All right. Welcome everybody. This is the April, 2021 monthly market update, or I go over all the latest happenings that impact real estate and by investment portfolio and our, I don’t know about yours. You guys want to check this out on the YouTube channel, go to school, pass a cashflow, search that and.
This, all the videos of all these past months are found @simplepassivecashflow.com/investorletter. So let’s get going the Easter egg this month. If you guys want to grab the free giveaway, but a simple passive cashflow.com/qrp QRP quail. Ralph Paul. To get the free book to learn how to avoid UDFI and UBIT tax, you get kit.
When you start to invest with that type of accounts, your qualified retirement money in leverage investments, and you do want to use leverage, right? We all want up to a certain point, right? When you get the best returns, the cashflow But, yeah, I think if you were listening to our last office deal webinar, that was funny talking with the bank office folks.
A lot of don’t know what this QRP solo, 401ks and Roth IRAs. And we were laughing because the ultra high net worth don’t do that stuff makes, so it made me laugh quite a bit, but for a lot of you guys under $4 million network, A lot of your equity might be in your retirement accounts and this may be one way to get it out.
But I kinda think for most people, it just makes sense to take it out, but of course, therein lies the strategy and that’s why you listen to this full passive casual podcast and check us out and join the investor clubs. simplepassivecashflow.com/club and get all the insider secrets such as do I need to be using QLP or spokes.
All right. So first thing here, this is a sort of an indicator on TSA checkpoint screenings. So yeah, TSA, the security folks at the airport, this measure is a seven day moving average. And it is definitely coming back up as if March, April from the bowl, April 20, 20, over halfway there from the peak of where we used to be prior to 2020 in 2029.
So things are coming back slowly. We’re not, we’re like halfway there in terms of TSA stats. And if you guys are listening to this podcast form, , if you go to simple, positive cashflow podcasts, you want to get a glimpse of all the poor charts that I’ve put together here. And the flood graphics.
You could also check this out on our YouTube channel or it’s simple, passive cashflow.com/investor letter. Of course. Stimulus plan came out again under the $1.9 trillion one. My wife says, I asked her how many stimulus funds do you think there were? She was like three, cause I got three checks.
Really? I think there’s four or five by now. And there’s probably going to be, I’m guessing two, maybe three more to come later this year. Who knows? Maybe even next year. But yeah, I think seamless helps investors, right? That’s essentially just running up debt and the people who are going into deals with good debt, are they going to be the benefactors in the future, but here’s a little chart just checking yourself where you fall based on how many dependents you had come to you, but you guys are all smart.
You guys got your checks. You guys are cool. You guys do the direct deposit. Now, this is something interesting. Moving forward, not to say anything politically, actually I don’t see anything like that. I don’t really care one way or the other, but I do know Democrats typically spend more money in terms of stimulus dollars and which ultimately helped me, so I guess that’s a cool thing in the end, but. Senator Ben Cardin let a little things slip there on the hot mic. You said that Democrats will most likely, and I quote most likely use reconciliation on an infrastructure package. And basically what that is not that the Senate and the house is majority power going to the Democrats.
They can use this to bully their bills and stimulus packages through. So it is what it is. They have the edge actually in all the presidents, Democrat too. So all three branches of government going to the Democrats and you asked me, I don’t care. Look, guys, spend your time on making money at your job or investing your money.
And. Spend less time on worrying on things you can control, figure out where the puck is going go there. All right. Now I’ll probably get some hate mail or some trolls of the YouTube channel for that. But it is what it is anyway. A lot of folks are thinking that the us GDP is going to go gangbusters.
I think we’ve shown Fannie Mae, Freddie Mac stats here as one from the conference board where they are showing some upside projections, downside projections and the base projections actually. But I like to see the optimistic pessimistic, and then the baseline deals just to compare them.
But yeah, they’re expecting growth expectations to reach five to 6% for 2021. Due to COVID 19 release spending and the overall, things getting back and forth, both ends.
There’s some demographic trends mean this is no surprise to everybody that the green dots are where the top 10 population rank growth is. These are in no particular order going from the right to the left or East to West. Raleigh Charlotte, Atlanta, Houston, Dallas, Fort worth Austin, San Antonio, Phoenix, Arizona, salt Lake city, and Las Vegas.
Those are the top 10. The bottom 10 are Los Angeles, orange County, Milwaukee, Detroit, Pittsburgh, Cleveland, Baltimore, New York city. Believe that’s new Haven and Philadelphia.
bigger pockets. I don’t know where these guys get their data from. But they said top cities for red growth in 2020. Number one, Houston, Texas Portland, Oregon, Dallas, Texas, Chicago, Illinois, St. Petersburg, Florida, Phoenix, Arizona, round rock, Texas, Oklahoma city, Scottsdale, Arizona and Helene, Texas. If you’re reading this chart, they’re saying Houston rent growth is going to go up 19%.
I don’t know where they’re getting their numbers from, but I’m just throwing out these percentages personally, but I’m just looking at the top 10 and Hey, these are good markets is the message that I’m pulling away. As an investor, John Burns put up the school article with five new home designs, thoughts and starts.
So things that are coming in terms of trends, things are going on. First one, healthy living. So less focusing on the materials you use to build the home and start focusing on creating a healthy lifestyle in the new home, such as low VOC materials. Yeah. Marketing should emphasize things such as better sleep and easy to clean surfaces throughout the design.
Rather than those certifications or low VOC materials. I guess what they’re saying is those lead platinum silver. I always thought that stuff is garbage in the first place. It was just like a contest of who could pay the most to these guys to give them the best score.
Actually, I shouldn’t say that, but. I guess what they’re saying is those certifications are being less and less important and getting back to the basics of music services and better sleep. Next thing rethinking five CS. So are they replacing the windows in the right location and homeowners have a strong preference about their entry design and most don’t want a front porch for planned conversations with their neighbor.
I guess that’s what a garage is for. You just opened the garage, driving close the garage. You don’t have to talk to anybody. You never have to get out, just go to your, or your cubicle at home. Go get, keep it go at work, go to your cubicle. That drives you around.
Number three, functional tech smart tech should make the home run smoothly from behind the scenes going away or the touchless tech and the voice says this that’s. Still have some runway for growth. I don’t know about you, but I still don’t trust. Mrs. S she always gets it wrong. This is a I’m learning how to control that one.
I’m not going to say it because things will start to go the largest opportunity for smart homes is tech that identifies me to issues before disaster strikes. I think maybe they’re talking about those fancy refrigerators that I don’t have that tells you when something is going bad or something like that.
I know none of the subs, I don’t have a full house like that because I rent and I’m happy. Sound insightful offices are historically been in the front of the house, which is exactly where consumers don’t want them. They want to put them in the back of the house upstairs with a window in front of the desk and wall behind the desk for effective video conferencing.
Interesting. Yeah, but this makes sense, right? They want to have their office in the back. Hidden, I guess young families will invest in homes. Despite the theoretically having less disposable income, young families want the private spaces, the healthier home, and won’t they functional kitchen and the sanctioning bathrooms that most are also more likely to replace a perfectly functional appliance or fixture.
If it is job style, start focusing on more, helping them with their busy lives. Yeah, this might be the trend here, right? For the 5% that can actually enforce their own damn house. But 95% of all, or the vast majority can’t afford it and will live in rentals and apartments. So what they can afford is what, nice to have my opinion, but not starting to old sound like an old grumpy man.
Moving on to some commercial stuff here, Disney to close 60 stores in North America. So if you guys like to dive in that massive pile of Disney plush toys, I guess you probably can’t do that anymore because they don’t allow you to touch the merchandise, but they might even be closing your nearby Disney store.
So you’re going to have to go to Disneyland to get your stuff or go to evening. Refinance loans. Propelio another increase in whole mortgage lending activity during the fourth quarter of 2020. This is Adam data solutions. So what they’re saying here is purchases refinance, and he logs are on the uptick as of the last three quarters.
Now this makes sense, right? People are getting back into the market or more lending action. Another top 10 market from ALN data that call no, this is more apartments. 10 markets, Phoenix, Arizona, Tampa, Florida, Dallas Fort worth Houston. Those are your top five, top four by long shot. Now you start to get into Atlanta Seattle, North Carolina fall.
Let the bill. Raleigh North Carolina, Denver, Colorado, Orlando, Florida rounds up top 10. It Phoenix, Tampa, Dallas, Houston plant a top five
joint center for housing studies of Harvard university came up with this cool article and I sticking this one figure that I saw useful work. The rise in young adults, living with parents early in the pandemic was mostly rare first after the summer. So what they’re saying is the young adults, they obviously moved in with mom and dad starting last year, but then now they’re regressing back and take back out and it has it broken down between 18 to 24 years old.
Which, yeah, a lot more than my running back to come up, dad, as opposed to the 25 to 29 year old is a great resource. This joint center for housing studies at Harvard university. I don’t think this is very biased industry data, like some of the multifamily housing needs, but these are very rich articles.
If you guys are bored and you want a good resource. Another resource of all data that called does a lot of apartments, top 10 worst markets. And the naughty 10 is New York city, Los Angeles, Chicago grand Rapids, Michigan Birmingham, Alabama Shreveport, Louisiana, Illinois, Springfield, Northwest Arkansas Buffalo, New York, Richmond, Virginia.
But I think out of this list, New York city is by far the biggest loser New York city, the rest of the list, they’re losing some population, but not too much
huge news coming out of Phoenix, Arizona, as we mentioned them earlier, Phoenix mixed use project takes a giant leap report by commercial property executive as this. Development would comprise a 2.1 million square feet on light industrial as well. The office retail and entertainment space. And this is a Keystone equity’s recent acquisition of 129 39 acres in Goodyear, Arizona situated at the interstate 10 and three Oh three.
More things from Phoenix pin investment Suncrest, real estate to develop 109 unit build to rent community in Phoenix. Now, this is something I’ve been hearing a lot about a podcast land. Some of you guys have sent us emails on this, and I just think it’s people are just like building turnkey rentals are still too unsophisticated investors.
But it makes sense, right? People want newer stuff these days. They don’t need to be in the best areas. They just want it to be new. And I see the appeal to this. This is why people would rather be in smaller living conditions, like a condo, one bedroom, high rise apartment, whether it’s new, they have all the cool amenities and it’s cheaper as opposed to being in a larger house or traditional housing environment. But. So people have, there’s like this thesis that people want news. So when you get the people to what they want, that can’t afford it, you have to buy to rent. So the investor buys it and then rents it out.
I’m not a big fan of this, but Hey, prove me wrong, right guys. But they’re building that in Phoenix because the population growth another chart here. Market five-year rent growth projections over the national average. So this is a five-year horizon in Phoenix, Arizona. Number one on the list at 37% rent growth in this five-year period.
Second place in them. Empire, California, San Bernardino area, 32% Dallas Fort worth 32% in this five-year period, Atlanta, Georgia 31%. And then you go down to Baltimore, Seattle, New York city, Northern New Jersey, central Valley, California, orange County, Oakland, San Francisco. Why can’t I say it? And insula now these are all the big red growth jumps over a long period, right?
Not just six months or a year, but a five-year period. These are your longterm trends and out of this list, a lot of your primary markets, right? Which you’ve come to expect, but out of these, the top 20 of 24 markets that actually will catch it all. Let me go through here. The only ones who will do it will be Phoenix.
I don’t think inland empire will cashflow too much close to Los Angeles and it’s in the state of California, but Watson one real estate there. Where the tenant, it’s all the power. Dallas Fort worth Atlanta. Yeah, I like those markets, but all these other ones, they’re all blue States.
You’re not going to have the rent evaluation. You’re not going to be in the cash flow with a class B or C asset. Indianapolis number 15 on the list is on here that cash flows, salt Lake. Not really. You can’t really cashflow there anymore. Tampa Bay Detroit can sorta, but that’s getting lower on the list.
More news from Tempe, which essentially Phoenix the house enters Arizona market with $177 million multi-family development in Tempe, which will feature a 310 studio, one, two and three bedroom. So yeah more development. And also here’s another one. Intel expanse. What’s making all this Phoenix news, Intel expanse, Arizona footprint with $20 billion investment to new factories will be developed at the company’s campus Chandler Arizona, which is pretty much Phoenix.
Now, John Burns with their March madness theme came up with these fun themes. Bracketology for their next at merchant markets. So in the Southeast conference, rebuild South Carolina, Knoxville, Tennessee South is boys. To welcome 82% of the national household growth over the next decade. Just why we like to invest in Alabama and Texas looking at, I don’t know as much, not still, but yeah, Knoxville, not Memphis, but Knoxville.
And some of those smaller markets that tendency even look good. I don’t really look at South Carolina to me. It’s just too far, but I hear it’s a great market. Western conference, the Tucson, Arizona, Fort Collins, Colorado are benefiting for the rapid growth and rising prices of Phoenix of Denver. I don’t know if you can cash flow a Denver or Fort Collins.
That’s the problem with that? You’re not saying that they’re bad places, but you just can’t cashflow there. Bracket busters, Myrtle beach, South Carolina and Spokane Washington are booming for their relative affordability house prices and house prices that are rapidly rising. And then the parental powerhouses, I guess these are your North Carolina’s and your Dukes.
Austin, Texas and Phoenix, Arizona, both markets are mentioned as university cities as a clear destination for full buyers, particularly out of California. Do you guys go on YouTube and inundate with these videos that people St while they’re getting the heck out of California, it’s hot stuff. These days, hot topics, very tweetable topics or YouTube algorithm, friendly topics, even California to go to Texas, Arizona Vegas.
And here’s a screenshot of the Yardi matrix, another multifamily apartment rent tracker that I follow year over year, rent growth of all classic classes.
Take a little breather here. Do you guys have not yet? Join our community, get educated, go through our pipeline. Free e-course that is up this month. Go to simple, passive for that. And if you’ve been following with us and getting a sense of our community and our unique tribe of high net worth working professionals, to try to get our network from one, the $10 million.
Check out our family office, a Honda mastermind, which is to grow your network and also get in a group of other like-minded. I paid professionals to learn more, go to simple, passive casel.com/journey. And for those of you guys just getting started, maybe your net worth is under a quarter million dollars trying to pick up your first rental property or about turnkey rental.
Check out the simple classic Castro investor incubator, check out the e-course if you just want to dip your toe in that, but you can learn more about that. It’s simple, passive castle.com/incubator for information about the e-course and incubator there. But we’re going to transition more on to what I’ve been doing a little lately.
We see, we have some live attendees there. If you guys want to drop some questions or comments into the question, answer box, we’ll get to it at the end. But I was trying to find ways keep growing, keep improving So I’ve been getting some business coaching lately trying to improve my skills in terms of leadership, which means hiring people.
I’m learning that I am going to be a father soon. So I cannot do this simple passive cashflow dance for 12 hours every single day. And I need to bring the team around me. So I am trying to grow myself that way, which is very difficult. How did we treat a little contribution this last month?
Well, a bunch of our deals just close one full cycle Atlanta, Georgia, that one you guys remember if you guys were with us back in 2018? We just more than doubled best buy in two and a half years. Huntsville investors doubled investor’s money in three years.
Another one we 26% return people’s two years and get under the Chattanooga. And we also got this other deal in Texas. I can’t say where it is yet, because it’s not final yet, but we are looking like it’s going to be 130 something percent return in five years We’re in the talks with buyers for that right now, to submit that total return.
But on that deal, it was Rocky up, started out the Gates occupancy actually went down to the 60%, which is very rare. I’ll be that happens. Things pretty goes pretty smoothly, 90% of the time, but this is like the 10% of the exceptions. We crawled all the way back and, continue to doing the business plan, rehabbing units and.
Yeah. It’s great when we can make great investors at ease and get right the ship. The truth is these assets are pretty resilient and yeah. Maybe we don’t pay out distributions for a little bit, the business plan is going along the business plans through increased rents and event, she cashed in with a big return, like how we are looking like it’s going to be here shortly.
Woo, ooh, on that. But also booboo on our recent closing last week, a 303 unit class B in Houston, Texas Cambridge village apartments. For those of you who have joined us if you guys like red wine, white wine champagne, or you’re just crazy enough, like this guy doesn’t even need a drink.
Congratulations. And thanks for jumping on this one with us a little bit on certainty here from myself, and this is the crazy thing, right? Like where does my headaches come fall? Not from these big, robust deals, but on this pain, the butt single family home that I still own two of these things.
And we’ve been trying to get this one sold for like a whole year and. I’m not complaining or anything like that, as a remote landlord, I have very little recourse control of how things go. You’re just getting fixed up. I dunno, what this thing is, XL like given up hope. I just written it off.
Luckily I think I’ll make a profit on this summer, but man, what a headache, it’s definitely not worth the trouble. I don’t know why anybody does those burst a pain. It’s cool. You can make 20, 30% for time and money like that. But for the risk of working with a bunch of lower level contractors, wiring money remotely, to me, it’s not the way for more accredited investors or guys over half a million dollars worth.
But Hey, that’s just me call me ladies, if you want. But how do I get certainty? That’s one of the big, important things for folks and, going back to that El Paso deal, occupancy job pretty much the 50%. And we crawled back in two years to get that thing back to 90% stabilizing and very confident that we’re going to get your 20% people’s money in three years on that it’s phenomenal little Rocky start, but.
That’s how things go. And the full family office on a mastermind, the group with the bank and the collective genius more information go to simple, passive cashflow.com/journey because it’s the largest it’s ever been. We got a lot of people in the beginning. Try us out. They paid the in-store price, something at renew, some weren’t the right fit.
But overall the last couple of years, people have been joining and we’re at the highest level of membership as possible. And now I’ve created more of an elder program or people stick around, they’d be up for another year and they try and help out the community more for now new members coming in, we give them a couple of mentors, people who have been in the group for more than a year to help jumpstart their networking and also have another person.
That’s another viewpoint other than myself and the other staff to help them out. So we’re trying to make this program better every single day. You guys are always interested in the crop I’m buying. So what did I buy this month? Do dads. So I bought these these felt planters. They’re still on my couch.
I haven’t put dirt in them, but. I bought them because I was going to grow like sweet potatoes and potatoes. And I guess there’s like a little Velcro flap that you can see when it’s ready. They’re like 20 bucks. I think it gets me outside. And then I actually am really into like worms and stuff like that.
So I bought this compost container, or you put like all the. Composting stuff in there. And then every few days I run it out to the worms, throw it in the compost pile that I’m getting back into the Sufi thing, sibling, fish, and steaks. But yeah, again, if you guys want to grab the QRP book, go to simple passive castle.com/qrp.
Nothing here should be taken as legal tax, financial investment advice. Think for yourself folks, we’re here just to educate you guys and connect you with the right people. But we will see you guys next month. All right. Aloha. Everybody it’s may day coming up, but.