UNITED STATES
The U. S. Real Estate Market at a Glance
Now is the time to get in
O
RJ PALANO
Turnkey operator in Atlanta, Georgia, an author and marketer and is an invited speaker for the Information Management Network( IMN) Conferences for hedge funds and family offices.
ur economy is percolating along as evident by a rising stock market and real estate market. Unemployment remains historically low and there is actually a shortage of labourers in the building trades throughout the U. S. Recently I spoke at the Information Management Network( IMN) Conference for single-family housing in Miami, FL.
Shortage of housing inventory
Shortage of labourers to fix or build houses. This is literally an epidemic in the single-family housing business ever since the hedge funds entered into the real estate space. Large to small operators are struggling to find competent workers to complete their projects. I’ m not kidding – this is from north to south and coast to coast. It’ s hard to find good crews!
Did Trump send all the Mexicans back? The truths is, the Hispanic population is entrenched in the building trades – we need them and others to repair and build houses. The shortage of building materials and labourers is even worse in the aftermath of Hurricane Harvey. Rehab companies flock to disaster areas to obtain profitable home owner insurance work, leaving a bigger glut of labourers in areas they leave. It’ s inevitable that wherever there is a shortage of building supplies the cost goes up nationwide.
My logical conclusion is that the price to build houses will go up significantly and so will the value of existing houses.
A week doesn’ t go by without an article in the Wall Street Journal about the millennials re-entering the house-buying market. This first-time house-buying group has quietly sat on the sidelines until now – and they are making up for lost time. If priced right in good neighbourhoods, houses are peeling off the market within weeks of being listed.
I’ ve modified my own business model to take advantage of the hot selling market and currently we are selling 50 % of our houses retail to home buyers and 50 % of our homes to investors like you. At the IMN conference, I was approached by two funds that want to buy all my houses.
In my personal situation, I’ m holding houses long-term for the passive rent to replace income from a job. However, I recently did sell some houses as the values went up and I had other opportunities in the multi-family sector that would provide me in excess of a 12 % return.
You see, if you bought a house for $ 100,000.00 and it was earning a cap rate of 12 % and then the value went up to $ 200,000.00, your cap rate would drop to 6 % based on the value of the home. Once I looked at things from this perspective, I realised I could obtain a higher yield on my assets if I redeployed them into other areas. Thus, I sold 35 % of my rental portfolio of single-family houses and am in the process of acquiring higher yielding multi-family properties.
How about you? Do you want to sell your houses now? If so, this might be the best time for you – and I mean RIGHT NOW.
I have these two hedge funds chomping at the bit to buy 20 + houses per month – each. It’ s challenging because even though I invest over $ 40,000.00 per month for marketing to acquire houses – from TV commercials, pay per click and post card mailings – I can’ t find enough good opportunities. I could find enough houses … just not the kind we like for the long term production of income.
If you’ re thinking of selling, call me or email me – as I think the end of summer will produce fast sales near full retail simply selling to these two groups. I can let you know real fast exactly what price we can get for your property in its current condition, and without losing your tenant.
Everyone is in a different season of life. Things change. Some investors become disillusioned, others have a new need or idea for their money. If that’ s you, then this could be your time to sell. Just let me know.
50 NOVEMBER 2017 SA Real Estate Investor Magazine