🏠 ‘Never been a worse time’ to buy?

Plus: Chris Voss on why ‘that’s right’ is better than ‘yes’ and other takeaways from Multifamily Mastery 6.

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Best Ever CRE Team
October 26, 2023

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Hello, Best Ever Community!

In today’s newsletter, we dive into why now is the time to invest in multifamily, Darin Davis of Presario Ventures breaks down Austin’s real estate market, and Chris Voss explains why “that’s right” is better than “yes.”

First time here? Make sure to subscribe to stay up to date on all the latest CRE news!

Let’s real estate!

🎙 ICYMI
ON THE BEST EVER SHOW

🧭 Darin Davis — Exploring the Dynamics of Austin’s Real Estate Market: Darin Davis of Presario Ventures provides a deep dive into what investors need to know, highlighting the importance of passive income, strategies for navigating rising interest rates, and the power of focusing on foundational wealth. Listen here.

🧑‍💻 Kranti Ponnam — Tech-Driven Strategies for Success in Commercial Real Estate: Kranti shares insights on the intersection of technology and real estate, emphasizing the importance of treating real estate investments as businesses. Listen here. 

👀 J.D. Schmerge — Market Insights From a Multifamily Broker: Slocomb Reed sits down with seasoned commercial real estate expert J.D. Schmerge to deep dive into the dynamics of the ever-changing market from decoding property valuations to the art of bridging sellers and buyers.  Listen here.

🗞 NO-FLUFF NEWS
‘NEVER BEEN A WORSE TIME’ TO BUY?

It’s now 52% more expensive to buy a home than to rent one, the largest gap since 1996. Surging mortgage rates, inflation, rising home prices — pick your poison. They’ve all played their part. But wherever you point the finger, with renting being the best financial option for many Americans, there’s “never been a worse time” to buy a home, according to The Wall Street Journal — which is good news if you’re looking to invest in multifamily.

🚪 Opportunity Knocks: The monthly cost of a new mortgage is now 42% of the U.S. median household income — 10% higher than on the eve of the 2008 housing crash. And while prospective homeowners are cash-strapped, around 80% of outstanding U.S. mortgages have an interest rate below 5%, meaning fewer homeowners are incentivized to sell. This will likely limit SFR inventory for the foreseeable future and prop up multifamily demand. Meanwhile, as SFR property values have skyrocketed alongside interest rates, multifamily property values are down more than 20% from last year’s peak, spelling opportunity for investors.

🥊 Supply No Match for Demand: Despite new apartment completions for the year reaching more than 405,000 units in Q3 — the highest level in decades — net absorption rose 33% over the past year as apartment demand soared. As more units continue to come online, Fannie Mae expects multifamily vacancy rates to rise to 6.25% in 2024, but then flatten out around 6% by 2025 as construction deliveries slow and economic conditions and job growth improve. With construction starts jumping 17.1% in September, demand is expected to remain “subdued but positive,” contributing to slow yet steady rent growth through 2025.

🏘️ Some experts say now is the time to buy multifamily, citing strong fundamentals, the affordable housing shortage, and the amount of dry powder sitting on the sidelines. With investors still waiting to deploy $300 billion to value-add CRE investments, there’s a window for investors to enter a multifamily market that 64% of investors surveyed say has loosened over the last three months.

🎤 “Now is the time to be preemptive,” says John Sebree, senior vice president and national director of the Multi Housing Division at Marcus & Millichap. “It’s time to analyze the market, understand what exactly you want to go after, and then go after it very, very aggressively.”

📰 Other CRE News

Winter Is Coming: Today’s market looks a lot like 2019, when multifamily leasing was strong in spring and summer but slowed in the cooler months. This, along with an influx of supply, could spell a rough winter for operators.

Flow of Funds: The total amount of outstanding multifamily mortgage debt increased 7.1% to more than $2.1 trillion in Q2 2023, according to Trepp.

Soft-Storage: Softening demand has caused a consistent drop in rent for the self-storage sector, with street rates declining both monthly and annually across the top 31 metros.

Retail’s Big Rally: Many expected a recession to curtail spending activity in 2023, but retail spending has grown consistently, benefiting landlords.

Ripple Effect: U.S. existing home sales have declined monthly since February, largely due to rising mortgage rates. Economists explain the wide-reaching negative implications for the economy.

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✍️ BEST EVER BLOG
CHRIS VOSS, BRAD LEA, AND MORE

Multifamily investors from across the country descended upon the Gaylord Palms Resort and Convention Center in Orlando, Florida, this month for Jake & Gino’s Multifamily Mastery 6 event. Here are some highlights and key takeaways from the event.

📖 Multifamily Fundamentals: Jake & Gino shared their personal real estate journeys, including Gino’s early mistakes that became the foundation for their three-step framework for investing in real estate: buying right, financing right, and managing right. Think of them as the three pillars of a wheelbarrow, says Gino — buying and financing being the two legs, managing being the wheel. If any of the three pillars fails, your wheelbarrow (your deal) goes down.

👍 ‘That’s Right’ Is Better Than ‘Yes’: Chris Voss, former FBI hostage negotiator and the author of Never Split The Difference, discussed how to build trust and competence in a conversation or negotiation. The biggest takeaway was that saying the phrase “that’s right” triggers an oxytocin release. Oxytocin is known as the “bonding drug.” It’s associated with trust and relationship building. Every “that’s right,” Voss says, is solid gold.

📱Post All Day, Every Day, Everywhere: Entrepreneur and CEO of Light Speed VT Brad Lea shared his No. 1 rule for building your personal brand: Post on social media all day, every day, on every platform. In a world where it’s easier than ever to create content, there’s no reason you should not be everywhere. “Be the content,” he says. “You are the brand.”

🧠 Mindset Pillars from a Nave SEAL: Chadd Wright’s three mindset pillars are being patient, staying present, and being deliberate. As an ultra runner, he says that the growth comes in the last 10 miles of a 100-mile race. The first 90 miles prepare you for the growth in the last 10. Think about that whenever you think about giving up.

If you’d like to learn more about Jake & Gino and their multifamily coaching and apartment syndication mentorship program, visit jakeandgino.com.

💻 GSP REI
FREE WEBINAR

Investing in affordable housing is a time-tested, proven investment strategy, and current economic conditions are creating an unprecedented affordable housing crisis with increasing high demand and historically low supply.

🎓 In this 30-minute webinar, you'll learn:

  • The Benefits of Affordable Housing: Understand the advantages of incorporating affordable housing investments into your real estate investment portfolio.

  • Proven Strategies: Learn how to execute a successful SFR strategy and review core competencies like capital, construction, and property management.

  • How to Make a Positive Impact: Learn how affordable housing investments can contribute to your long-term wealth-building goals and positively impact communities.

  • Key Residential Market Insights: Gain valuable insights into the current economic environment and the demand for SFRs, particularly affordable housing.

👉 Register here to join us at 2 p.m. EST on Wednesday, November 8.

Can't make it on November 8? Register anyway, and we'll send you the replay.

🎓 EXPERT RESOURCES
FREE DOCUMENT DOWNLOAD

☎️ 5-Step Process for Securing Passive Investor Commitments for Apartment Syndications

Discover Joe Fairless’s five-step process for securing financial commitments from passive investors to cover a significant portion of project costs and successfully close apartment deals.

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—Joe Fairless