Who's excited for 2023?

[Faith Importico]

I am so pumped for 2023! I think a lot of investors will make lemonade out of these lemons. 

[Scott Trench]

I am extremely wary of 2023. I think that at some point, opportunities will begin to emerge. But, I think they are still few and far between right now. I plan to play it very safe in the first part of the year. 

I think folks who should be excited will be in the following areas: 

- Creative finance, including seller financing, assumable mortgages, and subject to. 

- Private lending - this is a great time to earn a high 8-10% yield with relatively low risk

- All-Cash buyers (not just folks using bridge financing to present themselves as all-cash buyers) - these folks get to buy on their terms, and may have distressed opportunities

- Preferred Equity - essentially another tier of debt, this is also protected from downside and may offer relatively good yield.

I think folks who should not be excited are: 

- People who recently entered, or are currently entering, the commercial space, including multifamily - I think there is huge risk here, risk that should make people in late 2023, and perhaps 2024-2026 excited about entering 

- People who are buying property at 4-5% Cap rates, with 6-7% interest rates

- Folks with properties that are breaking even or worse with cash flow - rents may decline next year, AND it's really hard to exit/sell property right now profitably.

- Folks with short-term rentals who projected returns using numbers from last year

- Folks with flips or BRRRRs that they need to exit or refinance

- Anyone with variable interest rate debt, or any time-bound pressure to sell, refinance, or exit their investment in the next 3-5 years.