This is the February, 2021 monthly market update where I go over the news and what’s been impacting the economy and our real estate investing Easter egg just to start out. So I put together all the recordings for the turnkey rentals. In a little turnkey download tab for we guys that’s all past the cashflow.com/turn key slash download.
The reason why I did this because a lot of the stuff I’ve forgotten yeah, we have the incubator group and we have the remote investor eCourse for new investors, but now I’m moving off to syndication deals and more accredited investing type stuff. So I thought I would try and archive this all in one place before I forget it all.
So if you guys are starting out low on the net worth side, check this out, but let’s get into it. If you guys don’t know who I am. My name is lane I still have my PT license. I don’t find it. Go back to the day job. So habit, because it took so long to get , if you guys want to check out my podcast, find it on iTunes, Google play, and also the YouTube channel.
All right. First thing here, we’ll start with a few teaching points for folks. First thing first, Biden’s in charge now and some of these tax changes might be coming down the pipeline. Currently corporate rates are at 21%. Biden’s looking to push set up with about 28%. They always talk about removing the 10 31 exchanges.
Frankly, I don’t really care, 10 31 exchanges. Doesn’t really impact us sophisticated investors who invest as private places in syndications and diversify. It only hurts the sucker buyers who are distressed buyers. I love 10 31 buyers because they’re distressed and they pay a hundred, five, 110% of asking price because they’re distressed.
They have to move. So you don’t want to be that person don’t say no to 10 31. And so two might be taken away. Which is fine. So other things that’s going on is, the other than the corporate tax rate possibly going up is he’s he looks looking like he’s going to whack those people over $400,000 AGI.
But for a lot of us, we’re able to use these passive losses and manipulate her AGI to fly under the radar with that type of stuff. You don’t know how to do that. Check on my tax guide. It’s simple. Pastor cashflow.com/tax. Okay. But yeah, a lot of cool charts here. I got this Ernst and young report that they put out.
You guys want to see some of the visuals here, check this out on the YouTube channel or I have all the investor letter, all the monthly reports on my firstname.lastname@example.org slash investor letter. And you guys, can I catch up on plus individual form? So other things he’s going to be looking to do is it’s going to create like a maiden America credit, 10% towards revitalizing and between manufacturing facilities and bringing production back to the U S I’ve definitely looking at some industrial vestments.
Dean stays, did diversify myself. I still like what they found. They still like mobile parks. And office space, but yeah, I’m always looking to diversify my personal portfolio. Nope,
of course. Biden is a big greeny guys. So you’re going to possibly see a lot of the solar credits maybe restore the full electronic vehicle tax credits for, in terms of housing, looking like that they might bring back the $50,000. First time home buyer credits. Everybody freaks out every time, something like that comes out saying that it’s actually going to impact a lot of things to me.
Like I stopped caring about all of that stuff. Cause it’s a drop in the bucket really. Yeah, some people might be buying a house and it might make things go up for a month or two, but even big $15,000 tax credits for first time home buyers. I just seen it, not really move the needle, the longterm.
But if you are like me and you rent, Hey, it might be a cool way to pick up $50,000. But if you’re buying a one to $3 million house, what’s 15 grand. That’s not much as far as childcare 8,000 tax credit for childcare, 5,000 tax credit for informal care givers aimed at elder care. Most of the stuff is still in the works and I’m sure it will change, but when we figure out what’s going on, I won’t let you guys know.
Of course we strategize best practices behind closed doors in the family office for Honda mastermind. If you don’t know what you’re missing, like you guys don’t want you to miss them, but it’s good stuff in there. All accredited investors and it is what exactly what it is. Mastermind of multiple family offices coming together that are under our umbrella.
So learn more, email@example.com slash journey, but enough for the commercial. So more teaching points here. I was working through the development deal that we have going on in Huntsville, and we just signed our guaranteed maximum price contract on that. And for those of you guys still doing the birth strategy and flipping houses.
The way we did it. This is a $20 million project we’re working on. We’re trying to build 200 multi-family class a units. So workforce housing, class A’s kind of synonymous with new builds. We are put in place a guaranteed maximum price contract to shelter. The movement on the price where.
We’re also incentivizing the contractor to find us cost savings. So I pulled this out of the wash dot standards when I used to be an engineer up in the Washington state. So back then, or if you followed the wash dot standards, there’s a former like year. Saying that if the contractor finds a cheaper way to do it you could split the cost savings with them.
So it’s a way of incentivizing them to be a good steward of your money and find cheaper ways to do it in the private sector. We use a 25% profits split, but yeah, just a few ideas for you guys doing the birds. Take some tips from us. We want to be aligned with our contractors as much as possible, even though it’s very hard, if I’m going to do a construction project, it’s going to be on the bigger scale with these bigger, more professional construction firms.
If you guys hadn’t heard, the whole game stop thing, I’m not gonna beat this to death and show you’ve read about it in every single publication out there, but. If you haven’t, basically a bunch of folks on Reddit banded together and manipulate the price of gain stuff. And look, this is what I personally don’t have any paper assets.
This is what happens when a bunch of kids have access to an asset. And this is why I’m out of something that everybody has access to. There’s a reason why we’re like real estate. Not everybody can save up 20 grand to go buy a hundred thousand dollar house. Certainly not many people can go and buy a 10, $20 million apart.
There is limited access. There is a barrier to entry. That is why I like it. And I try not to do anything where I don’t have that unfair advantage. But if you guys are on the rollercoaster of stocks, mutual funds, that type of stuff. It took me a long time to get off of that bandwagon, but I’m so glad I did getting into real assets, especially that cash flow,
On this chart is 30 or 40 things that can go wrong. Ranging from weapons of mass destruction, price, instability, digital inequality. Some of these, I don’t even know what they are likely of a crisis, infectious diseases, climate action, failure, human, environmental damage, extreme weather in it.
Ranks everything on a chart, which if you guys go to the YouTube channel, you guys can take a look at what I’m looking at, but. Frank it on the chart between how much impactful it is to the global outlook and how likely it is. I’m sure we have about half of these on the private placement memorandum of in capital letters, but in this life, there’s risks, right?
You’re always going to have risks. But I think if you figure out ways to mitigate that risk is the important thing. And I think diversification is that will personally the way I do it. And going into things that perform well in recessions. Not hospitality, not restaurants, not those things like travel and leisure.
We touched upon this earlier, potentially impact the Biden’s 15,000 home buyer tax credit out of the list. This is the, probably the one that’s likely to go through is what I’m reading. It’d be cool. The residential real estate market is very hot right now because of the whole supply.
Not necessarily, I think there’s super high demand, but it’s more because of low supply, but maybe when this gets put into the money supplier or out there, people start to get, see this. Maybe it might take the real estate market even further.
John Burns we just had him on the podcast a month and a half ago, but he points out some cool things, developments that are happening migration from urban to suburban locations, people are seeking less density, larger floor plans or outdoor space. The low mortgage rates, relative affordability and shifting from working and schooling from home supports the suburban migration.
So examples of that are Bay area. Worker’s going to Stockton or Sacramento Seattle folks moving out to Tacoma or, like to the East sides. If you’re familiar with that site, Bellevue. Migration from gateway cities to secondary markets continues to be on the rise, such as Boise Spokane, Charleston, I don’t necessarily like those specific markets, but this is just what John Burns is saying as a general training.
And they advise to a lot of institutional investors. Another development is luxury and second home sales sword. In locations drivable from nature, coastal markets. So those people run away from those high price areas, such as Seattle and San Francisco, Los Angeles. You’re seeing new home sales peaking in places where people are trying to pick up that second home or that nice luxury home
just outside where the populated areas. So places like Naples Lake Nolan, I in Orlando salt Lake city and Las Vegas, or people in salt Lake city and Las Vegas are benefiting in daybreak. In Summerland. For example, you have home sales in the top 50 master plan communities. Now these are like the big suburban development.
So track homes. Largest year of your growth. You’ve seen in nearly a decade, we expect lower mortgage rates and buyers since urgency improved living situations. And John Burns will advise for a lot of those types of clients, the big home builders out there. They’ll use their data to make the right picks of where to go.
I’d be telling you this guys, because these are the smartest minds of the business and we are lucky we get insight in what their information is, so we can make decisions as a mama thought investor or a syndication, private placement investor, and follow where the smart money is going.
Not where the dumb money, which is typically in these primary markets, just the flipping houses locally, because they need to feel it, touch it and see it. New home prices Rose 8% year of year, according to the proprietor builder survey, I will bust the man in limited supply at driving prices up and up.
And they say that they do not see this forecast really changing any taxing, but are some of the barriers to be on the lookout for. Should they come to fruition? Finished inventory per community remains low are restricting sales at 28% other communities, nationally three align with production capacity and lots of supplies.
So they’re still moving forward, but it’s going a little bit slower. Finished lot supply runs, low builders are scrambling to find new land deals and develop additional lots after selling far ahead of expectations. Some of the new lots of pipe, won’t be ready until the second half of 2021, especially in markets with difficult approving processes, building product delays, and shortages, continue to play the builders such as appliances, or, we’ve been facing a little higher than normal lumber.
So we’ve been forced to buy lumber as we need it. Resale home supply remains though in most metros. So this is encouraging even more consumers to consider the homes.
Yeah. Joint center for housing studies of Harvard university. Real next findings. That’s definitely not an article that you would scroll through on social media feed here. So I didn’t put it on the Instagram channel. There’s no one who would read this, but I started reading this article and I was actually.
It’s actually pretty good. So they’re saying, during the downturns, the expectation is that the housing prices with the client not increase and certainly not increase as such extraordinary high rates as it has. Some of the causes is the tight labor markets. The unemployment rate after peaking at 4.7% in April, we came down to a still weak level and 6.7% in November.
So some room to improve, but. You got to remember before this whole thing was not an economic issue was a health crisis before the health crisis that threw everything out of whack. We were at a super low level, 3.5% unemployment high inflation that consumer price index has been running for years, but only up 1.1% in 12 months ending November, 2020.
Therefore strong housing prices increases are not simply reflection of inflation. They’re extraordinary high on real inflation adjusted basis. So what is it like four to $6 trillion when I dunno if that’s true, but it’s somewhere on that magnitude. At least two to $3 trillion got pumped into the money supply, which is likely causing the stocks to stay at these all time highs despite.
Going to 14.7% and not 6.7% unemployment. People will say likely what’s happening next is inflation. But if some of the readings that I’ve been doing through Richard Duncan and other economists out there, what they’re saying is a lot of the inflation is not tied to the money supply these days.
Essentially America can print whatever money they wanted and nip delay the interest rates and. Can do this all by not precinct inflation. Not yet. That is there was still a loose lending mortgage bubble. The average national lending of a single family of whole mortgage debt divided by the market value of the whole is still an extremely low at 34%.
There’s no mobile skies. People are paying down debt, especially in this 12 months. If you have a job consumer debt is on the decline. So it’s not a repeat of 2008, that’s for sure. It’s a couple with ultra low interest rates. The fed pushed down interest rates to very low levels in early 20, 20, and promises to keep it they’re ultra low for years to come.
As a result, Walter’s rates have dropped to a record low level of 2.7% 400 points bait lower than it was a year ago. Housing production shortfall prior to 2008, housing production was cyclical with volumes that went significantly above long-term growth, but that’s not happening today. And bill we’re building as we need it. It’s what’s going on. Fewer houses for sale. The pandemic has been noted for the bowl level of houses for sale. Like I said, Low supply potential sellers do not want to risk inflection with buyers, wandering through their houses for showing and open houses.
That’s what these guys say. I don’t know if I wiped by it. If, to me, , if you need a house, so you don’t care, if you were walking through it, you need it soul. But in recent years, as an evidence that the baby boomer generation supporting onto their homes longer than their predecessors, it’s creating that log jam.
There is no more fundamental economic rationale for prices to go up. Shift and family spending moving towards housing, everyone’s stuck in their house. And this is all the, see why people are rehabbing their houses, de Paul renovations. People are nesting. They’re less traveling.
They’re stuck in their house, putting more money and more percentage of their net worth into their house.
Maybe because people can’t have house guests now, maybe the whole keeping up with the Joneses isn’t around anymore, but there’s certainly data is showing that they’re certainly putting more money into their houses. A pandemic induce acceleration in the purchase of second homes. So this is a lot of the wealthier guys, they’re trying to. Buy other properties in other areas like we mentioned from the John Burns study this is a list of the top 50 master plan communities of John Burns. The takeaway here guys is you look at the list, , what are the States that keep coming off Florida? There’s one big one.
The Howard Hughes in Summerland, Las Vegas, Utah, South Carolina, Florida, Texas, Florida, Texas, Florida, Texas. I mean it’s and then Phoenix. There’s a couple in California. There’s one Houston, Texas, but it’s always the big three, right? Florida, Texas, South Carolina, that these are the places where people are moving.
Do you have notes? Top 10 emerging markets. If you are a multi-family general partner apartment buyer, please cover your ears because the top three are Huntsville, Alabama, Pensacola, Colorado Springs. These are the top emerging markets and these are the smaller markets. So these are not secondary markets like a Dallas or a Phoenix, Arizona.
Those are that. I thought the mid tier in terms of population we’re talking about is emerging markets. So a lot of these are considered tertiary markets. So again, in order it’s funds for Alabama, Pensacola, Florida, Colorado Springs, Omaha, Rena, Savannah, the points you Orleans, Birmingham and Knoxville, Tennessee.
Maybe that whole Huntsville, Alabama growth is spurred on, or actually this got released pretty recently in the last month that the secretary of the air force has selected Huntsville, Alabama as the preferred location to post the us based con. No, I don’t know what the heck this is. Back in the day, these guys would launch the V2 rockets.
I don’t know what they’re doing all in space, but whatever they’re doing, it probably costs a heck of a lot of money and it was all the smart people and everybody else and a lot of tech stuff. So that’s going on in Redstone arsenal in Huntsville, Alabama. Why I liked Huntsville a lot. Patty may release a press release economic growth, expected to accelerate as vaccine deployment quickens, and one brother approaches like a dog here, but they’re saying the U S economy is expected to grow 5.3% in 2021 is substantial improvement from the currently projected 2.7% contradiction in 2020.
So they’re saying it’s a green light. Commercial property executive also echoes that to their headline on January 11th was vaccine to trigger order three CRE recovery with an economic turnaround expected to begin around mid 20, 21. I gotta say, guys is what were you doing when that Bicheno was about to burst here’s fatty maids right out of the report.
That’s their GDP estimation. So exactly what they’re saying to hit 4.8% in Q2, 2021, 7.5% in Q3 and 6.1 in Q4, and then the kind of re level off in 2022. Yeah, a lot of action. Prices are still low for large commercial assets. And , I don’t think that . The prices are better RV.
No, that long a Freddie Mac C’s improving multi-family sector for 20 and 21. So this is Fannie Mae’s brother or sister or whatever you want to call it. The other pseudo government agency predicts rents to increase in most markets and originations to rebound after a very slow year, 2020 for obvious reasons.
So the U-Haul report has come out guys so that you have all report is something I really liked to follow, which you guys haven’t used. The U-Haul in awhile. You’re probably too rich to use it, right? The you haul is what all the blue collar folks or the broke college kids use to move themselves.
So this is a great indicator where the blue collar workforce are moving and the top. 12 migration growth is in this order, Tennessee, Texas, Florida, Ohio, Arizona, Colorado, Missouri, Nevada, North Carolina, Georgia, like in saws in Indiana. That border Texas is always on the top here. It’s always a dog.
Like a Texas has been like the top, like the last half a decade at least, but a surprise or one is Tennessee. And I think a lot, a few slides ago we had Knoxville. If you’ve been up there, so there’s something going on, but yeah, Tennessee used to be 12th on the list. Now it is shown to be number one of Florida was number one, but it’s down to number three in Texas is number two.
Like I said, I, Joe Biden just passed his $1.9 trillion relief bill. It’s like stimulus three or stimulus four. I don’t know which one we’re on now. But this one went into effect in right as he took office January 15. What is it? How does it impact multifamily investors will of that big bill? What it did was it extended the eviction and foreclosure memorandum student end of September 30 billion in emergency rental and utility assistance, $1,400 similar checks for qualifying adults.
Increasing federal weekly unemployment balance. And it’s two, $400 through the end of September at 5 billion in emergency assistance for people experiencing homelessness. And it’s, people are like, before this happened, they’re like, Oh my God what’s going to happen.
We’re going to fall off the cliff. People’s welfare checks are going to be running out. And this happens all the time. Guys. Like the government has shown us time and time again that they are just going to print money. that’s just what they do.
Some of the biggest surprises of 2020, where the rapid innovation safe in the housing industry via virtual tours, exploded private appointments, drove conversion rates to levels of federal stimulus. They’re saying that’s a big surprise to me. It was no surprise. People were repairing and remodeling their houses.
Single family home rental operators competing for land. A lot of these guys are building with the build to rent model which included amazing 8% in the South East surprise of rocks. And.
The midway point here, guys, just take a little break here. If you guys haven’t checked out our offerings of what we have in our ecosystem and simple passive castle.com. Check out the website and our two groups of masterminds are the family office. Ohana mastermind the phone for short, simple, passive casel.com/journey.
If you want to learn more. Probably in the next couple of months, we’ll kick off another key beta group. Now this is the group for newer investors under Porter, mainline under half a million dollar net worth. You’re trying to pick up that first single family home rental. And that’s what I did back was 10 years ago, myself.
And that’s what started this whole journey. If you want to learn more about the equity simple passive cashflow.com/incubator, check out the revolt investor. E-course. If you want to buy that, and when you sign up for the incubator, we can be funding for their purchase there. That way you can get a headstart on the e-course, the academic learning.
And then when the group starts up, you can jump right in everybody, but a little bit of a personal updates on my side, as I always try and break things up in the six eats. But Tony Robbins first growth. Like we had our virtual bubble. I thought it was awesome event. I was pooped after two full days of this.
We had about a hundred attendees virtually. It was a paid event, so it was awesome. People who were there were serious about connecting with others. It was not a death by group PowerPoint. It was, I would say 60 to 70% was breakout room times. Building organic relationships with other passive investors.
So I’m saying it was great for me because I’d never done one or I never hosted one. So it took me a few hours, but I really got the hang of the virtual breakout rooms. And I think a lot of people were able to navigate on their own. So that was cool contribution, new members that came to the bubble.
I didn’t realize how many people I guess they don’t listen to every single podcast or they read every single article I firstname.lastname@example.org, people say, Oh yeah, I’ve seen that infinite banking thing. I didn’t realize it was such a thing everybody’s doing it here. Or, yeah, let me see it was really cool to see people seeing the light on some of these wealth building strategies of the wealthy and how supple they are, but how counterintuitive they are to what you normally see out there.
Again, it seems like we’re heading off in life is to create a contribution to the world to create more of a cheek. I was watching a YouTube video today of what’s the difference between McDonald’s in and out burger. And McDonald’s when they conquered the world to do this big business.
Whereas in and out burger, they’ve kept things small and a boutique, and that’s my vision for simple passive cashflow. Hopefully you guys will stay a part of it. I do I get a little significance in my knife? We close this sucker. The Jacksonville’s tallest building in the bank of America tower.
I was built in 1990 and we just bought it as a group. It was a $75 million deal on an appraise the next week for like low eights. So we just made a few million, at least right there. And it’s a biggest and skylight, who doesn’t like to be the biggest. How do I get a little uncertainty in my life?
This has been the theme for the last six months, right? What is the world going to open up again? Then we just showed you like three articles of how everybody’s saying what are two quarter three, 20, 21 is going to go like gangbusters, but it hasn’t happened yet. We’re still waiting.
I’m seeing a lot of listings go up by brokers. A lot of these brokers are finally getting the sellers to say, yep, now’s the time let’s put it on the market. Let’s move it. We held back in 2020, but let’s get it moving. We know that the world’s not okay,
but we don’t know if we have another six months at prices at this level. Which is why we’re pretty active and which is why it was great that we were still active last year, because all these other guys who just sat with their bare hands under the butts, they don’t have the broker relationships at this point.
How do I get a little bit certainty into my life? We sold three deals in the past month. One in Atlanta that one we a hundred percent return investors’ money in two and a half years. Sorry guys. The first checks in that are going on, I think in a week two on that. And then we’ve got to wait for some, the final bills that come in, but we should get that out shortly.
Another class C in Huntsville. So 60% return for investors in three years, that’s like a 33% time. And then another one, a hundred percent return in three years on another Huntsville property. But yeah. It’s done certain how do we build a little loving connection in my life? In the bubble, it was a cool thing.
On Saturday night . Some people were invited their spouses and we have those spouses panel. My wife was there. A few other of the investor wives were there and we demo dive into, how do we work as a couple to make financial decisions. So I want the testaments to go.
And how do you run your family household? And the finding was everybody’s lives a little bit differently, you’re not going to have the ideal, we make decisions and tent and maybe that’s how it happens, but that doesn’t happen in my family. So it was great to get people together and it was really appreciate the spouses for coming out to that.
The spouses and somehow, or listing. Such good sports, listening to this book, passive cashflow podcasts, as they are driving around, or maybe reluctant Nicholas thing. Cause their spouse is making you listen to it. But let me know. I don’t like that’s shortage.
If you guys came to the Saturday night thing, I got shirts for you guys as a prize and thank you for coming. Cause not many spouses come most don’t so if you guys truthfully came, let me know. We’ll get you a shirt. Some fun things I bought because what’s money for it and to buy some cool stuff.
So I bought a workout bench and I bought this cool punching Bay, but not like the punching bag you fill with towels or sand that like ribs for hands up. This one’s like you put water in and, punching water is still can break your hand. But so there’s a column of air. And so it’s like just soft enough, you get that snap, but it’s just soft enough.
But, that can be found on Amazon. A couple of cool things I bought this month. Yeah, the, again, the Easter egg guys, if you guys want to download all the audio trainings for surrounding single-family home, remote rentals, turnkey rentals, hopefully you can use this to get ready for the incubator.
If you want to join us on that and get Rolodex access to the people that we work with, go to simple passive cashflow.com/turnkey dash. Download. Or share this with your friend, right? I think that’s the common theme I hear all the time is that my friend does it. I tell him about this all the time and I just waste my time.
In fact, that’s how I created this podcast. So my friends would ask me how I buy all these rental properties and they never do anything. Some of these guys still never done it. But, you can lead a horse to water, but you can’t force them to drink something like that.
But for those of you who jumped on live, thank you. If you guys have any questions on typing in the question, answer box, we’ll try and get to it, but I here’s the legal disclaimer and not, we will see you guys next month.