Builders FirstSource CEO Dave Rush joins ‘Squawk on the Street’ to discuss what Rush anticipates for housing demand, what more affordable homes mean for Rush’s company, and the labor challenges Builders FirstSource is dealing with.
Personal brand maestro Richard Branson
As an entrepreneur, your personal branding is as important as the branding of your business. It is the key to establishing yourself as an authority in your field and winning the trust of your target audience and future customers. However, personal branding and business branding are two very different things.
International performance coach and founder of AC PowerCoaching Agnes Cserhati says: “Personal branding has a profound impact on how people perceive and respond to you. It’s not a nice-to-have but a must-have for your entrepreneurial success. You may have an innovative product or service, but it is hard to differentiate yourself in a competitive market. But there is only one of you, so use it to create a competitive advantage.
“Your personal brand is what people say about you when you’re not in the room; therefore, it is the most potent catalyst for building trust. You have two choices; you can allow others to say what they want about you based on their perceptions, or you consciously drive the process and ensure that what others say about you, online and offline, aligns closely with your image and values.”
When you think about some of the most successful and charismatic entrepreneurs, they all have a compelling, relatable story. Virgin founder Richard Branson’s audacious yet fun personal brand has been a key driver of the company’s success, helping to win trust through customer-centric values and create a vision of a company that is friendlier and more human-centric than others.
As the COO of Facebook, Sheryl Sandberg established a personal brand that manifested itself in her book Lean In, which sparked debate and made her a household name for women who struggle to ‘have it all’ and break into male-dominated industries.
People find stories irresistible, so as an entrepreneur, the first step to building your personal branding is communicating your story, which is about your journey, how you started and how you got to where you are today. Varun Bhanot, cofounder and CEO of MAGIC AI, recognized early on in his startup journey that his personal brand would be pivotal to his business success. Launched in 2022, MAGIC AI is an AI personal trainer that delivers one-to-one personalized training to people in their homes using an AI-powered mirror.
He says: “In October last year, I started investing in personal branding, mainly on LinkedIn and Twitter. I committed to posting three times a week about my journey, building my startup. It is important because people buy from people, and you can connect with customers if you build a name and story behind a brand. In addition, if people see you as an authority on a subject, in our case AI and health, it lends further credibility to the brand you are building.”
At the heart of his personal brand is authenticity, showing the lowlights and highlights of the entrepreneurial journey, hoping it may inspire or help others. Among the most significant benefits of these personal branding efforts has been attracting the interest of investors who have followed Bhanot’s regular social media posts about his journey.
He adds: “It has also helped to attract opportunities such as podcasts and press invitations as people see me as someone with something to say. It has also given greater credibility and authority to our brand. As a new company, it can be tough to cut through the noise, especially in a noisy field like AI or healthtech. However, by intentionally giving our brand a voice via my brand, it no longer feels like a faceless corporate but rather a brand people can relate to. A mission people can get behind.”
Helping people to understand who you are may sound straightforward, but doing it to maximum effect through a compelling personal brand takes time, effort and a clear understanding of why you are doing it.
Firstly, corporate branding vastly differs from personal branding, which is less about your actual business and more about the perceptions of the person behind it. There’s also a vast difference between having confidence in your values and your authority and being arrogant; the first can be a powerful catalyst for your brand, while the second will turn people off.
Agnes Cserhati says: “You need to identify your core values, key strengths and unique value proposition, then reflect on your strengths, accomplishments and professional goals, and ask yourself, ‘What makes me stand out in my industry?’ Create a personal brand statement and stick to it. Be consistent. You are communicating your brand identity and value proposition, so your messaging must be clear, concise and memorable.
“A quick but impactful hack is to write down three words you would like others to say about you when you are not in the room. Then ask 20 members of your network for the first three words that come to mind when they think of you. See if their perception matches how you want to be identified.”
Home prices seem to have turned a corner. While they’re still down compared to a year ago, they’ve steadily climbed—at least month over month—since February.
In fact, between February and May, home prices increased a full 4%, according to the CoreLogic S&P Case-Shiller Index released in July.
Will that trend continue, though? And what markets are seeing the most change in pricing? Here’s what the data tells us.
From April to May, national home prices increased just 1.2%, but in some markets, the jump was much higher, especially in larger metro areas. In Cleveland, for example, prices increased 2.7% over April. Chicago and Detroit both saw 2.3% increases, while San Diego and New York were just under 2%.
“Price gains have been strongest in Midwest pandemic-laggers—Cleveland, Chicago, Detroit—which are now the hottest housing markets,” says Selma Hepp, CoreLogic’s chief economist.
She’s right: The turnaround for these cities has been notable. In Cleveland, the average monthly price increase was just 1.4% in pre-pandemic days, while Chicago and Detroit’s average jumps were even lower (Detroit’s monthly increase has actually quadrupled since then).
To be clear: It’s not just these three markets seeing changes. All 20 of the biggest metros saw month-over-month price jumps in May. Other cities that saw bigger increases than the national average included Seattle, Minneapolis, Dallas, and Washington, D.C. Below is the list of all 20 markets and their YoY changes.
Some of these spots even experienced year-over-year increases—and significant ones, too. In Chicago, for instance, home prices have climbed 4.6% in the last year, and in Cleveland, it was nearly 4%.
It’s clear that prices are rising—and quite a bit in some parts of the country. The question is whether those price trends will continue as the year goes on.
According to CoreLogic, they likely won’t. In fact, the monthly gains have slowed slightly since beginning in February, which could indicate those increases may plateau in the near future, the data firm reports.
“Elevated mortgage rates and high home prices are putting pressure on potential buyers,” Hepp says in a press release. “These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average.”
This leveling off seems even more likely as mortgage rates continue to surge. The current average rate on 30-year mortgage loans is now above 7%, according to Mortgage News Daily.
“The rest of 2023’s housing market activity will continue to depend on mortgage rates and the availability of for-sale homes, with neither likely improving for potential buyers in the near future,” Hepp says. “As a result, 2023 homebuying activity may end up being the slowest in about a decade.”
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
Home Prices Rise For the Fourth Straight Month—Which Markets Are Improving? Read More »
International buyers are pulling back from the U.S. housing market, as high mortgage rates, soaring home prices, a meager supply of homes for sale and a strong dollar all make the purchases much less financially attractive.
From April of last year to this March, international buyers bought roughly 84,600 homes; that’s the lowest number since the National Association of Realtors began tracking such purchases in 2009 and a 14% drop from the year before.
And while overseas buyers bought fewer homes, they paid more for them. The median price of homes they purchased was $396,400, the highest the Realtors ever recorded.
China, Mexico, Canada, India and Colombia were the top five countries of origin for international buyers of existing homes by number of houses, not dollar volume. The survey does not count new construction, where international buyers are also active.
Chinese buyers had the highest average purchase price, at $1.23 million, likely because a third of them bought in California, where home prices are highest. In total, 15% of foreign buyers bought homes worth more than $1 million.
“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” said Lawrence Yun, NAR’s chief economist, in a press release. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
While foreign sales dropped overall, Chinese purchases did make sizable gains. The total of 2023 Chinese home purchases is the highest since 2018, which was one of the peak years for Chinese international property purchasing, according to Juwai IQI, an Asia-based international real estate technology group.
“Only about one in every 10 Chinese buyers is purchasing purely as an investment, which is a big change from the mid-2010s, when wealthy Chinese consumers looked to diversify their wealth out of China,” said Kashif Ansari, Juwai IQI co-founder and group CEO. “In 2023, the typical Chinese buyer is no longer an offshore investor but is on their way towards becoming an American resident and citizen.”
Foreign buyers continue to flock to the same places as they have in the past, namely Florida (23%), California (12%), Texas (12%), North Carolina (4%), Arizona (4%) and Illinois (4%). Chinese buyers in particular like California, as they often buy so that their children can attend local schools and universities.
“Florida, Texas and Arizona continue to attract foreign buyers despite the hot weather conditions during the summer and the significant spike in home prices that began a few years ago,” Yun added.
About 42% of foreign buyers used cash. As for why they are buying, half purchased the properties for use as a vacation home, rental property or both, up from 44% the previous year.
The drop in overall foreign purchases is unlikely to ease the competition for domestic buyers, as international buyers only made up a little more than 2% of all buyers. But it could help on the margins in certain local markets favored most by foreign buyers.
Today’s domestic buyers, however, are more concerned with mortgage rates, which are more than twice what they were in the first two years of the pandemic, and with the meager supply of homes for sale.
Foreign buyers are bailing on the U.S. housing market. Here’s why Read More »
By Antonio Neves, founder of Man Morning, a global community of accomplished growth-driven men who are committed to getting better.
Our evolutionary history reveals a powerful truth: Humans thrive in communities. We are not mere individuals operating in solitude; instead, our survival has depended on supportive relationships and partnerships within our tribe. Friends played an essential role in these early societies, aiding in resource acquisition, enforcing justice and offering protection. These shared pursuits fostered strong, enduring bonds among group members, and we’ve inherited this desire for deep friendships.
However, recent trends suggest that there’s a silent “friendship recession” underway, particularly among successful, ambitious men. With remote and hybrid work and professionals regularly changing jobs, men are challenged to form long-term bonds in the workplace. This can stunt career growth where promotions and raises can be greatly impacted by who is and who isn’t visible. Strong and powerful relationships are built in person, not over Zoom or Teams.
Let’s delve into the roots of this phenomenon and consider some actionable steps we can use to navigate this crisis.
In our increasingly urbanized world, forging new friendships can be challenging. Our lives lack the forced social mixing provided by educational institutions, and our network of friends starts to peak around our mid-20s. As we grow older, career and family responsibilities start to dominate, causing friendships to take a backseat.
This trend is exacerbated among high-achieving, educated men. Longer working hours and frequent relocations for job opportunities often mean less time to nurture existing friendships. Additionally, the increased time spent with children, a pattern common among contemporary parents, leaves little room for personal social interactions.
Recent data reflects these changing dynamics, with an alarming drop in the number and quality of friendships over the past decade. A 2021 survey found that 12% of Americans reported having no close friends. This can have consequences.
While the nature of our societal needs has changed since our hunter-gatherer days, the importance of friendships for our well-being has not diminished. Friendships are critical for helping us build self-esteem, feel a sense of belonging and decrease stress in our life. Moreover, numerous studies associate social isolation and loneliness with a range of health issues, akin to the risks of obesity or smoking. This can lead to loneliness, depression and anxiety.
While there’s no universally applicable manual for making friends, I have found that there are a few steps that can help:
Don’t get overwhelmed by the idea that you need a vast network of close friends. In my work with the Man Morning community, I’ve found that even a small group of reliable friends can provide ample emotional support.
Building and maintaining friendships requires consistent interaction over time. This also includes the willingness to be inconvenienced. Proximity and frequency of contact have been identified as key factors in friendship formation. Aim for weekly interactions over the course of a few months to solidify a new friendship.
Having a regularly occurring event on the calendar is critical. Participate in organizations or activities that encourage social connections like men’s groups, hobby clubs, sports groups, faith communities or classes at the gym.
Be thoughtful in choosing your friends. Shared interests, education, age and career paths can act as catalysts in forming friendships. However, it’s also important to be willing to stretch yourself and step outside of your comfort zone and meet with other men from diverse backgrounds.
Share your experiences, thoughts and beliefs over time. This increases empathy and facilitates deeper bonding. Just remember to balance self-disclosure with attentive listening.
No one who has accomplished anything of significance did it alone. Neither should you. Overcoming the “friendship recession” is possible when you commit and take these steps.
5 Ways Men Can Build Strong Connections In The Workplace And Beyond Read More »
This article is presented by Rent To Retirement. Read our editorial guidelines for more information.
Investing in real estate isn’t something that involves using just one strategy. The best strategy for you depends on the type of investor you are and the current market dynamics. In 2023, build-to-rent (BTR) is quickly becoming the most effective investment strategy for beginners and experienced investors alike.
BTR gives investors the opportunity to purchase new construction properties below market value in growing locations. There are many advantages associated with using BTR to grow your investment portfolio, which include hardly any maintenance, builder warranties, substantial appreciation in growing markets, the ability to attract high-quality tenants, and more financing options. We’ve started using a unique portfolio lender that finances new construction rentals with as little as 5% down, with no PMI (private mortgage insurance) costs. It is creative financing options like this that have allowed us to expand our portfolio quickly in the BTR space, obtaining more properties with less capital down.
Now that the market is slowing down, many builders have a surplus of builds they began last year in anticipation the market would continue without slowing down. At the same time, rising interest rates have slowed down institutional buying in the BTR space nationwide. This unique combination of factors allows the individual investor the timely opportunity to purchase new-construction rentals below market value in some of the best markets throughout the U.S. If you know the right markets to look in, you’ll have access to inventory that wasn’t available a year ago when it was a red-hot seller’s market.
Many of these new construction properties are available with immediate equity and appreciate quickly if you are in the correct market. This allows you to be able to access equity quicker than you otherwise would during different market conditions or when you’re not investing in the ideal market.
The best BTR markets are ones that are popular among new residents searching for a place to live. If you own or invest in a property that has low vacancies, it’s easier to maintain a consistent cash flow. When the property is in a hot market, it will steadily appreciate while you hold on to it.
Before you invest in build-to-rent properties, you should know more about the top markets that will help you benefit from cash flow and appreciation. Here is an in-depth look at five markets to consider.
Lehigh Acres is a premier market in Florida that’s known for its picturesque lakes and sprawling golf courses. It also has proximity to numerous sandy beaches along the Gulf of Mexico.
The median price for single-family homes in Lehigh Acres is $369,000, which is well below the national average of nearly $437,000. Over the past five years, home values have increased by more than 106%, which is well above the national average. These numbers indicate that property investments in this area should pay off quickly.
There are currently more than 4,000 homes for sale in Lehigh Acres. Since properties continue to appreciate in value, this location is a great spot for making BTR investments. Keep in mind that the unemployment rate in this area is just 3.1%. When you want to build residential real estate in Lehigh Acres, the average price per square foot is around $214 as of April 2023, which is just below the national average.
Huntsville is a large city in the Appalachian area of northern Alabama. Its population is currently just under 221,000, which makes it the most populous city in the state. Over the past five years, the population has grown by around 6.25%, which is substantially larger growth in comparison to national population growth rates.
The increase in people choosing to move to Huntsville is driven by affordable home prices and a strong economy. Companies like Target, Boeing, and Northrop Grumman call the city home, which keeps unemployment rates low and makes the city more appealing to young professionals searching for a job and a place to settle down. As of May 2023, the unemployment rate in Huntsville is 1.6%, which is tied for the lowest rate in the country.
When looking specifically at housing, the median home price is right around $420,000, which is slightly below the national average. Over the past five years, home values have risen by nearly 42%. Keep in mind that the national average is just 31%.
The median listing price per square foot is $171, which means that building a home in this city shouldn’t be too expensive. There are around 1,200 homes for sale in the area. The inventory buyers have access to is at its lowest in more than a year, which is part of the reason why home values have been increasing.
San Antonio is a highly popular city that’s home to the University of Texas at San Antonio and many exciting attractions that residents and tourists alike love to visit. The popularity of San Antonio is relatively recent, which is why property investors are able to make high returns when it comes to appreciation.
The city has a population of right around 1.48 million. Over the past five years, population growth has been 5.64%, which far exceeds the national population growth of 2.36%. When you’re investing in BTR properties, choosing a location with high population growth is highly recommended.
The median listing price for a single-family home in San Antonio is around $315,000, which is much more affordable than the home values found in most other big cities. Despite this affordability, homes were priced at an average of $225,000 in July 2018, which means that prices have increased by 40% over the past five years. This is another number that’s better than the national rate.
There are currently around 10,000 homes on the market in San Antonio, which is the lowest inventory has been since February 2022. As for the unemployment rate, as of May 2023, it’s just 3.8%. There are numerous companies with headquarters in San Antonio, including AT&T, Rackspace Technology, and USAA.
If you want to build a home in San Antonio, the cost of doing so is around $177 per square foot as of April 2023, which isn’t that expensive in comparison to other cities across the U.S.
Rockport is a quaint city that’s home to just under 2,000 people. Despite the small size, Rockport is a great destination for investors because of its affordable home values and proximity to larger cities like Evansville and Louisville. Many people who work in Evansville are choosing to live in smaller cities like Rockport.
In April 2023, the price of a home in Rockport was around $319,000, which makes for a 167% increase in comparison to the median home values in April 2018. Home values are still well below national rates, which shows that there’s room to grow.
There‘s just over 30 homes on sale at the moment. As long as supply continues to outstrip demand, home values should increase at a steady rate. You can build a home in Rockport for just $83 per square foot as of April 2023, which makes it easy to build properties and rent them out for a high return.
The unemployment rate for this area is around 2.6%, which means that people who come to Rockport are generally able to find jobs and will want to search for homes or apartments to rent.
As the capital city of South Carolina, Columbia has long been a favorite among real estate investors. The people who live there have easy access to exciting destinations like the Columbia Museum of Art and the Riverbanks Zoo & Garden. This place is also home to the University of South Carolina, which is one reason why this is a good place to invest.
Columbia has a population of right around 138,000. Since 2018, the city’s population has grown by 2.07%, which is similar to the U.S. average. Even though Columbia is considered to be a large city, homes in the area cost a median of $265,000 and have a median price per square foot of around $145, which shows that you can build real estate at a relatively affordable cost.
When looking specifically at rent, the average price for a one-bedroom apartment or home was just under $850 in July 2021. Two years later, the average rent is $1,132, which indicates that investors who own rental properties are building high cash flows on the properties they invest in.
Home values have appreciated by around 70% over the past five years. One reason why home values have increased recently is because inventory has dropped off considerably. In December 2022, there were more than 5,800 homes on the market. Between 2018 and the end of 2022, inventory had never dipped below 5,500 homes in a single month. As of April 2023, there are only 1,954 homes on the market, which gives investors a unique opportunity to help meet demand with a BTR approach.
The unemployment rate in Columbia was 2.50% as of May 2023. It’s often well below the national average. Companies like Amazon, Walmart, and Blue Cross Blue Shield have headquarters in this city, which is a major reason why the unemployment rate is so low and home values continue to rise. More job opportunities mean more demand for housing.
BTR is a great investment option in 2023. You can use it to maximize cash flow, appreciation, and equity, especially in these five markets. Adding the right investments to your portfolio can set you up perfectly for long-term success.
Make better use of the BTR strategy with appealing financing options that allow you to put less money down compared to traditional loans that stretch your capital further and create a higher ROI. Investing in the right BTR market will give you the opportunity to BRRRR new construction within just a few years of property ownership and ultimately scale quicker and achieve the infinite returns we are all chasing in real estate investing.
Rent To Retirement is the Nation’s leading Turnkey Investment Company offering passive income rental properties in the best markets throughout the US to maximize Cash Flow & Appreciation! Rent To Retirement is your partner in achieving financial independence & early retirement through real estate investing. Invest in the best markets today with a comprehensive team that handles everything for you!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
Top 5 Build-to-Rent Housing Markets for Cash Flow and Appreciation in 2023 Read More »
Downtown Los Angeles.
TheCrimsonRibbon | Getty Images
These U.S. metropolitan real estate markets had the highest median single-family monthly rents during the second quarter of 2023:
These U.S. metropolitan real estate markets had the cheapest median single-family monthly rents during the second quarter of 2023:
Some 40% of Americans are eyeing a move at some point in 2023, according to a recent survey from moving website HireAHelper, and financial pressures are among the top reasons for relocating.
However, financial experts warn consumers about some of the unexpected expenses.
“Probably the most overlooked hidden cost is when you are looking for the next job,” said certified financial planner Michael Hansen, co-founder and managing partner of Frontier Wealth Strategies in Walnut Creek, California.
What you might save in dollars, you may lose connection, collaboration and community.
Eric Roberge
Founder of Beyond Your Hammock
It may be appealing to move to a cheaper state to work remotely, but telecommuting may not be possible for your next role, he said. Before moving, you should consider your new city’s job market and possible in-person job opportunities.
“What you might save in dollars, you may lose in connection, collaboration and community,” said CFP Eric Roberge, who recently decided to move back to Boston after living in a lower-cost area.
“Although you can’t necessarily quantify that and put it in a spreadsheet the same way you can a budget with a rent or mortgage payment, being with your people is absolutely worth something,” said Roberge, founder of financial planning firm Beyond Your Hammock.
These 5 U.S. metro areas have the highest single family rents Read More »
Sibling entrepreneurs Caroline and Jake Danehy, cofounders of Fair Harbor Clothing
For one woman entrepreneur, youth has its advantages. Caroline Danehy, cofounder and chief brand officer of Fair Harbor Clothing, and her brother started the company in 2014 when she was in high school. She had passion, youthful exuberance, agility, curiosity, grit, a willingness to be coached, and an attitude to do whatever it takes.
Fair Harbor has gone from selling board shorts made from recycled plastic bottles from the family garage to becoming a sustainable lifestyle brand in less than a decade. Flagship stores have opened in Soho and Palm Beach Gardens. The brand is sold in Nordstrom, Saks 5th Avenue, specialty stores, and online through its site and other sites.
Danehy spent summers fishing, swimming, and surfing in Fair Harbor with her family. Fair Harbor is a small summer community on Fire Island, off the southern coast of Long Island, New York.
“It’s a magical place with no cars and a simple, minimalist living,” Danehy said. The life there inspired the siblings to form a company that transforms harmful plastic waste into comfortable beachwear.
“We started to notice more and more plastic waste washed up onto the shores,” sighed Danehy. She became interested in sustainability, insisting that her family turn off lights, bring reusable bags to the grocery store before it was mandated, and organize park cleanups.
Caroline Danehy, cofounder and chief branding officer at Fair Harbor Clothing
At the same time, Danehy developed a strong love for fashion. She wrote a fashion blog from middle through high school, “Cakes, Cookies, and Cardigans,” which focused on consignment and vintage shopping. It was a way for her to make old fashion new again by repurposing clothing.
In 2014, Danehy’s older brother, Jake, a junior in college and a geology major, was learning about plastic waste and its impact on the environment, particularly oceans. Danehy was a senior in high school. He told his sister, “We should start something that matters.”
They began conceptualizing the mitigation of single-use plastics by creating awesome products people love wearing. The first product was a pair of board shorts made from post-consumer plastic bottles turned into polyester. These shorts are worn in a wide range of activities, such as surfing, bodysurfing, diving, swimming, and sailing.
They entered a Shark Tank-like pitch competition—TIA Entrepreneur Showcase—at Colgate University, where Jake was a student. Judges included Jessica Alba, MC Hammer, Neil Blumenthal, and Jennifer Hyman. They were awarded $20,000 plus mentorship.
The siblings traveled up and down the East Coast doing trunk shows and fulfilling orders from their parent’s garage.
Selling at trunk shows gave the brother-sister team clear insight into customers’ values and how to position the brand. They were scrappy, determined to succeed, and able to figure things out. Still, naysayers said they were too young to start a business and needed more experience. Boy, did the siblings prove them wrong!
Since then, Fair Harbor moved from selling at trunk shows to e-commerce on their site and others, wholesale (including Nordstrom and Saks 5th Avenue), and opening two retail stores. “We’ve revolutionized the [board shorts] category by replacing mesh lining with our ultra soft breeze knit liner [that is chafless],” stated Danehy.
They expanded from board shorts to other men’s beachwear and have a line of women’s and kids’ wear. Fair Harbor has recycled over 30 million plastic bottles by turning them into our apparel. “We closed our first institutional round of funding,” said Danehy. The dollar amount was not disclosed.
Early-stage founders—especially inexperienced ones—can save time, money, and aggravation by finding mentors and advisors with knowledge, expertise, and connections. Based on their experience, mentors provide guidance and advice that help entrepreneurs avoid mistakes and shorten the time to success.
As young entrepreneurs, the brother-sister cofounders knew they had much to learn. “My dad always taught us to surround ourselves with people who have more experience and know more than we do,” said Danehy.
They took advantage of the mentorship provided through the TIA competition. Since then, Danehy has learned to look for people she has a natural connection with from various industries and who have complementary skills to hers. She meets them everywhere, including industry events.
“What Jake and I lack in experience, we make up for in grit, determination, flexibility, and staying agile,” said Danehy. “But I couldn’t imagine a better time to start a business than my late teens and Jake’s early 20s when you have a fresh perspective and an incredible focus to ensure it works.”
Still, as a young founder, Danehy finds it challenging to maintain a work-life balance. She puts her entire being into Fair Harbor. Over the past nine years, she has worked hard, kept her head down, pushed forward, staying very focused on product, customer, and brand.
Over time, Danehy realized that having a perfect work-life balance isn’t the goal. It’s anxiety provoking. If you concentrate on what you don’t have, you will never, ever have enough, so she is grateful for the moments of calm she does have.
Whether it’s cooking on Tuesday nights with her boyfriend, going vintage shopping on the weekend, spending time with her family, or meditating, she needs outlets to take a breath. “I need to put it in my calendar; otherwise, life gets away from me,” said Danehy.
What fuels your entrepreneurial passion?
Sibling Entrepreneurs Turn Plastic Waste Into A Sustainable Lifestyle Brand Read More »
This article is presented by GSP REI. Read our editorial guidelines for more information.
Large investors expanding their affordable housing portfolios has recently become a notable trend in the real estate market. Nuveen, the investment management division of the Teachers Insurance and Annuity Association of America (TIAA), made headlines with its acquisition of a substantial 12,000-unit affordable housing portfolio, predominantly located in the mid-Atlantic region, with a significant concentration in New York City.
Nuveen, which manages $1.1 trillion in assets, is now managing a $6.4 billion portfolio of affordable housing. Prior to this deal, Goldman Sachs, alongside the Michaels Organization and the Community Development Trust, purchased $1.2 billion worth of affordable housing across the United States earlier this year. These investments reflect a growing trend among large investors who recognize the advantages of affordable housing investment.
In this article, we delve into the top four reasons driving this expansion and explain why smaller investors should consider participating in this resilient market. We’ll also talk about how you can start investing in affordable housing to make a significant profit while making a real difference in communities.
Supply and demand are a crucial factor in successful real estate investing. Whether you are fixing and flipping houses, wholesaling, or building a rental portfolio, making a profit will be challenging if there isn’t demand for your product. If there is demand, your vacancy rate will stay low, and your rents will remain strong and consistently increase.
Demand for affordable housing in the United States has reached critical levels and is continuing to rise. The National Low Income Housing Coalition estimates that the nation faces a shortage of 7.3 million rental homes that are both affordable and available to extremely low-income renters. This scarcity means that for every 100 households in this income bracket, there are only 33 affordable rental homes.
Such shortages persist across all states and major metropolitan areas. But it’s not just extremely low-income renters who need affordable housing. To put things into perspective, Nuveen’s research reveals that nearly half of all U.S. renters are considered rent-burdened, allocating more than 30% of their income toward rent payments. Even more concerning is the fact that one in four of these rent-burdened individuals are severely rent-burdened, spending over 50% of their income on rent.
Despite ongoing efforts at the local, state, and federal levels, the need for affordable housing continues to intensify nationwide. This mounting demand creates an attractive investment opportunity for those looking to enter the affordable housing market.
Large investors are drawn to affordable housing not only due to its social impact but also because it offers favorable yield stability, even in challenging economic climates—including recession.
Nuveen’s research showcases the affordable housing sector’s resilience, illustrating that affordable housing investments, compared to traditional real estate sectors, including market-rate apartments, industrial, office, and retail, have generally delivered higher yields throughout the last 20 years. This long-term track record indicates that affordable housing investments can provide investors with attractive returns and stability throughout an entire economic cycle, even during downturns.
According to Nuveen’s report, an additional favorable aspect of affordable housing is its tendency to avoid downward rent adjustments during a recession, unlike market-rate apartments. This characteristic highlights the durability of cash flow in this sector compared to other forms of housing.
Simultaneously, the scarcity of affordable housing options and the overwhelming demand for them contribute to the sector’s robust performance. Nuveen notes that properties designated for lower-income renters exhibit higher occupancy rates and experience less volatility compared to traditional apartments. This phenomenon can be attributed to the persistent undersupply of affordable housing relative to the substantial demand, creating a stable, consistent pool of potential tenants for these properties.
By diversifying their portfolios with affordable housing assets, investors can potentially mitigate risk while generating consistent income streams.
One of the significant advantages of investing in affordable housing that is attracting institutional investors is the access to government subsidies, such as Section 8 vouchers. These subsidies provide property owners with stable, predictable rent collections since the government makes direct payments to owners on behalf of eligible tenants. Consequently, affordable housing investments benefit from reduced risk and enhanced cash flow reliability.
The availability of government support adds a layer of security that makes affordable housing investments even more attractive to investors. My personal experience with single-family affordable housing investments has been that Section 8 voucher rent tends to trend above market-rate rents.
It is crucial to emphasize that the expansion of affordable housing portfolios aligns with paramount societal and policy objectives. Governments at all levels—local, state, and federal—have acknowledged the pressing need to tackle the affordable housing crisis and implemented initiatives to incentivize investments in this sector.
This does not mean all the red tape has been lifted when it comes to developing affordable housing or accepting Section 8 voucher tenants. Affordable housing investors will have to overcome challenges, including public and private resistance. By engaging in this market, investors not only have the potential for financial gains, including reliable, stable income, appreciation, and tax advantages but also play a pivotal role in addressing the vital housing needs of communities.
Institutional investors have been expanding their affordable housing portfolios to make a social impact investment that generates economic returns but also drives positive change and improves the well-being of individuals and families in need.
Institutional investors expanding their affordable housing portfolios is a testament to the opportunities present in the sector. The combination of intensifying nationwide demand, favorable yield stability, and government subsidies certainly creates a compelling investment proposition.
However, it’s not just institutional investors who can benefit from affordable housing investments. Smaller investors should take note and consider following suit for several reasons, but they should also fully understand the risk that comes along with affordable housing investments and the factors that are crucial to success in the sector.
As with any investment, with great reward comes great risk. Luckily, however, the risk can be mitigated.
First, demand for affordable housing extends far beyond what major institutional investors are capable of filling. The shortage of affordable rentals and homes affects communities all over the country, of all sizes, from urban cities to suburban and rural areas. Both multifamily and single-family rentals and homes are desperately needed.
Second, the potential for attractive yields and stability applies to investors of all sizes. Nuveen’s research highlights the consistent outperformance of affordable housing investments compared to other asset classes.
Smaller investors can diversify their portfolios and access these benefits by actively engaging in direct investments or passively investing in private real estate investment funds that focus on affordable housing. This allows them to tap into the sector’s potential while leveraging the expertise and resources of established market players.
Third, government support and subsidies are not exclusively available to institutional investors. Smaller investors can also benefit from programs such as Section 8 vouchers and other local and state initiatives aimed at increasing the availability of affordable housing. As discussed, these mechanisms provide stability, reduce risk, and ensure reliable rental income, making affordable housing investments an appealing option for investors of varying scales.
Moreover, the current political landscape and public sentiment favor affordable housing initiatives from everyone, from institutions to private investors and nonprofits. Governments at all levels are actively seeking public-private partnerships to address the affordable housing crisis. By participating in this market, smaller investors can align themselves with government priorities, potentially accessing additional incentives, grants, and deal flow.
It’s important for smaller investors to conduct thorough due diligence and seek guidance from experienced investors when venturing into the affordable housing market. Understanding local market dynamics, evaluating potential investment opportunities, and complying with regulations are crucial steps to success. Collaborating with experienced investors, contractors, property managers, and housing organizations can provide valuable insights and mitigate risks associated with entering the affordable housing market.
One great thing about investing in affordable housing is there is a low financial barrier to entry—you don’t need a ton of capital to start investing in affordable housing.
However, on the flip side, there is a very high barrier to success when investing in affordable housing. Many times, these homes need to be fully redeveloped or heavily renovated. You will also need to know how to underwrite the renovation cost properly and manage the construction budget, time frame, and quality to ensure you stay in line with your projections and time frame and mitigate the future risk created from shoddy renovations.
It is also crucial you perform strict tenant screening practices. It is a major misconception that all Section 8 tenants will trash your property. This is certainly not the case, and strict tenant screening can certainly help lower the chances of this happening.
Another crucial aspect of affordable housing investment success is aggressive, professional property management. Whether you handle the property management yourself or work with a third party, they need to be proactive and handle everything professionally. I can expand on best practices in the construction and property management of affordable housing in another article.
The expansion of affordable housing portfolios by large investors signals the immense potential of this market. The combination of intensifying demand, favorable recession-resilient yields, and government support makes affordable housing investments an appealing option for both large and smaller investors alike. By capitalizing on this trend, smaller investors can profit with a purpose by making a positive contribution to addressing the housing crisis while generating favorable financial returns. With the right research, partnerships, management practices, and support, smaller investors can navigate this market and unlock the opportunities that affordable housing investments present.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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