All Forum Posts by: Chuks Erinne

@Troy Sheets I have a feeling the correction will affect the high end RE market. I dont think we can see the 2008 level but sure could see a correction. I think we are in that Hyper-supply phase. At least in my area...more and more construction, competition, demand, over pricing etc. Lets not talk about whats happening in areas like Portland, OR.

That's a great idea. I plan to do the same as well. I know one thing i need to do is get my PRO account :)

Hi BP!

We all know this is a sellers market for the most part and there has been a lot of talk about where we are as it relates to RE. Im curious about your feedback based on the article by Teo. 

According to this article (https://www.extension.harvard.edu/inside-extension...) written by Teo Nicholais, we know the real estate market goes through circles (in phases): 

Phase 1 - RECOVERY:  We know the characteristics of a recession: high unemployment; decreased consumption; and decreased company investment in buildings, factories, and machines. The price of land, essential for economic activity, is at its lowest point in the cycle.

As population increases so does the demand for goods and services. This expansion is typically hastened by government intervention in the form of lowered interest rates (the key ingredient for investment).

Phase 2 - EXPANSION: The transition from recovery to expansion occurs when companies and individuals have bought up or rented most of the available buildings. Occupancy begins to exceed the long-term average. As unoccupied buildings become scarce, landowners raise rents. Since most real estate expenses are fixed, increased revenues translate almost dollar-for-dollar into increased profits. Increased profits attract new development of vacant land or redevelopment of existing properties.

Phase 3 - HYPER SUPPLY: As long as the current occupancy rate exceeds the long-term average, there will be upward pressure on rents. As long as there is upward pressure on rents, new construction is financially feasible. This is the case for both the expansion and hyper-supply phases.

The First Indicator of Trouble

The delineation point between expansion and market hyper supply is marked by the first indicator of trouble in the real estate cycle: an increase in unsold inventory/vacancy.

Phase 4 - RECESSION: The transition from hyper supply to recession is marked by the second indicator of trouble in the cycle: occupancy falls below the long-term average.

The Second Indicator of Trouble

New construction stops, but projects started in the hyper-supply phase continue to be delivered. The addition of surplus inventory leads to lower occupancy and lower rents, which significantly reduces revenue for landowners.

Question:

What phase do you think your market or the general market is as a whole and what are you doing about this?

How is this affecting what you buy into, how you buy, strategies to prepare for whatever comes?

Great job! I love the execution. Obviously your arv was based on comps. The actual arv is 30 over your conservative arv. Where you being overly conservative there? I didnt expect to see that much difference. Any info on your comparison process? Dos and Donts? 

Also, any info on how you nailed the rent. I usually just call local PMs to find out what kind of rent i can realistically expect. Sometimes Craigslist is misleading.

Your execution is truly inspiring!

Hello, checkout www.udemy.com and you can take classes on these topics. I recommend learning a backend programming language and then some frontend technologies like Html,css etc. Then understand accounting principles, taxation if you can. Then get a degree in Information technology or computer science or engineering with a minor in RE Finance then top it off with an MBA! Thats my blueprint. I wish you all the best

Hi, in regards to the comps, you could compare revently sold by $/SqFt and compare to what you are getting. I hope that hepls. Good luck!

Thanks, Marc!

Hi Folks! Im looking for a reliable contractor recommendation in Savannah, GA. Please help! Much appreciated!!

Hey guys, @Patrick Jameson Im in Atlanta this weekend looking at some properties. Unfortunately, i wont be there this time. Looking forward to the next one.

@Marc Phelps Sounds great!