November 2021 Monthly Market Update

Hey, what’s up folks. We are live. This is the November 2021 monthly market update where I quickly go over what is going on is some of the news out there impacting investors, mostly real estate investors. If you guys want to get a hold of my new book coming out next month, I’ll go to simple, passive to cashflow.com/book.

And shoot me an email if you guys are able to help. Need some folks to help me out with the launch. Give me a review, I’ll buy you a book. We also have the the audio version there at simplepassivecashflow.com/book. So help out the cause get the good word out, we appreciate it guys.

 

And we’ll get started.

If you guys haven’t met before my name is Lane Kawaoka. Currently 6,500 rental units need to update this slide and used to be an engineer. And I show you guys how to escape the rat race, investing in alternative investments and stop doing stuff like buying a house to live in, paying off your debt. Instead buying real assets that produce cashflow and grow for you.

You guys haven’t yet checked out the free podcast, simple passive cashflow, passive real estate investing found on all the platforms. And if you’re tuning in on the YouTube version of this with the podcast version. You want to see the slides that we have check out the YouTube channel and also check out the podcast version.

But before we get going, if you guys have any comments or anything, please type it into the comment box below, we’ll try and answer it if it comes up. So the first thing here, you know what I see a lot of people doing and what I try to do as part of the simple passive cashflow. Just to get people from being victims of the consequences of their own action.

This little picture of this dog who got stuck under a picnic table and it restricted his movement because he went all over and it’s got the leash tangled under all the legs of the table and again, those things are buying a house to live in.

I think if you’re in credit card debt, you need a way to force savings account for your self. Yeah, buy a house because it’s a forced piggybank, but for most of you guys listening, you guys have good financial skills. You guys are the max out, your 401k crowd. Push your money to investments and not necessarily a house to live in.

I still rent today. Next thing is investing in your 401k and getting that company match thinking that’s all cool. And maybe the company matches okay. I guess it’s free money, you’re investing in my opinion, garbage retail investments turbo tax, you guys are just still turbo tax.

You got to get with it, spend some money other than free and, get some deductions in there. But if you don’t have any real estate, go through turbo tax because you’re not going to get any deductions in that thing anyway. And then doing a Roth IRA or any kind of IRA, I just don’t really see the point to if you’re investing in real estate because real estate gives you passive losses.

And that’s what you can use to effectively shelter your passive income. And why are we doing this? Why are we going into good assets? Will inflation is upon us. If you guys haven’t seen here, we’re looking at a little picture if you guys have seen how much a pound of coffee costs in Walmart and it’s not $6.79 anymore.

If you look again, it’s $8.49, the cost of inflation is around us. So here we go. Let’s get into some of the headlines here. Wallet hub released a couple of reports of some of the safest cities in America, and those are Columbia, Maryland, South Burlington, new Hampshire, Yonkers, New York, Madison, Wisconsin, Portland, Maine Warwick, Rhode Island, Raleigh, North Carolina, Burlington.

Think that’s for bond. Winston-Salem North Carolina. Now some of the unsafe cities in America, Lubbock, Texas, south St. Petersburg, Florida, Anchorage, Alaska, Birmingham, Alabama, Baton Rouge, Memphis, Tennessee, Oklahoma City, Oklahoma, San Bernardino, California, Fort Lauderdale, Florida, Missouri.

Some of the people who aren’t sophisticated investors might say yeah, I don’t want to invest in these least safe cities, but I had four rentals in Birmingham. A lot of the investors still go there for rental properties. I have a couple of apartments in Oklahoma city.

I invest in the top 10 worst safest cities in America, and I think it all comes with part of the territory of investing in the right sub markets, even in these bad unsafe areas. You can just invest some generalities of these stupid top 10 list. That’s it, if you’re looking for the safest cities in America.

You’re probably ain’t gonna cash flow there and it’s probably not going to be a good investment. Partly I bring these types of figures up to call up the BS, right? Safest states in America, Vermont, Maine, New Hampshire, Minnesota, Utah, Connecticut, Massachusetts, Rhode Island, Maryland, Washington.

Now you’re not investing in a particular state. You’re investing in a MSA, a city and if you dive down even deeper into a certain MSA or sub market within the market. So for example like Seattle has maybe a couple dozen sub markets within the greater Seattle area. And even within one of those sub markets, you might have a good side or bad side or good block, bad block.

What we tell investors is get away from these stupid top 10 lists and really start to dive in and just know that some of these safest states, a lot of these just won’t cash flow. They’re not going to be good investments. Sure. They’re nice place to live in. And maybe it has a good school district or two, but is it going to be make good investment?

And that is where you separate the real investors to those people who just like to collect houses in random areas of the country, because they feel like it is safe for them. Some of the least safest states in America, Tennessee, Missouri, Florida, Alabama, Montana, Oklahoma, Arkansas, Texas, Mississippi, Louisiana.

If you went off this list, you wouldn’t invest in Texas, Alabama, Florida. I’d say three of the top eight states to invest in quite frankly, so bad data. Michael says he’s jumped St. Louis. It’s only bad in certain areas. So St. Louis and Kansas city, I don’t know what it is about those towns, but man, it isn’t really like block by block those certain areas.

And that’s just go to show you, even in the right sub market, you have to go look block by block.

Okay. Thanks for the comments, folks feel free to drop more comments in, and also if you guys are checking this out on replay, drop the comments below, I might get to it. If I happen to be playing around with social media, which I try not to, I think it feels to me it’s a waste of time. This next slide is some Arbor.

Arbor is one of the the few direct Fannie Mae Freddie Mac lenders that we’ll work with to get these large direct Fannie Freddie loans for apartments, not a good data and newsletters they come up with. So this is an article on affordability and some of the highlights here.

The pandemics economic effects combined with this year, surging rent prices have straightened low-income renters facing housing of 40 back in the spotlight. So as we know that the pandemic impacted a lot of the low end, the class C type of stuff, the class A stuff in a traditional recession, the class A people lose their jobs and move to the Bs and Bs to Cs

but in this particular COVID-19 pandemic slash recession, the A-class were pretty much unimpacted other than paying for a grub hub and not having to go to their college sports games or professional sports games and big, nice vacations. But other than that, they’re pretty good. Some of our class A apartments they ran into a rough month there when a lot of people were realized that

interest rates were low and they bought houses. And this is why it’s nice to invest in stuff that your tenants aren’t exactly economically mobile. Now that could be insensitive, but, Hey, when you’re in an investor, you don’t want too much turnover amongst your tenant.

Next point here reduced business income due to the pandemic and related downturn may decrease the value of tax credits and require affordable developers to seek alternative financing sources. So there’s a lot of developers out there that will develop these properties for the lower income, or it might have say 20% of the units designated to be 20% under the market.

I think it’s a good idea. It’s the government’s way of ensuring that you have ample supply of lower income because even in a good area, someone’s got to take out the trash or do those types of jobs. So it’d be cool if they live close to where it’s at. I think this is a hell of a lot better idea than making a bunch of projects and we’re a bunch of more people are living.

There’s just a lot of unsafe conditions and high crime areas where I think that the it called this the lurk different acronyms L I HTC is another program, but developers will take advantage of these government incentives to build and get either get credits or great loan.

But the give back is they need to have these rent restrictions on a certain amount of units. We’ve got a couple of apartments that have these exact same thing where 20% of the units are designated lower.

The share of the LIC HTC mortgages utilizing the 4% tax credit remain elevated at 40% through the second quarter 2021. Reflecting the continue to attract the of rehabbing versus ground up development. The housing choice voucher program. Another major affordable housing initiative is set to be expanded in the proposal of 2022 federal budget by 5.3 billion.

A 13.3 increased from the fiscal year, 2021 now 3.50 several trillion, still pennies amongst the big stimulus package. So it sounds like a lot of money, but just a drop in the bucket in my opinion.

Now, this article is a doozy here. We’re going to try and break this down. This is from the joint center of housing studies of Harvard university. And if you guys are ever looking to sound really cool and smart in front of your coworkers, friends about investing in rental properties. This is a great source to read about.

So what this article is, and I’m gonna summarize from a real high level here just so you guys have the major takeaways. This is discussing kind of the whole debate, whether you should have zoning restrictions on certain areas of your market, of your MSA or submarkets. Now, if you guys have been paying attention to the last investor letters, the last one we had.

I think it was one month or two months ago. You guys can access the old versions of this monthly newsletter at simplepassivecashflow.com/investor letter. But if you recall, California gotta love California. Probably the most progressive state in the union. They had a restriction on certain single family home zoned areas and due to some of the need for more housing due to high costs, they are starting to break up those traditionally single family home zoning and allow for some more densities and duplexes drop Webster claws or smaller apartments in those.

And a lot of affluent people get upset at this type of stuff. Because it’s not in my neighborhood, right? This is for the rich folks, leave us alone. I don’t know why I say it in that accent, but it’s the battle between the haves and have nots once again, and this has been going on since the beginning of time in the 19th century in America, cities started to itch institutes.

And the builders of homes are lightly regulated in the early 20th century. Progressive reform include the practice of land zoning from Germany in order to provide working class families with low density housing on the urban health score. If you guys are history majors or you love geeking out on this stuff, you guys can look at the 1917 Buchanan versus Warley Supreme court decision which prohibited zone by race.

And in 1926, the courts gave it blessing to zoning that segregated land uses and building types in Euclid versus Ambler. The court endorsed single family homes on the grounds that they excluded parasite apartment buildings that blighted neighborhoods and lower property values. I guess that’s a better term to call those types of the projects right?

Where they just, Hey, let’s just stuff, all the poor people into these really dense populated areas. And I think this is what you think of when you think of the slums of India. I think that’s what they do, generally. The idea and the movement today, at least with the current administration is to break that up, bring spread apart.

People into different areas, which means that the poor people will be amongst some more middle-class people. And then, also the high ends will be intermingled with the middle-class people, single family home at this greatest impact in the suburban boom took place decades after the world war two.

And this is where the FHA, the federal housing administration and the veterans administration. Got together and develop these areas called Greenfield, such as old farms, which generally took the form of single family houses on individual lots. As they say, a lot of the guys who came back from war they wanted to start all life.

And this is where the overwhelming choice to Americans will be to the suburbs developments, cater to this taste carefully Cabernet, calibrating the size of the lots and price point. For these different income levels what the encouragement and approved by FHA such developers, such as William Bevin, explicitly fought barred black Americans.

And in some cases, Jews from buying into these subdivisions. And that was where, we think of it as duh, that’s not right. Back not too long ago, stuff like that.

That Supreme court case Jones vs Mayer prohibited discrimination in real estate transactions. Fun fact, just a little while ago, I saw, I used to have a lot of properties of Birmingham, but Birmingham or the state of Alabama just got rid of a law that said that you could not teach yoga in public schools because they thought that it was the hokey-pokey or kind of mix of churches.

Type of stuff strange, right? This country is so diverse, so amazing, great to live here. So no matter what size of home and yard that possess some urban communities felt like they had a stake in maintaining the social or physical characteristics of their neighborhood to ensure that new development would serve only high income brackets, suburbs, commonly imposed, minimum, large minimum.

House lot size is often up to three acres, but sometimes up to 10 over time, many came to see any new development as a threat to their quality of life. The not in not in my neighborhood. When I was an industrial engineer, we would study things like, they would design like bridges on not really highways, but major thoroughfares to eliminate buses coming through cars.

Buses. So it was one of those like social engineering type of things to keep the poor people out.

Local officials responded by making it more difficult for home builders to obtain construction permits from the 1970s onwards, they implemented measures that impure or block new construction in the name of saving nature. A process that the late Bernard Ferdin a long-time professor at MIT. Describe as the environmental protection hustle, suburban cities and towns became composing outright limits and moratoria on new construction to slow or to scorch development.

In addition, building development, official city engineers, the fire marshals, each impose increasingly demand requirements on new residential development in the 21st century. No large municipalities Metropolitan’s continued to impose non zoning. Anti-growth measures these included, not wanting environments and building Coles, which was their sly way of living growth, but also requirements for project approval from two or more government entities, extracting fees for developers and formal design.

Such restriction, constrained development and thus could contributed to the rise in housing prices. I used to be a city engineer and city controls the permits they can designate who builds and who does it, and they can guide the growth of a city and who moves in and what kind of clientele that they serve.

It’s. So this, if you guys are living in fairytale land, where you believe that, you, anybody can live where they want, you may be mistaken,

but there’s been a movement to increase density and remove barriers to housing developments sometimes called yes. In my backyard has brought about the. Single family zoning fans, as well as new rules to apply accessory dwelling units in single-family houses in states and localities, most notably, Oregon, California, and Connecticut, but the efforts to get rid of single family districts have not addressed the plethora of obstacles to residential development on a scale that would affect housing prices.

Many places have a little. Have failed to increase the level, height or size of the building to allow for more density in Oregon zoning reforms allowed them to Sally’s to acquire large lot sizes, California and new laws allows local jurisdictions to impose more occupancy restrictions on subdivided, lots, these local zoning and design requirements in place and accept lands that have been deemed prime farmland, wetland, or part of conservation.

The new zoning rules usually allow building up to four units on a previous, the single family, a lot, a single number that will remain likely the most development that had been done on one lot at a time by homeowners and small skill builders. Overall, this is a small process. And if you want to grow your YouTube channel and you want to scare people to clicking on your video and watching your videos so you can collect ad revenue that way you scare the crap out of people.

And you tell them that the world is coming to an end, like California housing bubble is going to pop because a handful of inputs are now allowing some duplexes, triplex, or pods to be. As opposed to a traditionally single-family home neighborhood. I just don’t believe that impacts things too much.

That’s why do we need this? Because our country’s population is growing and we need more of this. Value-based. Type of housing to house the Lord middle-class because the shame, the middle-class are dying out. It’s endangered species and they’re becoming the lower middle class and they need, they don’t, they can’t afford these larger single family home lots and generally moving into multi-family apartments.

Last point here merely eliminated single family zoning histories just is light unlikely to increase housing stock. Significant, as I just said, To at least residential development will require peeling back layers of regulations that have accrued over the decades. This could mean reducing minimum, lot sizes, relaxing, overly stringent construction, and site requirements, easing design reviews, and rolling back some environmental controls.

Being certain provisions for wetlands and open space, the political efforts necessary to reverse such entrenched practices, how it will be formidable so that the recent laws against single-family zoning are, but the first steps in a large March. So what they’re saying is, yeah, sure. It can be open to single family home or duplex surplus applause, but good luck trying to get a permit.

Moving on. So the next slide here is taken from the Yardi matrix. A great data source. The image below is basically showing com the January of this year, as the vaccine started to roll out. Man rent increases have been pretty much skyrocketing asking rents nationwide, continue to break records.

Although there is some signs of deceleration, which, normally the rent increase go up two to 3% every year, which kind of goes up with the pace of inflation. You know what I mean? A lot of this growth for the first part of the year, until now, in my opinion, it just wasn’t sustainable. And it’s got to cool off at some point, but asking rents were up 11.4% year over year in September.

Monthly rent growth was 16%. He read a 1%, which is the last month he gained since the housing market began to accelerate in March. And you say, oh my God, we’re going back down. No rent increases kind of goal or a lot more smoother in terms of increase and decrease the fact that it went up 11.4% year over year.

It’s just phenomenal. That’s usually what the top market in the nation. Like the best out of the top hundred, 150 markets did. And that’s what the average is across the country. Just phenomenal. Sunbelt tech hubs are still leading the nation in rent growth as markets in the Southeast and the Southwest benefit from rapid domestic migration and job growth.

The migration story has been playing out for a number of years, but accelerated quickly during the day. Yeah. This is why I used to have apartment in Iowa or we build what best in Kansas city, Indianapolis. I just don’t really like those types of areas. Population growth might be, I might be going up.

I think of it as more stagnant. At the end of the day, the rents are not really increasing too much as it is. The Sunbelt states, your Arizona, your Texas, your Alabama is your George’s Florida. Is your care lines. Single family built to rent continued to grow at even faster paced and multifamily.

The nation rents are up 14.3% year of your occupancy keeps rising up 1.2% year over year. Andrew comments is the build to rent the next phase in your development or an offshoot. So the builds to rent to me is. I just don’t. The big institutions are getting into the space because we’re becoming more and more of a nation of renters.

I just feel there might be a good exit. What is hard to do is if you buy out 50 or you developed 50 houses, the loans don’t allow you to piece off sell a onesy twosy property here, there. So it makes your exit strategy pretty much impossible with that. I’ve looked in. But, with why do we like apartments?

We have one freaking roof, a lot of times, one major Shiller or individual HVACs. Whereas in the apartments, all we’ve got to worry about are the interior walls. We don’t have to worry about all these stupid roofs or all these, like backyard, all this, like landscaping. There’s just, there’s this double amount of things that can go wrong with a single family home.

Other reasons. I feel like single-family yeah. Tenants are a little bit more needy. They’re a little more entitled, right? They, they literally have a Fort to themselves where apartment dwellers, they know their role, they’re renting an apartment, a box within the box, and it’s just easier to keep open mind.

I dunno. I never say never, but I dunno. I just see the large institutions going into it and their property capitalize and they can do things that, the mom and pop investors can do, and they can do things that the private equity guys, folks like us can’t do. No. We don’t build, we don’t build little houses.

I, and I think that’s another thing, right? A lot of this is predicated on relationships. And who do you have in your Rolodex? There’s a lot of house builders out there, it’s just it’s a different type of business. The good.

Bill for. So John Burns reports, the build for rent story, the tenant preferences. So what’s mattering more is spending more money on some pet friendly home designs. So what matters less is don’t spend on head walking and services such as dog walk walking. So for us, we like pets. If it’s in like a.

The plus, or especially a because to me and this one, I’m just speaking in terms of generalities here. So give me a break. If somebody has a house, a dog or a cat, they’re typically a little bit more stable and they’re not going to move with what I’ve, that’s, what’s important to me as the investor.

Whereas you get into the class C housing. Animals are more like guard animals or they’ve you have cats. Now you’re talking about the cat lady at cat dude with 60 cats and they can be destructive. So I think that there’s a different, there’s a paradigm differential between the lower class, the higher class rentals that said.

That’s do cause damage. So it’s supported to collect more rent, which typically anywhere there’s a pet fee cleaning fee and then maybe a bump in rents, maybe about 10% plus every month for those pets, things that other people are looking for. Other high-quality finishes such as a fabulous kitchen.

And this is just, people have been in, locked up in their houses for two years and a lot of people are working from home. So it makes sense to spend a little bit more money than. Typical one-third that your budget kid budgeted, supposedly on your housing, some things that they’re skipping out on a spending less premium Florian, smart tech.

So the premium flooring and the real wood, I don’t know why people would want those. I like the luxury bile vinyl. It looks super cool. It looks sometimes even better than the hardwood and it’s indestructible. And when you get tired of it and if it happens to break, you can just fix it. I think that’s up to the game changer amenities so that people want more relax, relaxation areas and spend less on coordinating social activities.

So if you guys check out my last podcast on apartment life.org. We still feel like the social aspect is really the added value for residents to increase that community aspect of it. So we still like to do things to increase the community aspect or that’s wild seeing why people pay more or stay, they don’t move out because they have a community of friends.

The home office as suspending on a full office or den for single family renters with children, that having met nook is something that we’ve been designing into our new development for that, that dedicated work from home person. But they’re went, they’re seen as lot of people offer that extra bedroom for that.

People aren’t spending the money on. Not spending money on a full office for single and couple single founding renters merchandise, a bedroom for flexibility,

the national association of realtors and an article about renter demand shifts toward more affordable and suburban class B and C apartments. Go figure. They’re setting the apartment demand has surged during the pandemic, continued to soar to a decade high level as 2021 quarter three with a net absorption of nearly a billion units since 2020 quarter to absorption.

Just so you guys don’t know, absorption is new stuff coming online or vacant things be filled up with people or observed. Yearly quarter of a million units in the past 12 months as of 2023, the vacancy rate has fallen to a decade low 4.5%. And the asking rent has soared to a historical high of 10.5%.

So whenever you’re looking at, the demand or the hotness of the barn we look at a lot is not only it is where they asking rents are going. And obviously it’s been on a tear for this beginning part of the year, but what does that the vacancy rates too, can also be an early indicator of, or symptom of a better market or a worst market in the future.

So as vacancy starts to creep up, that’s how you know that there’s too much inventory coming online. And I think at that most cases, in my opinion, you’re going to see that the rent’s late. The vacancy tips. You guys are more graphical people. We have a lot of English in years. So the graph at the top, this coming from the highest 12 month net absorption declining vacancy rate in rapid rent growth as of October 13th, 2021.

So the top growth top graph is the absorption of units. As you’ve seen as of the last 20, 20 quarter three absorption has gone a way. Almost two to three times what it’s normally been. Vacancy rates have also come down. Typically we’re hovering anywhere from six to 10% vacancies. That seems to be the healthy about the vacancy across the board.

But now, Lowe’s are 4.6%, which is indicative of a good, hot, healthy. Asking rent year over year growth, obviously that has skyrocketed 11.4% since last year.

I will just comment, so when the 20, 20, 20 21 quarter one was the part of the pandemic, which you had, and I think my cursor is on at this point, I guess you guys can’t see my cursor. At that bottom of that low scenic rents cuff on a frozen, because what a lot of people, a lot of investors or operators we’re doing is just holding rents where they are.

It was seemed a little unfair with people not working, to bump up the rents. So that was appropriate at that time. At the same time, vacancy remained about the high, it didn’t spike due the pandemic. And that’s what we all thought it would. Maybe thought people were going to lose their jobs are not working, turned out that the pandemic actually froze everything, how it was, which is actually a good thing, right?

Heads and beds rents do collect your rent checks. That was the impact of the pit. That

now this is a breakdown of construction of apartment units by class in 2021 for. And the class is designated by class a, B and C. So eight glasses, your luxury stuff, B class it’s, they’re still pretty nice stuff, especially if you’re talking brand new, definitely not luxury stuff. Class C stuff is your lower income.

And this is why, like, why is there no class C stuff? The cost of that built the dang thing just doesn’t make any sense when you’re billing. Which is why barely any supply comes online. 1.3, 4% of new construction is class C what it is, it’s a split between class a and B, but there’s an interesting phenomenon happening here.

It’s so if you’re looking at the graph, this is probably a graph for a lot of you guys listening on the podcast to go and check out later in the year 2011. You have more class a and class B, but the spread was very thin from 2011 to 2016, they diverged. So the class a share of new construction greatly increased and the class B stuff declined.

That’s the same adverse relate relationship. Now here’s what I’m speculating around 2016, maybe there was just too much nice stuff. Which is why, which is typically what happens when the market gets a little bit overheated. The developers go a little bit too much have on building the class, a stuff that they can’t really get the breaths because there’s too much class, good class space.

So that’s why I think you’ve seen this backtrack and now you’re seeing the class a builds 56% class V builds 42%. They’re coming together against, so one would assume that this is a good sign for investors and the market that this is, will this kind of, this cyclical pattern will continue to have.

I don’t think you’re ever going to get it. It’s just, if I don’t, I never say impossible, but it’s just, it doesn’t, it’s not going to happen where there’s going to be a lot more class B than a, it’s just stupid to do that because you to, again, to build something brand new, it just makes sense that just build it a class.

So I w one would assume that that the just cyclical pattern where it squeezes and expanse will continue to happen over time. It should there be a recession? I, what I would think is the whole quantity would decline, but the percentages will remain the same. This is a graph from ALNF a L N price class averages of effective.

Everybody always says what’s the difference between a B and C D class. One of the big things is, the age of the property. If you want to generalize, I’d say 19, maybe the year 2000 and newer as class, a 1990s, 1980s is more class B 1960s, 1970s, his class C plus D is just kind of garbage.

That’s older than 67 a year. But this is a graph of kind of showing what is the effective rate rents, and you can see how they line up for the class. A slightly above $2,000. A unit class B is around 1700 class C is 1400 in class D is 1100. Of course these are a lot higher because we’re including high priced areas, such as New York, California, Hawaii, Seattle, because a lot of the class C properties that will.

We’re average rents will be around 800 bucks, usually about a little less than a dollar or two, a dollar, a square foot.

If you go by this graph, we’re certainly not buying class D most of the California pricing is a lot higher than this. This is again, we’re an investor needs that, take this all into account and understand this is just the whole United States clumped into one. As we all know, we are very diverse.

Culture political mindedness and also a wide range of housing options. You got a lot of different class, a pricing. Class a and California could mean 3,500, $5,000 a month. And in bourbon, Huntsville, we’re building this stuff. That’ll rent for 1400 to $1,600 for class a, if you guys see that little orange dot there, that is actually.

Percent change of the rents have been changing. And a lot of the increases has been happening in the a B class types of markets or types of assets.

Everybody’s been talking about the supply chains, sorta judges. This is why we like to go into stabilize assets because, and this only kind of impact. Development where you aren’t able to get in front of the problem where the shortages that in our world is 63% are the windows is that’s the primary, the issue getting those windows 17% is getting the lumber.

13% is the engineered wood products. And 8% is the concrete. So it’s. I don’t. I don’t think that this is taking into account appliances. Appliances are another issue too, but this is the building material causing contractor project deletes

overall rental. Market’s been skyrocketing. If you’re an investor being left out or I feel bad for you, jump on board and ride this inflation wave for the next several years. But are the top three challenges for the rental industry, putting out by the multi-housing news. First one recruitment and retention of staff, a lot of people, or if you guys have heard of the great resignation, I’m going to restrain myself from telling you my real thoughts about this whole thing.

People are burnt out. So people are like leaving their jobs. And a lot of it is like lower level staff. Although I’ve have talked to a few of you guys, who’ve booked calls with me. Some of you guys just done. You guys are all white collar workers or you guys are done with it, but most of the people partaking in the great resignation are the, the service workers, the people on the front lines.

And those are the people that typically will employ as the property management staff at these properties and the maintenance handyman staff. So that’s number one, number two. Finding high quality vendors representing the number one challenge, I guess I goes with number one, number two, loss rent, more severely impacting smaller companies.

And there are many positions in this industry that don’t require a college education. They are looking to create programs, promote the industry, to attract workers. There is a lot of churn in the industry as we need to see that labor pool open up. And one way to do that is to advertise industry and all the benefits it offers.

Reminds me of the whole teacher shortage. What anybody wants to teach a bunch of kids and not get paid too much sign up. It’s like property manager, right? Anybody wants to interact with tenants who. They only write two and one star reviews when they are on set, but when they’re happy, they don’t tell a single soar.

They say, thank you. They assume that they’re entitled for good shipments in their $800 apartment. It’s a thankless profession. It requires a lots of tact, lots of project management skills, lots of people’s skills and it’s a very key, critical position in my opinion.

If you guys haven’t checked out the family office, Ohana group, I think we’re getting up to actually, I got to change the site 80 members, or so the initial fee to join is going up next year. So please reach out before the end of the year to partake in 2021 pricing. Cause ain’t going to go down. If there’s one thing that is true in life, it is rents typically don’t go down and the family offers Ohana initiation fee don’t go down either.

Most people who join, should we save them or makeup four or five times that initial fee in their first year. So get on the inside and unless if you’re not tired of listening to the same old stuff, a podcast land, or just to give you just the tip to just get you confused enough to call the guest

and figure out what product and sales funnel you want to fall into. And lastly, help me out and check out my book simplepassivecashflow.com/book. Shoot me an email at lane@simplepassivecashflow.com. If you would like to help me out for a few minutes, giving me a review on Amazon so that my parents can be happy with me.

They don’t know what I do these days they’re upset, or I think they’re just confused I’m not an engineer but unless there’s any other questions, thanks for joining us folks. The legal disclaimer here, of course. Do your own due diligence and think for your guys selves.

 

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