The Golden age of [fill in the blank]

[Alex Forest]

A little over a year ago in the fall of 2021, I remember thinking, and almost posted, "This is the Golden Age of cash out refis".  The rates were ultra low in the high 2s (15 yr) to mid 3s, new house sales were expensive and difficult to obtain, and 40% appreciation realized in just two years. For the rental property owners that had property for many years, it felt like an opportunity to pull out money (for future use) mostly to capture such a cheap rate.  I had thought the window of ultra low rates was going to close several years before it finally did this year, but with these other factors, working with ones current portfolio seemed to make sense.  What to do with the money pulled out?  With new opportunities to buy limited, renovation at turnover to capture higher rents with existing rentals made sense. Addressing any deferred maintenance and bringing the property up to a higher level to reduce future maintenance was a good use. Always keeping an eye out for new opportunities while having patience and the ability to go after them with extra reserves was another use.

Moving forward, what is this the Golden age of that we are in now?  Things are different than one year ago.  It's tempting to say wait until 2023 and that will be an opportunity mid year to purchase, and that may be the case. But what is the opportunity of today if it presents itself?  

Here a couple possibilities imagined. 
A)  Increase cash flow from existing properties. This sounds basic, but inertia exists.  With long term tenants, rent increases can lag. It can be difficult with mental obstacles to bring good long term tenants closer to market, and there can be reasons to be patient too, however it is an opportunity.  At turnover though, it is prime time to capitalize on this.  And if the unit could use some TLC, it can certainly be worth a partial renovation that will attract better tenants, yield higher rents, give back for many years to come, and make it easier in general to rent out.  There may be other ways to increase cash flow...is there the ability to create an extra bedroom, ability to split into two units, rent out a garage for storage, all with long term rentals, or other strategies like medium term.  
This is an interesting podcast by the cohead of global real estate at Black Rock.  One of her basic concepts is to simply increase cash flow in today's environment.

https://podcasts.google.com/fe...

B) New listings for sale.  There have been new listings at more attractive price points emerging for the first time in our region in two years.  Watching for good value at prices that work with today's rates. 

Even with higher rates, with cash flow from other properties, some of this can be applied as extra principal to the newly acquired property every month for a few years.  Even if rates do not come down in a couple years, paying extra towards the higher rate will accelerate the amortization schedule by many years quickly enough....and flip the monthly payment to have a much greater portion going towards principal and less to interest... This seems like a key mitigating strategy for today's higher rate environment and also makes you see and be prepared for the lower prices and better value that seems to be coming into today's (and next year's) market with the new properties coming out for sale.

Curious what others see as far as the opportunity and what the golden age of todays is.

[John Underwood]

I see this turning into an Era of opportunities for people with cash and with less competition.

I see some wholesalers changing strategies or having to focus on their day job ans flipping has become more hazardous with pricies being reduced. The 30k assignment fee may be near dead for now.

Wholesalers and flippers are going to have to work harder to find properties that will fit the new mold.

I am still buying distressed properties for cash and already have 4 in the pipeline with one I got for 50k that is in a $300/sqft neighborhood. I plan on keeping all of these as passive cashflow rental properties. 2 of the 4 are in self directed ROTH IRA'S so I will never pay any tax on the future gains and rental income.

There will be some great opportunities out there for people ready to take advantage of them. 

[V.G Jason]

Quote from @John Underwood:

I see this turning into an Era of opportunities for people with cash and with less competition.

I see some wholesalers changing strategies or having to focus on their day job ans flipping has become more hazardous with pricies being reduced. The 30k assignment fee may be near dead for now.

Wholesalers and flippers are going to have to work harder to find properties that will fit the new mold.

I am still buying distressed properties for cash and already have 4 in the pipeline with one I got for 50k that is in a $300/sqft neighborhood. I plan on keeping all of these as passive cashflow rental properties. 2 of the 4 are in self directed ROTH IRA'S so I will never pay any tax on the future gains and rental income.

There will be some great opportunities out there for people ready to take advantage of them. 

This. These past 6 months and next probably 18 will be the era of people allocating cash into investments that'll create even greater wealth than the last 10 years.  And cause the one's who didn't understand cash to be at the market's mercy for the remainder of their life(i.e forever living month to month). 

[Alex Forest]

Ive seen what look like unfinished fix and flip houses at various stages listed for sale seeming to pop up more recently. It looks like they started and then just had to stop, often for sale at decent prices. I imagine the hard money or lack of anticipated resources to finish must be creeping. Also have  been estate sales for some reason, I suppose those are going to exist at any given point in time.

@John Underwood , how are you finding and securing those amazing values of $50k in a $300/sf neighborhood?  I recall you mentioning something to this effect before...was it tax delinquency related or some other type of past due fee that you are able discover? That sounds like it will work in newrly any environment!

[John Underwood]

Quote from @Alex Forest:

Ive seen what look like unfinished fix and flip houses at various stages listed for sale seeming to pop up more recently. It looks like they started and then just had to stop, often for sale at decent prices. I imagine the hard money or lack of anticipated resources to finish must be creeping. Also have  been estate sales for some reason, I suppose those are going to exist at any given point in time.

@John Underwood , how are you finding and securing those amazing values of $50k in a $300/sf neighborhood?  I recall you mentioning something to this effect before...was it tax delinquency related or some other type of past due fee that you are able discover? That sounds like it will work in newrly any environment!

 Well I had made a loan to this person and they had paid it off. The house is collateral on these loans. They did it again and I made sure they knew I had first right of refusal in the loan docs.

They called me 2 weeks later and asked how much I'd pay for the house. I asked what they needed and gave them 100% of what they wanted after I checked the house out.

Sometimes it's just about helping people and Karma brings good fortune back around.

[Michael Margarella]

We pivoted to self-storage a few years ago. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

[Alexander Szikla]

Golden Age of Assumable Financing! 

[Alex Forest]

Quote from @Alexander Szikla:

Golden Age of Assumable Financing! 

 That is a good point, that is a major advantage to the seller. And to the buyer if the price isn't adjusted way up.  These are typically in the commercial loan world, aren't they, do they exist in the small residential loan market? 

[Paul Moore]

Hi @Alex Forest! I manage a commercial real estate investing fund and we are always looking for the next thing that is "a little bit undiscovered". By this I mean it is sort of cutting edge, but not brand new and untested. Stuff that is brand new carries much more risk than I want. 

On the other end of the spectrum I am not looking for something everyone knows about. I wrote a book on multifamily investing six years ago. But multifamily investing falls into this category now. 

We are looking for asset types that have very high upside but are not widely known by the general public. We found this by investing in RV parks. So I would call this "The Golden Age of RV Park Investing." 

My firm has invested several million dollars in RV parks this year and we can't wait to do more!  

[Mike Dymski]

The Golden Age of Cash Buyers

[Steve Vaughan]

Golden age of creative financing and selling to pivot into something else.  Risk-free yields are close to cap rates.