Market Update with a $80M+ Commercial Real Estate Investor
Notes: Watch the full video here (warning video is not PC)
You want to be ahead of the game in this market.
Three things in any deal - price, rate, and duration. Most people focus on price. The other two are very important.
We have a supply side issue.
Japanese model from the 80s -> stagflation, or Brazil model -> government picks winners and losers
Rates are going to continue going up, be prepared for that.
Being a better business person means creating something of value. Creating something.
Many flippers will get burned, they’ll have to go faster in their deals.
Supply is only going to get worse, prices are going to go higher, units will be slower to market.
One of the 5th worst mortgage industry days in history - rates have gone from 5.5% to 6.5% within two business days. That type of shock to the cost of capital will have implications.
Replacement price is so high that we do not see prices dropping. What we will see is a higher cost of getting into business and less volume. People who are new getting in now will be the loser. If you don’t own assets, you are screwed. Longer hold time and lead time due to materials.
Buy hold, get old, and die. Quicker money, BiggerPockets days are over.
Now is not the time for a newbie to throw money into the market.
You need to get in and out quick.
People may never know that they’ve already been hit. Market will adjust this week or next week.
Janet Yellen and Jerome Powell have screwed our economy.
People who have over leveraged will be getting out. Savvy investors will love this.
The appreciation is not real until you sell the asset.
We will still see fuel and food prices up due to a supply side issue.
If you’re not making 30% more this year, then you’re going to feel it.
Wait to deploy capital until the fed is done taking capital out of the system.
Give time for the dust to settle and then go full speed.
Get your accounting and your numbers solid. Do not go into a deal thinking that things are going to get better. It’s not. Take a worse-case scenario and test it.
Creative people will make a lot of money. Be conservative as possible.
jon@movewithmomentum
@realestatejax
