Big Trouble in Little America?

Solly's Weekly Review

Welcome to Solly's Weekly REI News, where we dive into the news that will affect Real Estate Investing activities. This week I dive into corporate pullbacks and major issues surrounding this year's elections.

The Week in Review:

Lots of investors are worried about housing affordability, even though they are partially (mostly) responsible for the displacement of minorities and low-income families within the top 30 MSAs. This has led to an almost bone-dry affordable and workforce housing market, with a mass exodus of the lower/ lower middle class we are seeing some major workforce issues. The biggest and most relevant change will be felt at the ballot box as people vote for politicians who vow to "curb rising housing and rent prices". This combined with a sizable pullback on real estate growth from more than 50 major companies is the start of far more interesting weeks to come. Let's dive in!

Rising costs, war, and taxes, who are you voting for?

"Would you rather use one piece of paper to decide the fate of your country or use the hundreds of green paper in your wallet?"

I can tell you which one our government would prefer and it's not the one that you travel to a polling center for. With so much going on, it's hard to even fathom voting for the candidates running for office, yet we all must do our "duty". Each mid-term election carries so much weight, not just in politics, but across the market. The fear of higher taxes from the left, ware with Russia and I guess Iran now, oh and not to mention an impending recession. Yet I see very little talk around affordable housing for those displaced by "InVesTors" who took over entire neighborhoods of underserved communities (with some help from their local municipalities of course). So it makes you wonder how or even if most people will vote because the last elections promised more affordable "everything" and all we have seen are prices rise. With wealthy people looking to not pay more taxes and the lower middle class in desperate need of more social programs, it will be a tough election with even more effects on the real estate market. It almost seems like we should be putting more guidelines for affordable housing in place, but I guess that's too hard.

A bit of corporate sell-off won't hurt anyone, right? ????

If you're asking if we are in a recession the best advice I can give is to follow where the money is or in this case, isn't. As we see more companies pull back on buying land for corporate headquarters, factories, retail locations, and such, it's important to note that I told you so. I mean what did we expect? A common trend to identify for clues of bad times coming is if you see companies pull back their growth and switch to a cash savings strategy. Those in marketing know when companies plan on cutting back advertising, they are preparing to batten down the hatches. This is the case for more than 50 major companies across the United States, they are scaling back their real estate growth in markets that were "booming" just a few short months ago. The key indicator to watch out for next will be a reduction in hiring and workforce retention, meaning that your tenants or prospective buyers shouldn't expect a raise anytime soon. The trickle-down effect will be felt more by homeowners who, let's face it, 100% OVERPAID for their homes (there, I said it). This correction will most likely drop pricing on real estate, leaving those who paid $50K over asking with a long road ahead to recover equity. On the opportunity side of the coin, be prepared to see your favorite homes on Zillow come back on the market or at an auction.

Best practices for impending doom??

For many of you, staying liquid will be at the top of the list and cash flow should be directly behind it. After all, what good is liquidity if you can't replenish it? Ideally, we would like to see investors who have started to allocate funds for producing and established REITs and Funds. These cashflow outlets allow you to stay diversified and give you flexibility on how you can make cash during an economic crunch. Combined with a healthy portfolio and the right REITs/Funds you would be setting yourself up for a great defensive position to ride out the lowest points and an even better position to go on the offensive.

Shameless plug time?

Don't know where to start when it comes to looking for passive investment options? Feel free to visit the website for RVPP , a variable income fund that combines a robust portfolio of cash-flowing SFR, multi-family, BTR, and commercial properties. P.S they give their investors a 15% distribution each quarter ??