All Forum Posts by: J. Mitchell Bernier

 I believe if implemented it would. Cause that would be technically the first lien. But either way it has to pass first, which is unlikely. 

I read the white house issued paper on this and yes, it is unlikely to happen. 

However, if it did it would only apply to landlords with loans that are federally backed (FHA, USDA, Freddie Mac, SBA, etc). If your loan is just a standard bank loan, then they couldn't touch you regarding rent control.

The scarier thing is them wanting to seal Eviction records even for nonpayment! So, you would have no idea on the prospective tenants past rental history. 

Best thing to do is google the the city census. you can even compare up to 5 different cities. This is the link with the city that I invest in. 

U.S. Census Bureau QuickFacts: Albany city, Georgia

We are big fans of Section 8 vouchers for the very reason Taylor mentioned. But there is one other that most people dont think about, Turnover. 

It has been our experience that tenants who receive vouchers tend to stay in the homes much longer. Which means turnover costs stay lower. If you are renting out in cheaper areas, the non-subsidized renters will move for just 50 less rent and not think twice about it. Whereas the section 8 tenants tend to not care, because they are paying them same amount if any based on their income. 

Hope this helps! 

Honestly your best bet is to call brokers and get multiple opinions and then even look at similar markets near you and do the same. You should also reach out to local appraisers and ask what they are seeing. 

Now if you are investing in a larger market CBRE reports are a great resource as well. 

You are not dwelling on this too much as CAP rates are absolutely important to any multifamily deal.

My vote will continue to be on markets located in the Midwest and Southeast, that are 2nd tier and 3rd tier cities. 

Affordability will continue to be an issue for your larger markets and much less competition from the big players in smaller markets. 

Honestly, I am not a fan of anything in Arizona now. Disclaimer: never invested there and only visited Phoenix one time, but I would welcome everyone to read about the water issues that some communities are having and recently a development was put on hold because they have yet to come up with a way to insure water for the homes.

 TINA is the acronym for There Is No Alternative. 

But in that scenario, you are taking a lot of risk for very little return and like I mentioned there are alternatives now. 

Let's say you bought a $200K house and you put 20% down and financed over 30 years at 6%. At the end of 3 years, you would have paid your mortgage down to $153k, from $160k. So that is a $7k return against your $40K investment over 3 years. That is a whopping 5.83% annual return, with all the risks still there. Plus, you have to work for that. Right now, there are Treasuries that are yielding 4.7% and AAA corporate bonds at 5% where there is no work, and the risk is either zero or extremely low. 

So why would anyone take all the additional risk in buying new property, because there are more risks, for Net Risk Premium of just over 1%???

I am not advocating for selling what you have and investing all of into Bonds, but if you are expecting investors with any sense to buy new properties for that skinny of a return, God help em. 

Here are my thoughts. 

Think Rates will stay above the 5% range and will most likely be closer to 5.5-6.5%, FED will not lower rates until 2024 and it will be very small increments when they do. Housing market as a whole will come down 10-15% with some markets being over 20-30%. Best markets will continue to be the lower priced affordable markets. Inflation will prove to be sticky and stay above the 2% target at around 4%. 

 But it doesn't beat a savings account anymore.... that's the point. Deals are not penciling out and there are now alternatives. TINA is dead 

I don't see free money (Fed funds rates of less than 2%) coming again unless we have another cataclysmic event, but to just buy property that you project will go up in value with ZERO cash flow while carrying all the risks just doesn't make sense. And with the investor pullback being so large I would say the consensus would agree with me. 

Blackstone just received an investment from the University of California for $4 Billion dollars to invest into their BREIT. Simple math says that if they purchased assets at a average price of $250K per unit that would be over 16,000 new homes. This is why I invest in smaller markets that don't have to worry about these massive players. 

Not to mention Blackstone is promising over an 11% annual return over the 6 year hold.... 

Interview below. 

Blackstone's Jon Gray breaks down 'massive' $4 billion BREIT investment from University of California (cnbc.com)