled to buy euphorically when the cycle drives prices up and to sell in panic when it drives prices down.” – Howard Marks (2013 Memo “Ditto”) I’m excited to share some thoughts about fear and greed. But I’ll start by sharing a ...
Aug 17, 2023•12 min•Ep. 1037
What the heck is going on with the 2023 real estate market? From high interest rates and high purchase prices to elusive cash flow, this market includes enough uncertainty to spook new and beginner investors into thinking the best course of action might be to sit this cycle out. Pro tip: Don’t sit out. You know the old adage: When’s the best time to plant a tree? “20 years ago.” When’s the second-best time to plant a tree? “Today.” Many expert investors will call this truth in 2023 in regard to ...
Aug 16, 2023•8 min•Ep. 1036
We’ve officially entered hurricane season. While the National Oceanic and Atmospheric Administration says there’s a good chance it will be a “near-normal” one for both the Pacific and Atlantic coasts, that’s not exactly comforting for property owners, especially given recent numbers. In the last three years, 13 hurricanes have made landfall in the U.S. One of those was Hurricane Ida—the second-most damaging storm the country’s ever seen. According to the Insurance Information Institute, Ida rack...
Aug 15, 2023•7 min•Ep. 1035
Offices across the country are still sitting empty. The nationwide office vacancy rate reached a high of about 20% in the first quarter of 2023, according to JLL, and while big tech companies are pressuring workers to return to the office, the hybrid work model has led to an increase in commercial office delinquencies. According to Trepp, a real estate analytics firm, the office delinquency rate surged 125 basis points in May to over 4%. This spells trouble for the commercial real estate market ...
Aug 14, 2023•13 min•Ep. 1034
We all hate market meltdowns, and this one was bound to happen. We just didn’t know when, exactly how, or how bad things would get. But we now know the answer to the first two of these three questions. When? Currently underway. How? See below. How bad? No one knows. The purpose of this article is to explore what led up to the unfolding meltdown of what is happening now. Then, based on the 10 items I consider below, investors can draw conclusions about what may happen next and how bad this could ...
Aug 13, 2023•15 min•Ep. 1033
Another famous name is weighing in on the housing market. A few weeks ago, it was Elon Musk claiming that home values would plummet as commercial real estate faced headwinds. Now, it’s Barbara Corcoran—albeit a more experienced source when it comes to real estate—touting the opposite. The statements came in a recent interview Corcoran did with Fox Business’s Liz Claman. “There’s no relationship between the commercial and the residential,” Corcoran told her. “The residential is starting to reboun...
Aug 12, 2023•5 min•Ep. 1032
The record-breaking rent growth of the last several years is showing signs of fading. Earlier this month, Redfin reported that rent growth slid 0.6% on a year-over-year basis for the first time since the pandemic. This is, of course, a modest decline in rents, but it begs the question: will there be a bigger correction or even a crash in rents? Or is it possible that rent growth will pick back up in the coming years? Let’s dig in. Where Rent Growth Stands When we talk about rent growth in the U....
Aug 11, 2023•8 min•Ep. 1031
Real estate investors want to avoid unnecessary taxation, and while there are many clever ways to reduce your effective tax rate, it can be difficult to simultaneously achieve robust asset protection. That’s because accountants and attorneys each have knowledge gaps that prevent them from seeing the full picture, according to Riley Neilson, real estate investment manager and founder of Flying ‘N’ Group. His business brings together lawyers and CPAs to help his clients achieve the delicate balanc...
Aug 10, 2023•11 min•Ep. 1030
Commercial real estate is melting down fast. Home values next.— Elon Musk (@elonmusk) May 29, 2023 That’s what Tesla and SpaceX founder Elon Musk tweeted last week in response to a stream of tweets from venture capitalist David Sacks. In that series, Sacks claimed that Fed rate hikes and the increased borrowing costs they led to are causing a slew of problems in the financial world, including a soon-to-be crash in commercial real estate. That latter part could certainly be possible. In fact, JPM...
Aug 09, 2023•6 min•Ep. 1029
Is it still possible to find undervalued commercial real estate investments? I believe it is, and I’ll prove it by telling you a remarkable story about a recent investment we made in a Nevada self-storage opportunity. We’re in a Transitioning Market We are in a time of transition. From a booming market to a shaky market. From historically low interest rates to the highest we’ve seen in years. From eager buyers, sometimes willing to overpay, to sidelined buyers, waiting to see where the falling k...
Aug 08, 2023•8 min•Ep. 1028
According to a recent report by Fannie Mae, there are concerns about the housing market. The U.S. housing market has experienced some ebbs and flows this year, but it’s undoubtedly been in correction mode. With elevated interest rates and tightening lending practices, Fannie Mae is forecasting a “modest” recession with a soft landing starting in the second half of 2023. Learn more about your ad choices. Visit megaphone.fm/adchoices
Aug 07, 2023•7 min•Ep. 1027
Federal eviction moratoriums lasted nearly 18 months, from early 2020 through late August 2021. Even after the federal eviction moratorium ended, many cities and states continued preventing landlords from enforcing their lease contracts. Some cities went so far as to use federal tax dollars to give free legal aid to tenants to fight lawful evictions long after moratoriums ended. And that’s even after taxpayers paid for nearly 10 million rent assistance payments, albeit months after it did many l...
Aug 06, 2023•11 min•Ep. 1026
Commercial real estate is facing a lot of stress. Many analysts and investors, including myself, expect to see significant value declines across much of the sector in the coming year. But one particular type of commercial real estate is facing the biggest crash potential of all: office space. And even if you don’t currently invest in office space, the future of this huge asset class will have large implications for the broader real estate market and the economy as a whole. The idea that the offi...
Aug 05, 2023•13 min•Ep. 1025
By most accounts, the Fed will hold steady after raising the federal funds rate by a quarter point to 5.25% at the beginning of May. A Reuters poll found that 102 of 116 economists thought the Fed was done raising rates this year, and 30 believed they would lower it. With inflation down from its high of over 9% last year to 4.9% in April of this year, it might seem like the Fed should reverse course now. But as Michael Gapen, chief economist at Bank of America, noted, “Inflation is more than dou...
Aug 04, 2023•14 min•Ep. 1024
Detroit, Philadelphia, Cleveland, and Houston. Those are the only four remaining cities where it costs less to buy a typical home than to rent, according to a new report from Redfin. The analysis compared March home values and rental estimates assuming a 5% downpayment and a 6.5% mortgage rate for the 50 most populous metro areas in the United States. Back in January 2022, an analysis from Realtor.com showed that buying a home was more affordable than renting in more than half of the largest met...
Aug 03, 2023•11 min•Ep. 1023
Your offer was just accepted on a beautiful property in Central Florida just a few miles from the coast. The income you will make from this short-term rental will fund your early retirement plans. Everything is humming along relatively smoothly—until you get your quote back for the insurance. Now, you feel like you just got punched in the gut. The cost of the insurance will certainly take a chunk out of your profits, but after talking to an agent, you count yourself lucky because had you been lo...
Aug 02, 2023•11 min•Ep. 1022
Atlanta, colloquially referred to as the “capital of the South,” is a large and growing market with interesting investment opportunities. The metropolitan area, officially defined as Atlanta–Sandy Springs–Alpharetta, has a population of over six million and hosts the headquarters of many well-known companies such as Coca-Cola, CNN, and Chick-Fil-A (all of which oddly start with the letter “C”), and has an excellent sports scene anchored by the Hawks (NBA), Braves (MLB), and Falcons (NFL). In thi...
Aug 01, 2023•8 min•Ep. 1021
Passive activity loss rules are complex. These rules prevent you from using tax losses from your rentals to offset your active income. A foundational understanding of the rules will save you thousands of tax dollars over your investing career. And knowing how to review your tax return to ensure these rules were successfully applied is an investor superpower. For instance, if you opened your tax returns, can you find the amount of suspended passive losses carried forward to next year? And can you...
Jul 31, 2023•10 min•Ep. 1020
Managing your real estate investment portfolio gives you more control over your assets and risk exposure. You can monitor the growth strategy of your real estate business so that it always aligns with your goals, which can change as you add alternative investments to your portfolio. While successful property management can vary among investors, there are key strategies that can enhance your skills as a real estate portfolio manager. These strategies can help you effectively manage your investmen...
Jul 30, 2023•18 min•Ep. 1019
Starting a real estate business can be a lucrative venture. Real estate investment provides various avenues for building wealth and achieving financial freedom, such as generating passive income through rental properties or earning profits through property sales. However, there is much to learn about real estate investing before closing deals. Real estate investing (REI) offers endless opportunities for growth and success. But, starting a real estate business requires planning, preparation, buil...
Jul 29, 2023•13 min•Ep. 1018
Starting a real estate business can be a lucrative venture. Real estate investment provides various avenues for building wealth and achieving financial freedom, such as generating passive income through rental properties or earning profits through property sales. However, there is much to learn about real estate investing before closing deals. Real estate investing (REI) offers endless opportunities for growth and success. But, starting a real estate business requires planning, preparation, buil...
Jul 28, 2023•14 min•Ep. 1017
The real estate industry is dynamic and ever-evolving. Market conditions are constantly influenced by factors like supply and demand, interest rates, and economic cycles, to name a few. Any of these factors can cause your property values, rental income, and investment opportunities to fluctuate. Before real estate investment trusts (REITs) were established in 1960, only ultra-wealthy investors could invest in high-income-producing properties like commercial real estate and apartment buildings. N...
Jul 27, 2023•19 min•Ep. 1016
