👋 Hello, Best Ever Community!

In today’s newsletter, CRE considers the election impact, accessible investing is on the rise, and a mobile home park investor reveals how he added $1.3 million of value to his property. 

Plus, if you haven’t already, make sure to sign up for the Best Ever Book Club led by Joe Fairless. January’s book is The Road to Character by David Brooks.

Let’s CRE!

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CRE HEADLINES

💵 Major Loan Sale: Blackstone aims to sell around $1.8 billion worth of commercial property loans, primarily supported by apartment buildings, in an effort to unload debt acquired through the Signature Bank collapse.

☀️ A Ray of Hope? After a period of uncertainty that nearly halted the market last year, sellers and buyers are now encountering increased transaction opportunities. In November 2023, the average number of bids per deal rose by 16% compared to the end of 2022.

⌛️ Maturing Loans Spark Defaults: With over $2.2 trillion in debt set to mature before 2028, the commercial real estate market faces a surge in defaults as property owners navigate the challenge of refinancing at elevated rates.

🏀 Ready to Rebound: CBRE Group's top analysts forecast a rebound in the battered commercial property business later this year, expecting 2024 to bring stabilization and recovery in activity levels for real estate investors.

🏆 Trophy Office Space: While high demand for top-quality office space is evident in U.S. downtowns, the lack of new supply is expected to persist due to ongoing challenges in the overall office sector, making the market for trophy tenants even more constrained.

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HOW THE 2024 ELECTION COULD CHANGE CRE

The upcoming presidential election presents a unique choice between an incumbent and a former president with long records attached to various issues — including those affecting commercial real estate. Commercial Observer recently broke down what either candidate’s election would mean for CRE and its markets.

✂️ SALT Cap Blues: Trump's decades-long career as a real estate developer generates wary respect in the CRE sector. However, his 2017 Tax Cuts and Jobs Act, including a $10,000 cap on state and local tax (SALT) deductions, is seen as unfavorable for high-tax blue states like New York, rendering real estate less competitive. The SALT deduction cap is considered a central policy problem for CRE in big cities.

👀 All Eyes on Infrastructure: The Biden administration is supporting the bipartisan Workforce Housing Tax Credit Act, a middle-income housing tax credit that would enable state housing agencies to allocate federal tax credits to private developers building rental housing for target incomes ranging from 60% to 100% of the area median income. The initiative is one described as “sorely needed” and one that would “have a tremendous positive effect on [CRE] because it will stimulate a new sector of development.”

📈 Interest rates are another factor weighing heavily on voters’ minds. One political consultant notes that the new narrative that interest rates are going to drop plays in the favor of both Biden and CRE at large, as does the increasing likelihood that the economy avoids a recession and achieves a “soft landing.” Biden enters this election with a compelling economic case: low unemployment, decreasing inflation, and a strong job market.

What It Means

🇺🇸 Despite facing multiple indictments and controversies, there's a possibility of Trump being re-elected in November, causing concerns for some. According to one New York City official, a Trump presidency might lead to social unrest and political instability, negatively impacting real estate values in New York (and possibly cities like it). However, a Biden re-election could potentially bring about economic stability — even if it's just perceived stability — along with the positive impacts anticipated from the Workforce Housing Act, and perhaps future initiatives like it.

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FROM BRIAN DAVIS

If you ask random people off the street about their options for investing in real estate, you’ll hear answers like “rental properties,” “flipping houses,” and perhaps “REITs.” 

There’s nothing wrong with any of those answers. But they barely scratch the surface of the options available for investing in real estate. 

Most people don’t realize they can invest in real estate with $5,000, or $500, or even $50. They think they have to save up tens of thousands for a down payment if they bother to give it any thought at all. 

I used to buy rental properties directly, putting down tens of thousands on each. Now I only invest in real estate passively, with just $500–$5,000 per investment. I avoid landlording headaches, but I still get all the benefits of real estate investments from cash flow to appreciation to tax advantages. 

I’ve invested in most of these options personally, so as you explore new ways to invest in real estate, keep the following in mind. All allow non-accredited investors, except where noted.

💸 Concreit ($1 Minimum): I’ve had nothing but good experiences with Concreit. Historically, Concreit has offered only one investment option: a pooled fund owning both short-term secured debts and medium-term real estate equity investments. This fund comes with great liquidity: you can withdraw your cash at any time.

🏠 Arrived ($100 Minimum): The original fractional rental property platform, Arrived has bought hundreds of properties. Investors can buy shares for $100 apiece, to spread money across many properties.

💰 RealtyMogul ($5,000 minimum): While most of RealtyMogul’s investment options are private placements in real estate syndications, they do offer two REITs for non-accredited investors. 

👉 View the complete list here.

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$1.3M VALUE INCREASE FOR MHP IN UNDER 1 YEAR

Derek Vickers added $1.3 million of value to this mobile home park property in less than a year. Here's how he did it. 👇

🏢 Property Details: 22-unit mobile home park with 10 occupied units purchased in Florida in September 2020. 

💸 Finances: Purchase price was $425,000 with $500,000 in capital raised.

💼 Business Plan: New vinyl siding and skirting on existing homes, old building removal, and the addition of a new home. Exterior renovations included tree removal, paved roads, new solar lights, a new fence, and new signage.

🍾 Results: 3.5 MOC in 10 months. Rents at the time of purchase were $600/month (all park-owned homes), and rents are now at $695/month (all tenant-owned homes). Property valuation was $1,750,000 at refinance in August 2021.

Derek plans to keep the property as a long-term cash-flowing asset.

If you have a deal you'd like us to feature, share it with us!

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FREE DOCUMENT DOWNLOAD

💰 A 5-Step Process for Raising BIG Capital

In my conversation with Richard Wilson, who is an investment advisor for millionaire and billionaire families, he laid out a five-step process he used to raise over $3 billion in private capital: (1) analyze, (2) position, (3) architect, (4) execute, and (5) iterate.

👉 Download now!

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At the 2024 Best Ever Conference, you can tailor your experience — whether you prefer a passive investor day, entrepreneur workshops, high-octane keynotes, partner hunting, or parties — offering a variety of ways to choose your own adventure and achieve your goals.

👉 Don’t miss it: Register today with coupon code 2024GOALS.

🙏 Thanks for reading!

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Hope you have a Best Ever rest of your week!

—Joe Fairless