EM Capital

?? "Good business leads to more good business." - Dan Erb ?? It sounds simple, but yet, it is far more common to treat investing as a zero-sum game. We are thrilled to share that our CEO, Dan Erb, recently joined Dr. Allen Lomax on the Real Estate Investing Abundance podcast! Dan opens up about his incredible journey from investment banking to real estate investing, revealing how he has leveraged the persistent undersupply of single-family homes since the Great Financial Crisis to shape his investment strategies. Tune in to this insightful episode to discover how aligning incentives, understanding market dynamics, and strategic partnerships have driven Dan’s success. ?? Listen now and elevate your investment game: https://lnkd.in/eBB-iG5q #RealEstate #InvestmentStrategies #Podcast #EMCapital #RealEstateInvestingAbundance #Singlefamilyrentals #SingleFamilyhomes

?? City Spotlight: Des Moines, IA – A Rising Star for Single-Family Investments ?? As we continue to explore attractive markets for real estate investment, this month’s spotlight shines on Des Moines, Iowa. With its blend of economic vitality and cultural expansion, Des Moines is quickly becoming a magnet for savvy investors. Why Des Moines? Here's what makes it compelling: ?? Economic and Cultural Growth: -Top Place to Live: Ranked 14th out of 150 by U.S. News and World Report’s 2022 Best Places to Live, Des Moines stands out in the Midwest for its livability and economic opportunities. -Major Economic Hub: As the capital of Iowa, Des Moines is a central figure in the insurance and financial sectors, hosting major corporations like Wellmark Blue Cross Blue Shield and Principal Financial Group. -Exciting Developments: The upcoming Pro Iowa Soccer Stadium and Global Plaza promise to transform downtown, bringing over 800 apartments, hotels, and retail spaces—set to enhance the city's cultural and economic landscape significantly. -Diverse Job Market: Des Moines features a booming job market across manufacturing, tech, insurance, and agriculture, with high-tech job growth outpacing cities like Seattle and Boston. -Economic Strength: With a metropolitan GDP exceeding $56.2 billion and substantial growth over the last decade, Des Moines offers a stable and flourishing economic environment. ?? Real Estate Market Dynamics: -Growing Market: The median home price in Des Moines recently hit $203,000, up 12.8% YoY, yet remains significantly more affordable than the national average. -Quick Market Movement: Homes are selling faster, with median days on the market decreasing, indicating strong demand and a vibrant housing market. -Youthful Population: With a median age of 34.4 years, the city’s demographic is poised for homeownership, bolstering the demand for housing. Des Moines exemplifies a market with both immediate appeal and long-term growth potential. Its combination of economic diversity, upcoming developments, and vibrant community life makes it an ideal locale for investment in single-family homes. At EM Capital, we're excited about the opportunities Des Moines presents and look forward to engaging with a market that promises both stability and growth. Stay tuned for more insights as we continue to identify and invest in markets that offer substantial value to our investors. #RealEstateInvestment #DesMoines #SingleFamilyHomes #EMCapital #MarketSpotlight #investing #SingleFamilyRentals

?? April CPI Update and Market Implications In the wake of last week's closely monitored April CPI report, we at EM Capital want to share key insights and what they mean for the markets and our investment strategies. The April CPI showed a year-over-year inflation rate of 3.4%, still above the Federal Reserve's target of 2% but demonstrating promising signs of moderation. Notably, core components such as food prices and goods are slowing down considerably, although shelter costs remain high, rising approximately 5.5% from last year. The market responded positively to these nuances, with U.S. interest rates experiencing a slight pullback and risk assets like stocks rallying. This reaction underscores a cautious optimism that, as inflation pressures ease, the Fed might consider lowering rates from their current highs of over 5%. At EM Capital, we take a broader view: While month-to-month fluctuations in CPI are closely watched indicators, they are just one of many variables that can affect the economic landscape. We believe that focusing solely on these short-term metrics does not necessarily align with strategic, long-term investment planning. Our philosophy is not to attempt predicting the immediate outcomes of macroeconomic variables. Instead, we concentrate on identifying and investing in markets and assets that are materially undervalued and poised for robust long-term growth. This approach allows us to capitalize on opportunities that others might overlook, driven by short-term data fluctuations. We remain committed to our strategy of focusing on sustainable, long-term value creation, regardless of the transient economic winds. Stay tuned for more insights and updates as we continue to navigate these evolving market conditions with a steady, forward-looking perspective. #InvestmentStrategy #EconomicUpdate #CPIReport #FederalReserve #EMCapital #LongTermInvesting #singlefamilyrentals #realestate

?? City Spotlight: Oklahoma City, OK – A Prime Market for Single-Family Investments ?? As part of our ongoing city updates at EM Capital, we’re highlighting Oklahoma City, Oklahoma—a burgeoning hub for single-family investments. Why Oklahoma City? ?? Robust Growth: With a metro area population exceeding 1.46 million, it's America's 20th largest and 6th fastest-growing city since the 2020 Census. ?? Young Population: The city's median age is 35.7 years, with a significant percentage of the population in key home-buying age brackets. ?? Diverse Employers: Major institutions like Tinker Air Force Base and thriving corporations such as Paycom and Devon Energy drive the local economy. ???? Educational Centers: Proximity to universities like Oklahoma City University supports a vibrant community of young professionals. Cultural and Recreational Appeal: ?? Rich Culture: From the Oklahoma City National Memorial & Museum to vibrant nightlife and a thriving brewery scene, OKC offers a dynamic lifestyle. ?? Outdoor Activities: Locations like the Myriad Botanical Gardens provide abundant recreational opportunities. ?? Affordable Housing: The median home price stands at $260,500, up 5% YoY but well below the national average, enhancing its appeal to first-time homebuyers. ?? Growing Demand: Despite the ongoing need for more housing, the city is making significant strides in infrastructure and quality of life improvements, promising further growth. Oklahoma City’s blend of economic diversity, cultural richness, and strategic growth initiatives makes it an attractive market for real estate investors. EM Capital continues to explore such promising opportunities, aiming to deliver substantial value to our investors. Stay tuned for more updates as we delve into markets with substantial growth potential. #RealEstateInvestment #OklahomaCity #SingleFamilyHomes #EMCapital #MarketSpotlight #singlefamilyrentals #GrowingMarket

Reflections on a Pivotal Week: Fed Decisions, Job Data, and Berkshire’s Annual Meeting This past week offered a whirlwind of insights, from the Fed's stance on interest rates to unexpected job data and Berkshire Hathaway's first annual meeting without Charlie Munger. Here’s a breakdown of the key highlights: ?? Fed's Outlook: In his post-meeting speech, Fed Chairman Jerome Powell noted the economy and job market's resilience in 2024, exceeding expectations. However, with inflation's path to their 2% target still uncertain after the first quarter’s data, the Fed has adjusted the timeline for anticipated rate cuts, pushing the expected first cut from June to September. ?? Job Market Fluctuations: April’s job report revealed weaker-than-anticipated growth, with only 175,000 jobs added—below the >200,000 expected by economists. This shortfall nudged the unemployment rate up to 3.9%, sparking a market rally as investors speculated on potentially sooner-than-expected rate cuts. ?? Berkshire Hathaway Annual Meeting: The weekend was marked by Berkshire Hathaway’s annual meeting, the first since the loss of Charlie Munger. Despite this change, the meeting showcased strong company performances, particularly a >30% increase in operating earnings, led by robust results from their insurance businesses. Beyond financial updates, the meeting offered profound lessons on investing, business, and life, emphasizing the importance of long-term focus and strategic decision-making. ?? Key Takeaways: The lessons from Berkshire, particularly the focus on long-term value creation and ignoring short-term noise, resonate deeply with our philosophy at EM Capital. As students of the market, we don’t rely on predicting short-term fluctuations. Instead, we concentrate on identifying and investing in undervalued markets and assets poised for substantial long-term growth. Last week’s developments underscore the complex dynamics of our economy and markets. At EM Capital, we remain committed to navigating these challenges, leveraging insights from industry leaders like Buffett and Munger to guide our strategies and ensure robust value creation for our investors. #FederalReserve #BerkshireHathaway #EconomicInsights #InvestmentStrategy #EMCapital #investing #singlefamilyhomes #singlefamilyrentals

?? City Spotlight: Kansas City, MO – A Prime Market for Single-Family Investments ?? At EM Capital, we're always on the lookout for dynamic markets that offer great potential for our investors. This month, we turn our spotlight on Kansas City, Missouri—a city that’s quickly becoming a hotbed for single-family investments. Why Kansas City? Here’s what makes it stand out: ??Cultural Vibrancy: Kansas City isn’t just about the blues and BBQ. It’s a cultural hub with a rich history in jazz and sports, home to landmarks like the Negro Leagues Baseball Museum and the American Jazz Museum. With a thriving arts scene and famous culinary delights, it offers a lively community atmosphere that’s hard to resist. ?? Outdoor and Recreational Appeal: Set along the scenic Missouri River, Kansas City provides ample outdoor activities from extensive parks and hiking trails to beautiful waterfront spaces—perfect for those who love a blend of urban and natural environments. ?? Strategic Location: Located at the confluence of two major rivers, Kansas City stands as a critical transport hub. This central positioning not only enhances its accessibility but also bolsters its importance in logistics and commerce. Economic Strengths & Demographics: ?? Anchor Employers: Companies like Cerner Corporation, Hallmark Cards, and Sprint Corporation provide a stable employment landscape, driving consistent job growth and economic stability. ?? Sports and Events: With the Chiefs’ recent triumphs and upcoming events like the 2026 FIFA World Cup, Kansas City is set to attract a global audience, boosting local businesses and tourism. ???? Entrepreneurial Spirit: Known as one of America’s most entrepreneurial cities, Kansas City boasts a thriving ecosystem of start-ups and small businesses, supported by numerous incubators and accelerators. ???? Demographics: With a young and growing population, the city’s demographics are ideal for increasing homeownership rates. ?? Supply Constraints: Current inventory challenges underscore the high demand for housing, making it an opportune time for investment. ?? Affordability: Homes here are more affordable compared to national averages, making Kansas City an attractive market for both investors and homebuyers. With a 2024 investment budget set at $2.3 billion, Kansas City is poised for further growth and development, reinforcing its appeal as a top choice for real estate investors. Stay tuned for more updates and insights from EM Capital as we continue to explore new opportunities in flourishing markets like Kansas City. #RealEstateInvestment #KansasCity #SingleFamilyHomes #EMCapital #MarketSpotlight #investing #singlefamilyrentals

??♂?Blueprint for Disaster: Politicians Punting on the Real Problems??♂? In light of the recent Wall Street Journal article "Wall Street Has Spent Billions Buying Homes. A Crackdown is Looming,” (https://lnkd.in/d-fPGFFe) it’s crucial to discuss the impact of institutional buyers on the real estate market and explore solutions to the ongoing undersupply of housing. The root of today's housing crisis dates back to the post-Great Financial Crisis era when annual housing starts dropped below 1 million—a low not seen in 60 years. Although there has been some recovery, with starts now ranging between 1.3 and 1.5 million per year, this is still below the 1.6 to 1.8 million needed to match U.S. population growth and the surging demand from millennials entering homeownership. While targeting Wall Street may be politically expedient, it fails to address the real issue: a structural undersupply of single-family homes. While institutional investors have become more active in recent years, investors only own ~3% of the total single-family home supply. This perspective is often lost in broader discussions that don’t fully capture the nuances of the market, such as the role of investors in building rental properties and providing accessible rental options. At EM Capital, we recognize that the real issue at hand is not demand—it's supply. Initiatives like President Biden's proposed $10,000 homebuyer tax credit might stimulate demand further, but without addressing supply, such measures could exacerbate affordability issues (https://lnkd.in/eSqsJQGM). A more effective approach would be to incentivize building. A case in point is Austin, TX, which experienced a significant increase in housing and apartment starts, leading to a notable decrease in prices and rents by +10% (https://lnkd.in/gDrq-Wr6). Despite the narrative that casts companies like Blackstone as villains in the affordability crisis, the real issue lies in the supply-demand imbalance. To effectively address housing affordability, policy efforts should concentrate on increasing supply, rather than stimulating demand or restricting market liquidity. For further insights into the undersupply of single-family homes and our detailed analysis, follow the link below to our previous analysis on this subject. EM Capital 2023 Housing Update: https://lnkd.in/g9Fpntb6 #RealEstate #HousingMarket #EconomicPolicy #WSJ #Wallstreet #EMCapital #HousingCrisis #Policyoverpolitics

?? Navigating Mortgage Rates: Insight from EM Capital As 2024 began, the common mantra among U.S. investors was “Don’t worry, rates will come down,” fueled by expectations of a 'soft landing' for the economy. This optimism was based on predictions of a significant slowdown in GDP growth, which would in turn cool inflation and prompt the Federal Reserve to cut interest rates perhaps five to six times throughout the year, starting in March. The assumption was that lower rates later would offset today’s high mortgage rates, offering opportunities to refinance at more favorable terms. However, as we approach the end of April, the anticipated rate cuts have not materialized. Instead, the economy and inflation have proved more resilient than expected, leading to a reduction in expected rate cuts from five to six to just two, and a half-percent rise in mortgage rates since the year's start. Why has the economy remained robust? ?? Government Spending: Strong fiscal measures have counterbalanced monetary tightening. ?? Job Market Strength: A solid job market has empowered consumers to continue spending. ?? Asset Price Recovery: Many households are experiencing an uplift in asset values from the lows of 2022, contributing to broader economic optimism. Inflation, while reduced from around 9% in 2022 to about 3% at the start of 2024, has settled around 3.5%—still above the Federal Reserve's target of 2%. This persistence is largely driven by robust consumer spending and significant shelter costs, which account for approximately 40% of the CPI and have risen by more than 5%. This scenario presents a complex challenge for the Fed and market expectations. The prevailing economic indicators suggest the market is too hot for the anticipated rate cuts. Moreover, certain inflation drivers, such as housing prices, are not immediately responsive to higher rates. EM Capital’s Approach: At EM Capital, we are 'macro aware' but not 'macro dependent.' Our strategy does not hinge on short-term rate predictions but rather on a disciplined approach to capitalizing on market inefficiencies. We focus on acquiring high-quality assets at reasonable prices in markets or asset classes that are overlooked or undersupplied. This methodology positions us to exploit potential opportunities arising from investor impatience and negative carry deals, reinforcing our commitment to generating sustainable alpha. In this volatile environment, being a student of the market and remaining adaptable is crucial. We prioritize long-term value over short-term speculation, ensuring our investments are robust regardless of economic swings. #RealEstateInvesting #EconomicOutlook #InterestRates #EMCapital #InvestmentStrategy #HousingMarket #Mortgage #Inflation

?? Update on the U.S. Housing Market Post-March CPI Report ?? Following the latest release of the March CPI data, we at EM Capital are keen to share insights on its implications for the real estate market, particularly focusing on the single-family sector. The core CPI rose to 3.8%, surpassing expectations and suggesting a resilient U.S. economy despite widespread recession fears. Notably, shelter prices have continued their upward trend, recording a 5.7% year-over-year increase, significantly influencing overall inflation figures. EM Capital’s Key Takeaways: 1) Resilience in Housing Markets: Contrary to concerns that higher mortgage rates—over 6% for more than a year—might dampen the housing market, prices continue to rise. This resilience is largely structural, driven by a shortage of homes following the Great Financial Crisis and the demographic shift as millennials enter homeownership. These factors, combined with the typical U.S. debt structure of 30-year mortgages and a strong economy, support sustained growth and pricing stability in the housing sector. 2) Market Sensitivity to Rate Changes: The CPI release triggered notable market movements. Global stock markets dipped, and U.S. interest rates saw a significant uptick, with the 10-year Treasury yield increasing by approximately 0.4% between April 10th and 15th, nearing a 1% rise since the year's start. Investor expectations for rate cuts have also adjusted, shifting from an anticipated 6-7 cuts in 2024 down to just 2, with further decreases or even potential rate hikes on the horizon if economic and inflationary pressures persist. ?? Strategic Insights: The persistence of high inflation and a robust economy continue to challenge Federal Reserve rate cut expectations and add complexity to the housing market dynamics. This reinforces the importance of a versatile investment strategy. At EM Capital, we remain committed to our long-term investment philosophy, which focuses on leveraging local real estate expertise to identify and capitalize on high-quality, overlooked single-family homes. Our approach is designed to navigate any market conditions, ensuring we stay aligned with our goal of sustainable growth and resilience. In a market fueled by such dynamics, understanding the underlying trends and adjusting investment strategies accordingly is more crucial than ever. We're here to keep you informed and well-positioned to thrive in these evolving times. #RealEstateInvestment #HousingMarket #CPIReport #EMCapital #EconomicOutlook #InvestmentStrategy

??? Demystifying Residential Real Estate: Single Family vs. Multi-Family Investing ??? Historically, institutional investors have largely steered clear of single-family rentals, favoring the scalability of multi-family investments. However, since 2020, the narrative has begun to shift. As the market evolves, it's increasingly important for investors to understand the nuances between these two sectors of residential real estate. Each offers distinct advantages and challenges that can impact investment outcomes. The Shift in Single-Family Rentals: Pros: ?? Increased Demand: The pandemic has sparked a surge in demand for single-family homes, driven by an aging population and residents seeking more space and privacy. ?? Greater Liquidity: Single-family homes typically offer quicker sales due to their lower price points and broader market appeal. .Cons: ? Vulnerability to Vacancy: With only one tenant, the financial impact of vacancies can be significant. ?? Slower Portfolio Growth: Scaling a portfolio of single-family homes can be slower and more labor-intensive. Multi-Family Investments: Pros: ?? Higher Income Potential: Renting out multiple units in one property can significantly boost income and cash flow. ? Economies of Scale: Costs per unit can decrease due to centralized operations and maintenance. Cons: ?? Complex Management: Multi-family properties require more intricate management strategies, potentially necessitating professional property management. ? Higher Initial Costs: These properties often come with higher purchase prices and are typically categorized as commercial real estate, necessitating larger initial investments and commercial financing. ? Reduced Liquidity: The specialized nature and higher cost of multi-family properties can make them harder to sell. Market dynamics continue to evolve. Fannie Mae's 2023 commentary suggests an increasing vacancy rate in multifamily rentals, which could be due to oversupply or lingering economic impacts from the pandemic. Meanwhile, Zillow projects a 14.3% growth in single-family home values, indicating robust appreciation potential. Understanding these trends is crucial for investors navigating the residential real estate market. Whether expanding rapidly with multi-family units or building a portfolio of single-family homes, strategic insights can help investors align their objectives with market opportunities. At EM Capital, we're dedicated to providing the expertise and guidance needed to make informed decisions in this dynamic investment landscape. #ResidentialRealEstate #InvestmentStrategies #SingleFamilyRentals #MultiFamilyInvesting #EMCapital