Mon, 15 May 2023
Are you living the life that you were created to live? I explore.
People have harbored unfounded real estate fears for years. Here they were:
2012: Shadow inventory
2013: Boomers downsizing
2014: Rates spike
2015: PMI recession
2016: Vacant units
2017: Home prices above pre-GFC peak
2018: 5% mortgage rates
2021: Forbearance crisis
2022: Rising rates
US houses prices are heading up this spring. The latest FHFA’s Monthly Housing Report shows 4% national home price appreciation.
We explore apartment reputation scores. This is a great proxy for what’s happened in housing the past three years.
As an investor, you have a low “loss to purchase” with your tenants. It’s difficult for them to buy their first home.
I discuss 12 Ways that you can raise the rent and increase the value of your property.
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Welcome to GRE! I’m your host, Keith Weinhold. We get clear together - Are you truly living the life that you were created to live?
A housing market update with some perspective that can totally shift your real estate thought paradigm.
Then, 12 Actionable Ways that you can raise the rent and add value to your property. Today, on Get Rich Education.
Welcome to GRE! From Johannesburg, South Africa to Harrisburg, Pennsylvania and across 188 nations worldwide, I’m Keith Weinhold and this is Get Rich Education.
Last night, people were losing sleep over money. At the same time, last night, you made money… as you slept.
Are you living the life that you were created to live?
Your big ideas, your grandiose hopes and ambitions that you promised yourself that you would follow through on someday… have they turned into fears?
Even ones that you had as a child - like to be an astronaut or a firefighter. Today, it might simply be that you would have quit your soul-sucking job by now.
Maslow’s Hierarchy of Needs - how many are you fulfilling? All five? There are five levels. The base level are your…
What are you doing to be the most that you can be?
With financial freedom, you can control your time and have a chance at living the life that you were created to live.
How do most people think of financial betterment? In a faulty way, like…
Alright, how do you know that all those things right there don’t move the meter in your life? It’s because, ask:
How many times would you have to do that activity - like add an unnecessary flight layover - in order to acquire wealth?
None. It doesn’t apply. You could practically do that an INFINITE number of times and you wouldn’t acquire wealth to create the time to live the life you want.
But how many times would you need to add a flight layover in order to make you MISERABLE? There IS a number. There is a certain number.
Doing those trivial things only helps ensure that you stay at a soul-sucking job.
Because rather than taking your time - a zero-sum game - rather than HAVING your time engaged in expansionary activities, you were focused on contracting.
You were focused on where there’s a low upside rather than activities that have an upside with no ceiling.
Another way to ask if the activity is expansionary and moving you toward financial freedom is: Did you overcome FEAR in fulfilling that task?
Yes, it’s an inconvenient truth that facing & overcoming fear is what makes you grow.
Did you overcome fear when you brewed coffee at home or got some stupid discount on grocery store bacon?
What are the activities you do that move you toward financial freedom - not debt-freedom - but financial freedom & overcome fear & grow.
That’s an activity like:
Making your first home a fourplex with an FHA loan… or repositioning your dead equity, like Caeli Ridge & I discussed here two weeks ago… or buying an income property across state lines… or learning how to become a savvy private lender… or finding out how to become an accredited investor.
Are you living the life that you were created to live?
Now you’ve got some examples, some milestones, and some checkpoints so that you’ll know if you’re either on the right trajectory - or hopefully - if you’ve been listening here long enough… you’re living that life… now.
Why would you live one more day of your life “below your means” than what’s absolutely necessary. That should only be a short-term life mode.
Don’t live below your means, grow your means.
Live the life that you were created to live.
But the major media channels stir up so much fear - and even niche ones - that it can often paralyze, even some clear thinkers.
Despite the fact that today’s real estate appreciation rates are quite normalized and modestly growing, some people still have unfounded fear over real estate.
And non-doers are always trying to time the market… and timing the market doesn’t work.
Here’s what fearful permabears are concerned about. It’s always something in real estate.
In 2012, it was “Shadow inventory”. Remember that? Never came to pass, just like most of this stuff.
In 2013, the fear was Boomers are downsizing
In 2014: Rates spike
In 2015, it was a PMI recession
In 2016, it was vacant units. Ha! A terrible miss.
In 2017, it was, look, nominal home prices are above the pre-GFC peak. Yeah, so what? They should be.
In 2018, it was 5% mortgage rates. That was the fear.
In 2019, I actually don’t remember what the fear was that year. That was a fairly uniform year but people stirred up fear about something in order to get clicks. Call it a recession.
In 2020, it was the pandemic
In 2021, it was fear of a forbearance crisis.
In 2022, the fear was rising mortgage rates will cause a housing price crash and there’s a collapse in sales volume.
In 2023, what’s the fear? Are we back to recession fears again?
Gosh, people have been steadily forecasting that for 12-18 months now, it still isn’t here, and it still isn’t on the horizon either, as job growth numbers keep beating expectations.
If you’re waiting to invest in the most proven investment of all-time - real estate, or even something else like gold or bitcoin or stocks - if you’re waiting until the uncertainty dissipates, then you’ll never be investing again for the rest of your life.
About the only certain thing in the investing world is persistent inflation and the fact that people are going to need a good place to live.
I invest in the certainties, not get paralyzed with uncertainty.
This way, we don’t get too caught up in the latest investing fad, often like stock investors do.
In 2017, it was anything around “blockchain.”
In 2021, it was the “metaverse.”
In 2023, “AI” is the term that’s instigated a Pavlovian response from investors salivating over the potential hundreds of billions in value that could be unlocked by the new technology… until that gets oversold.
There IS some opportunity in some of those things, but as soon as people lose money in them, they revert back to principles.
In a lot of ways, we stick to principles here, even if some of them are countercultural principles - like FF beats DF.
Keep your debt & get more of it. More debt means you own more RE.
US house prices have stabilized and are heading up. They've gone from modest declines or steady prices… to modest growth in most regions.
That's the summary from my latest "light reading" duty—FHFA's Monthly Housing Report. It’s released every month.
Some highlights from the latest one, all stats through February, and with nominal pricing…
Spring numbers will be factored in soon. Since it's property-buying season, appreciation rates will likely rise.
Like I've stated before and am becoming really somewhat known for talking about in the industry. In fact, just last week, I was in Arizona and shared this on Ken McElroy’s show - the housing crash is a 100% certainty. That's because it already happened.
It was a housing supply crash three years ago, which prevented a price crash.
So then, let’s look at some of the best appreciating markets in the US here, just the quick, Top 10.
And notice how widespread the national HPA is. It really just excludes the western third or western quarter of US states.
The market with the 10th most appreciation - and this is all YOY, through Q1 per the NAR:
Santa Fe, NM up 12%
9th is Hickory-Morganton, NC up 12%
8th is Appleton, WI up 12-and-a-half per cent
7th? Milwaukee-Waukesha-West Allis, WI. Up 14%.
I’m doing some rounding here.
6th is Oklahoma City, up 15%
Elmira, NY - hey I grew up near there - is up 15%. That’s 5th.
4th is Burlington, NC up 15% YOY
3rd is Warner-Robins, GA, up 16%
2nd is Oshkosh-Neenah, WI at 17%
#1 in the nation is… the Kingsport-Bristol area, which spans Virginia & Tennessee. Up 19%
I’m going to discuss apartments in a minute. But they are the 10 US areas with the largest single-family home price increase annually.
In the Information Age, a bad reputation will follow you around like your cat, internet tracking cookies, and a song that you can't get out of your head.
Apartment reputation scores are a broad measure of renter satisfaction.
It's amazing to see how closely they track the macro trends that impact tenants and property managers (PMs).
What I’m referencing here is J Turner Research's Online Reputation Assessment scores from today, and going back to March 2020.
This is a very telling pattern here.
Spring - Summer 2020: COVID descends. Lockdowns are here. Reputation scores plummet. PMs struggle to rapidly adjust to a new era where renters live and work inside their units 24/7. Everyone started using Zoom. Maintenance techs could rarely even go inside units for repairs.
Entropy ran rampant. Parents didn't know what to do with their children. Fear reigned. Common spaces closed. Neither tenants nor PMs were happy.
Then, in the…
Fall 2020 - Summer 2021: This was the boom period for apartments. PMs have solved for the new era, adopting new technologies and new strategies. They also re-open amenity spaces and in-unit maintenance.
Hey, foosball in the clubhouse is back. Apartment demand surges, and reputation scores go back up.
Late 2021: Apartment occupancy rates hit record highs. PMs again wrestle with on-site staffing shortages. Could ultra-low vacancy and still-robust leasing traffic put so much strain on property managers that reputation scores start to drop again?
Nope! Because in…
Early 2022: Reputation scores climb back up to new highs again. PMs once again adjust to the rapidly evolving climate, many leaning on early-to-mid phase adoption of centralization tech and management practices.
Mid - Late 2022: Apartment reputation scores inch back again. That’s when consumers saw peak inflation—including renewal rent increases.
At the same time, demand (for all housing types, not just apartments) slowed down and you didn’t see the high rent growth that you had. This puts more strain on PMs.
Inflation hit everyone, with big price hikes in property insurance, taxes, maintenance, turnover, labor, and utilities.
Early 2023: Apartment reputation scores are on the rise again, hitting new highs. Consumer inflation is cooling, while vacancy rates and leasing traffic return to more normal levels.
Some semblance of normalcy has finally returned.
At the same time, new tech adopted in the pandemic era proves to have long-term benefits to both tenants and managers.
In recent years, PMs have focused on resident satisfaction, so it's no coincidence that reputation scores keep improving.
Now today, as an investor, changes are that you have a low LOSS TO PURCHASE.
What’s a “loss to purchase”. Your tenants are leaving to go buy something very often.
You, as an investor in either single-family rentals or condos or apartments - you can retain residents right now because it’s so hard for them to go off and buy their own starter home.
Why’s that? Well, it’s not just the higher mortgage rates. It’s that fact coupled with the fact that credit availability is still tough.
As you know, you need to have a lot of good documentation & income & assets to get a loan. That keeps your rent-paying tenant in place.
In 2005, we were in the opposite condition. Back then, tenants fled my units. I had a hard time retaining tenants in 2005. Why?
Because it was so easy to get a loan, you could just lie about everything on a mortgage application and no one even checked the accuracy. Bloated appraisal values even came flying in.
That’s why my rental property tenants kept leaving. It seems like it was always to buy a first-time condo back in 2005.
Today, you can retain tenants. That’s your upside of today’s harder housing affordability and stringent lending requirements.
So, in this normalizing housing era where tenants have to live in your rental unit longer - because they have no alternative - you can find the properties most conducive to this strategy where thousands of other have created a quick account - at our marketplace: GREmarketplace.com
It’s not like a big box store. It’s more like an organic farmer’s market. That’s where the good stuff is. So, check back often for new inventory at GREmarketplace.com
You’re listening to Episode 449 of the GRE Podcast… and of those 449, I think that two of them were quite good!
Coming up shortly, 12 ways for you to raise rent and add value to your property.
If you get value from the show, please tell a friend about the show. I’d really appreciate it. Share it on your social media.
More straight ahead. I’m Keith Weinhold. You’re listening to Get Rich Education.