Single Family Investors Alert

The annual cost to own a home (taxes, insurance, HOAs, repairs) has jumped to over $18,000 per year—BEFORE even paying the mortgage! (Full Article HERE)

Meanwhile, rent prices in many areas are flat or even dropping, creating a widening gap between owning vs. renting.  Would you rather buy a house if it was significantly cheaper to rent in your market?

Mortgage Rates: Doubled in just the past 18 months.  Even though I believe we will see rates drop due to what is happening in the economy at this time.  If rates do drop, it will just increase the price of housing and create a large gap between renters/owners.

Insurance Costs: Premiums up 30%-100% nationwide due to natural disasters.  My buddy Ken McElroy’s multifamily portfolio insurance premiums shot up more than $1,000,000 per year.  That’s without any changes at all…just an increase in cost, double what it was.

Taxes & Maintenance: Local property taxes and maintenance costs rising rapidly, outpacing wage growth.  I personally live just outside of Austin Texas, I bought my house in 2022 and my property taxes have increased more than $1000 A MONTH! That’s $12k more a year in property taxes.  Although I am fighting to reduce these, it only makes me wonder how people on fixed incomes could even begin to handle such an increase in taxes alone.

Inventory Crunch: Still down almost 45% from historical averages, this is creating artificial scarcity and propping up prices.  We are seeing some markets have houses sit on the market longer and inventory increasing, but I believe this is temporary at best.

First-time buyers, especially Millennials and Gen Z, are getting priced out.  Making them more focused on becoming a renter vs owner.  The thought of home ownership and the “American Dream” is becoming less a reality (or desire) every day.  Due to this, I believe rental demand will increase in the coming years, raising rent prices, making it a great time to be a landlord in the future.

Major migration from high-cost states (California) to more affordable ones (Arizona, Texas, Utah) is increasing competition and inflating prices still to this day.  Paying attention to YOUR market is still crucial to your long term success in this business.  Where are the jobs going/growing?  Long term investment fundamentals are more crucial than ever.

Airbnb investors are pulling out in droves—occupancy rates and nightly prices are falling, indicating oversupply…which I saw coming a few years back and upset a number of my friends in the STR industry.  When EVERYONE is doing it…you probably shouldn’t do it.  I love staying at aibnb’’s vs a hotel, but if they only way a ‘deal’ pencils is with STR…it ain’t a deal you should be buying.  Make sure it pencils as a long term rental (or at least breaks even) so you have a back up plan and sound strategy.

Inflation isn't leaving anytime soon.

Policy shifts may come (like 40-year mortgages, federal land releases), but these won't immediately impact the market.

Single-family homes will increasingly become a luxury, not a standard in the future.

Grabbing properties today and holding for the long term…still the best play out there.  You just have to ‘survive’ the short term in order to thrive later in the long term.  I constantly ask myself “will my future self thank me” when it comes to my current real estate deals.

Cash Flow is King: Only buy deals that cash flow—no exceptions.  You need to survive on your deals until you can thrive later.  Leave money in the deals, then get it all out later tax free on a refi when the market changes.

Take Advantage: Take advantage of other peoples fear of the market.  You make money when things are disrupted.  BUT you need to do it with strong fundamentals and OBJECTIVE math.  Think long term based on the market you choose to be in.

Insurance & Taxes: Factor higher-than-expected costs into your analysis to avoid surprises when holding on to properties.  Taxes will ALWAYS go up on a BRRRR, just fyi.

Stay Adaptable: Watch for policy changes and be ready to pivot quickly.

Pay Attention and Get Educated: Talk and meet with other investors out there in the field, stay up to date with what the big time players are doing, stay in tune with your market.  You can Copy and Duplicate what the best investors are doing, it’s pretty much all I’ve ever done.  Which is why you need to come to the Limitless Financial Freedom Expo with Ken McElroy and I this year.  ALL we are talking about is this stuff, we want to help create certainty for you in these uncertain times. (discount code Tarl15, prices go up May 30th!)