Episode Summary:
In this episode, Craig and Jack discuss current events and news that impact real estate investing strategies. Topics include Mortgage Industry Layoffs, the ‘Stop Predatory Investing Act,’ Rent Control Bills, Multifamily News, and more. Tune in to stay updated on the latest market insights.
Overview of Episode 8
Mortgage layoffs at major institutions like US Bank dominate the headlines. Originations are down 75%, but staffing cuts lag at only 20%. As a result, profitability is strained, which impacts real estate investing strategies reliant on financing. Moreover, fewer deals per capita make competition fierce.
Rising Merger and Acquisition Activity
Mergers and acquisitions in the mortgage industry are soaring. In 2021, there were 43 deals, compared to a projected 110 this year. Consequently, larger firms are absorbing smaller ones. Both small and large investors must adjust their real estate investing strategies to this trend.
New Legislative Challenges
The Stop Predatory Investing Act proposes tax deduction limits for those owning 50+ homes. While this benefits small landlords, it could penalize mid-size investors. Thus, whether the act levels the playing field or creates unintended hurdles is up for debate.
Nationwide Rent Control Expansion
Rent control laws, such as Montgomery County’s 6% cap, are increasing. These measures aim to protect tenants but restrict housing supply growth. Hence, landlords must rethink their real estate investing strategies in light of these regulations.
Pressures on Community Banks
Community banks face rising deposit costs and regulatory demands. Accordingly, credit is tightening, which forces investors to adapt. Additionally, consolidations mean fewer banks offering the personalized service investors value.
Leadership Shift at HomeVestors
Media scrutiny of HomeVestors’ alleged predatory practices led to the CEO stepping down. Although the franchise model has scaled rapidly, it faces challenges with quality control. Therefore, franchise-driven real estate investing strategies may need stricter oversight.
COVID-19’s Lingering Impact
Fannie and Freddie extended multifamily forbearance plans due to ongoing COVID-19 effects. Although most landlords fared well, a small minority exploited the system. Consequently, investors must navigate legal delays and tenant protection measures.
Small Developers Lead the Way
The Baltimore-based Small Developers Collective showcases how grassroots organizing supports landlords. This group demonstrates that advocacy can strengthen the industry. As a result, similar collectives could help real estate investors nationwide.
Key Investor Takeaways
This episode underscores adapting real estate investing strategies to changing market and regulatory conditions. By leveraging advocacy groups, refining financing approaches, and staying informed, investors can stay ahead of challenges.
