February 2024 Review

We hope your 2024 continues to be successful!

Thanks for reading and welcome back. If this is your first newsletter, thank you for subscribing and wanting to follow the Rolling Rook story.

We are proud to keep you up to date with the future of our company, team, and industry as a whole. In this newsletter, we look to provide you with a snapshot of the day-to-day operations of RRC, give you the inside scoop of who we are as a team, and keep you up to date with pertinent information on the current real estate market.

If you'd like to learn more about how to start investing with us and get a deeper insight into deals on our radar, start here! Additionally, don't hesitate to pass this along to your family and friends who might share similar interests!

Discover the Latest from RRC

Rolling Rook Capital has been tirelessly evaluating the multitude of deals that flow through our pipeline, meticulously scrutinizing their compatibility with our stringent criteria. Each and every opportunity is meticulously examined from all perspectives, with an unwavering focus on our esteemed investors and their desired returns. We believe in the importance of transparency in all facets of our business.?

The multifamily housing market is still feeling the effects of inventory limitations and higher interest rates, emphasizing the need for a thoughtful assessment of these factors when reviewing deals that meet our criteria.

The Rolling Rook team is dedicated to discovering the most effective approaches and tactics for identifying opportunities that yield maximum returns. Through regular Level 10 meetings and quarterly Rock reviews, we consistently strive to achieve our goals, enhance transparency, and reinforce accountability within our team. Recognizing the significance of establishing a solid operational foundation, we are committed to continuous improvement to provide secure and profitable investments to our community.

We express our gratitude to all our readers and hope you will continue to enjoy our content. As we embark on our journey towards achieving our goals in 2024, we invite you to follow our progress and stay engaged with the exciting developments ahead. The course is set, and we are enthusiastic about pursuing our objectives. Thank you for your continued support!

Market Updates

The Macro

The macroeconomic outlook for 2024 discussed in the article, Freddie Mac Economists Share Expectations for 2024, by Len Kiefer and Sara Hoffmann indicates a shift from the robust growth experienced in 2023. While the economy expanded by 2.5%, surpassing estimates of its long-run potential growth rate, certain indicators suggest a softening labor market. The unemployment rate increased slightly to 3.7%, and there were declines in labor force participation rates, job growth rates, and total job openings. Expectations for 2024 include a moderation in job growth, fading consumer spending, and a modest uptick in unemployment as overall economic growth slows. If inflation continues to moderate, the Federal Reserve may cut interest rates, resulting in a modest easing of mortgage rates throughout the year, likely remaining in the 6% range.

Turning to the multifamily market in 2024, home prices and interest rates are anticipated to keep many potential first-time homebuyers in the rental market for a longer duration. While the single-family market faces a national supply deficit, multifamily supply and demand forces are more regionally influenced. The multifamily market has seen increased construction, with completions up 24% since 2022, reaching levels not seen since the late 1980s. This surge in supply is expected to moderate rent increases, with a forecast of 2.5% rent growth in 2024. The national vacancy rate is projected to be 5.7%, slightly higher than the average from 2000-2022. Positive transaction volumes and rent growth are anticipated, driven by stabilizing 10-year Treasury rates, although property valuations may face downward pressure due to the higher interest rate environment. Overall, 2024 is expected to bring moderate growth to the housing and multifamily markets, with resilience projected in the face of ongoing challenges.

For further details, you can access the complete article here.

The Micro

In an article featured on REJournal titled "Midwest Spotlight: Analyzing Multifamily Performance" by Finley Askin, the focus is on the diverse and stable Midwest region in the context of commercial real estate. As you delve into the content, the reasons for RRC's emphasis on this region become evident.

The multifamily market, which experienced record-breaking rent growth in 2022 fueled by high demand, is undergoing shifts in 2023-2024 with certain regions facing setbacks. However, the Midwest has emerged as a thriving area for multifamily investments, offering advantages such as a diverse economy, a growing population, and a stable housing market. The region's steady economic growth, low unemployment rates, lower cost of living, and business-friendly regulations make it attractive for investors. Additionally, the Midwest's transportation infrastructure, tax-friendly regulations, and diverse economy contribute to a stable demand for commercial real estate.

Key players in the Midwest, including cities like Chicago, Minneapolis, St. Louis, Cleveland, and Columbus, have seen significant multifamily investment. Chicago remains a leading market, while smaller cities like Rockford and Aurora are providing affordable rental options. Ohio, particularly in Cleveland and Columbus, has focused on redeveloping historic buildings, experiencing substantial growth in multifamily sales. Minnesota's Twin Cities have been a hotspot for multifamily investment, driven by high demand and capital investment. Overall, the Midwest's multifamily real estate market is thriving due to a combination of population growth, economic strength, and urban revitalization efforts, offering diverse opportunities for investors and renters alike.

You can read the entire article here.?

New With RRC

Rolling Rook continues to achieve remarkable success with its recently launched short-term rental in Dayton, Ohio, with every day in February occupied. This venture has proven to be invaluable, providing insights not only into the day-to-day management of short-term rentals but also into the dynamics of the Dayton market and its untapped potential.

As a team, we have come together to assess our strengths and weaknesses, refining our roles and responsibilities. This strategic approach allows us to grow and strengthen each facet of RRC's operations, enabling us to efficiently cover more ground—whether that involves exploring more deals, gathering additional information from our market, or engaging in deeper conversations with our investors.

Ongoing discussions with potential cosponsors aim to elevate the production rate and initiate a more robust deal flow. Despite a relatively slow year for many real estate investors, Rolling Rook is confident that persistent work on systems and adherence to set criteria will yield exciting deals in 2024. The commitment to not compromise on standards remains a key aspect of the strategy for the coming year.

We express our gratitude to all our readers and hope you will continue to enjoy our content. As we embark on our journey towards achieving our goals in 2024, we invite you to follow our progress and stay engaged with the exciting developments ahead. The course is set, and we are enthusiastic about pursuing our objectives. Thank you for your continued support!

Investment Philosophy

Our investment strategy centers on targeting B to C-class properties, identifying those with inherent value-add potential through strategic renovations and operational enhancements. Our market selection involves a meticulous analysis, integrating distinctive trends that align with our accumulated expertise from prior service. Additionally, we actively cultivate an off-market pipeline, consistently evolving, with the primary goal of maximizing returns for our esteemed investors.

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