This week I’m sharing something that has been on my mind a lot. If you are dragging your feet in this business right now, your future self might regret that.
That circling thought?
I won't be able to buy single family properties for these prices again…
I truly believe that, in my lifetime, right now will be the last chance I will have to buy single family house properties for the price they are right now – that single family properties are only going to get more expensive, not more affordable. I believe this is ONLY for markets that have job growth, supply issues, and demand...which is pretty much most markets (but not all).
I have written before, more than once, that single family housing prices are affected the most by SUPPLY and DEMAND. This is more so than multi-family and commercial.
Why?
Single family valuation is based almost purely on 'sold comparable properties' vs multi-family and commercial properties are valued on so many other factors independent of sold comps (like local cap rates, net operating income, etc).
You can have demand for multi-family properties and units, yet still have the property values level out or even drop due to other economic factors that are separate from sold properties.
However, single family properties can have rising interest rates, stricter debt criteria, and if the neighbor’s house sold for more due to demand...then prices go up.
Across the United States in most major markets (and many many sub markets), we massively lack supply yet still have so much demand...and there is no plan to fix this that makes any sense.
Over the next two years, you will see builders that had started projects wrapping up their existing inventory and exiting with what they can...but how many are currently starting new builds and projects right now? What banks are financing new construction?
I believe that we will see some fluctuations in pricing throughout SFH over the next two years BUT…
I see no reason (short of cataclysmic events) where SFH prices do NOT go up and we will wish that we bought more properties to KEEP (not flip) today when we look back tomorrow…
So I have to ask…
Is your business set up to take advantage of the opportunities in front of us before the tides turn?
If it isn’t, I suggest starting here:
Acquisitions, and your process for it, is everything… Everything starts and ends with how you handle your acquisitions.
You want to buy more properties? Get better at underwriting deals.
You want to increase your profitability? Get better at underwriting deals.
You want to streamline your rehab? Get better at underwriting your deals.
You want to have less stress? Get better at underwriting your deals.
Setting up your underwriting process, so that it effectively collects and stores the data you need in order to better handle funding/planning/rehab/disposition/stabilization, is KEY to streamlining your business and reducing inefficiencies…
If you only had one chance to ever see the property throughout your entire time owning the property…
What information would you need to collect in order to be able to handle all rehab/planning/dispo/stable/etc?
Can you (or someone on your team) find this information inside your internal business systems easily once its been collected?
Can you add some of this to your current process when acquiring properties today so you’re quicker and more confident to saying YES or NO to a deal coming across your desk?
You might’ve seen in my last newsletter that I was thinking about doing a workshop. Well, you guys convinced me that this was TOO important to not do. These next couple years are primed to take advantage of, and it starts right now.
June 15-16th I am hosting a 2 day workshop. You’re going be exposed to how I set up my business to work virtually AND efficiently with a lean team. You’ll get real life practical experience to apply IMMEDIATELY to your business.
I am limiting how many people can attend to make sure that everyone gets the hands-on help they need.
Be the first to get notified when this goes live so you can secure your spot. Sign up here on the waitlist.
That's it for this week’s newsletter insights. Stay tuned for more next week!
Talk soon,
Tarl Yarber
