In this episode of Multifamily Rockstars Rod Khleif and co-host Mark Nagy dive into the current challenges and opportunities in the multifamily real estate market. They discuss the impact of rising interest rates, market downturns, and how operators are navigating the turbulence. Despite the difficulties, they emphasize the potential for savvy investors to capitalize on upcoming opportunities. Rod & Mark also touch on the single-family market, the broader economic landscape, and how external factors like elections and natural disasters could shape the future of real estate.
Here’s some of the topics we covered:
- The Bridge Debt Multifamily Meltdown
- Massive Opportunities in Multifamily
- Sky-High Real Estate Interest Rates
- These Markets Are Thriving Despite the Economic Chaos
- Similarities Between Today & The Dot Com Bubble Bursting
- How Money Printing Fueled Record-Breaking Inflation
- The Ultimate Hack to Building Powerhouse Connections in Multifamily
- Educate Yourself NOW to Seize Game-Changing Deals
If you’d like to apply to the warrior program and do deals with other rockstars in this business: Text crush to 72345 and we’ll be speaking soon.
For more about Rod and his real estate investing journey go to www.rodkhleif.com
Full Transcript Below
00;00;00;00 – 00;00;16;10
Rod
Welcome to another edition of Life Time Cash Flow through Real Estate Investing. I’m Rod Khleif and I am thrilled you are here and you are going to love today’s guest. You know why? Because it’s me. So I’ve got I’ve got my co-host, Mark Nagy on. What’s going on? Mark?
00;00;16;12 – 00;00;26;18
Mark
What’s going on? Rod I’m, I’m glad we’re digging into this stuff because there’s a lot of a lot of big changes that are happening in the real estate market right now. And, glad we’re able to touch on it and just do some big value add, I think here today.
00;00;26;21 – 00;00;44;27
Rod
Yeah, well, we’ll do the best we can with that. I think that, you know, that’s why I’m being interviewed today, guys, because I wanted to drill down on quite a few things. Mark’s got a list of questions to ask me that we can go into as to what’s really happening, because really, there’s a meltdown happening in the multifamily space.
00;00;44;29 – 00;00;59;09
Rod
And, and, and of course, with crisis comes opportunity, this incredible opportunity. So, you know, Mark’s going to ask me questions. We’re going to get into it. I think you’re going to get a ton of value from today’s episode, and, let’s do it, brother.
00;00;59;12 – 00;01;18;29
Mark
Yeah, I think we’ll start a little broader here. Right? Because there’s there’s the rate cuts, there’s the election coming up, all those sorts of things, but just kind of start general in terms of what you’re seeing. How are you feeling about the multifamily market, the single family market? What are you seeing out there in terms of where things are going over maybe the next 12 months and just really where they’re at now?
00;01;19;02 – 00;01;41;12
Rod
Sure. Well, there’s a lot of questions you just asked. So let’s start with multifamily. Okay. So in the multifamily space, there are a ton of operators in trouble right now. They got adjustable rate bridge debt. Rents have pulled back in many markets and markets that I’m in, even, you know, Texas, Georgia, the Carolinas occupancy has dropped.
00;01;41;14 – 00;02;01;10
Rod
So, you know, there’s a lot of stress in our business right now. And so, you know, operators that haven’t been through this are really struggling and trying to come up with solutions. And, I’ve, I’ve never seen so many multifamily properties on the market as I’m seeing right now. I literally get dozens of emails a day of new properties hitting the market.
00;02;01;18 – 00;02;21;15
Rod
Sales are down about 90%. And so, you know, again, there are incredible opportunities coming in. So I’m excited. I mean, we’re we’re we’re in a lot of cash. We’re, we’re I got access to a lot of cash. And I think they’re the deals are just going to be extraordinary here over the next 12 months. And and a lot of people are playing, you know, in the sidelines.
00;02;21;21 – 00;02;46;09
Rod
A lot of the bigger players are in the sidelines. So in the multifamily space I see a tremendous amount of opportunity. There’s going to be some upset. You know, it’s going to be there’s already been some foreclosures. There’ll be more foreclosures, you know, banks taking assets back. But you know, this, as it relates to the 2008, 2009 crisis, this is different in that, it’s is specific to multifamily for the most part ofthis.
00;02;46;09 – 00;03;05;02
Rod
We’re going to see massive pain as well. I mean, occupancy across the country is at about, I don’t know, 60, 65%. Those assets don’t break even unless they’re at 85%. Now. Right now, banks are kicking these loans down the curb because if they foreclose, that immediately hits their balance sheet. So they’re doing everything they can to avoid that.
00;03;05;05 – 00;03;22;00
Rod
So a lot of them are doing what’s called deferrals. Well if if they’ve got what they consider a creditworthy borrower, they will defer the interest or a portion of the interest or the payments or a portion of the payments and put it on the on the back end. And, you know, I think it is just kicking the can down the curb.
00;03;22;04 – 00;03;36;11
Rod
So we’ll see. We’ll see. But so that’s what’s happening in the multifamily space. And other asset classes and commercial aren’t doing as bad, retail. You know, mobile home parks are okay.
00;03;36;13 – 00;03;37;12
Mark
00;03;37;13 – 00;04;00;02
Rod
Trying to draw a blank here, off. We talked about Austria. Oh, Industrial’s doing great, you know, so there’s some other asset classes that are still doing quite well, but multifamily definitely, is going to see a reckoning and there’s going to be opportunity. And so as now now let’s pivot and pivot to single family for a minute on an overarching, comment.
00;04;00;05 – 00;04;18;17
Rod
You know, there is a huge shortage of housing in this country. I mean, and and you know, the fact that, you know, this administration had an open border policy and there’s, I don’t know, upwards that people are saying upwards of 20 million people have come into the country, that housing shortage. It was a we were 5 million housing units short before that happened.
00;04;18;19 – 00;04;44;22
Rod
Okay. So there’s a huge housing shortage. How that impacts pricing, I don’t know. Right now pricing is still stable and it’s even still gone up, compared to a third, you know, I think it went up like 9%, across the United States from the third quarter of last year to the third quarter of this year. Now, when the fed drops the rates more, I think it could really open things up.
00;04;44;22 – 00;05;08;17
Rod
And we’re going to see we’re going to see prices go up again. But you know that’s not my wheelhouse anymore. And and so I don’t pay quite as much attention to it. You know we are becoming a renter nation. There’s no question about that. The disparity between, you know, rent, pricing and mortgage payments is still very wide and makes it very difficult for, for people to buy, single family properties.
00;05;08;17 – 00;05;14;24
Rod
And, you know, one of the things we should talk about is some of the impact of the election on all of that. Let’s do that later.
00;05;14;24 – 00;05;34;05
Mark
But, yeah, on the market, because of interest rates, multifamily prices are down, you know, anywhere from 20 to 25% just depending on the market. I know you just talked about distress and things like that. So what do you think is going to continue to happen with multifamily? Do you think it’s going to go even further down next year in 2025?
00;05;34;05 – 00;05;39;29
Mark
Is it going to slowly start to go back up? What’s your kind of prediction here?
00;05;40;02 – 00;06;00;12
Rod
Well, I mean, it’s there’s no question they’re going to continue to go down. Yeah. There’s absolutely no question. We’re going to see much deeper price cuts, you know, and we’re also seeing lender delays affecting these this this whole scenario, this distress when rates went up, Fannie Mae and Freddie Mac reallocated a lot of their analysts to other departments and Fannie and Freddie.
00;06;00;12 – 00;06;22;04
Rod
And if you guys don’t if don’t know that Fannie and Freddie is probably the largest source of debt for multifamily assets, you know, there’s also insurance companies and there’s bank loans. But Fannie and Freddie are the the conforming debt solution for multifamily. And they reallocated a bunch of their analysts when, when the rates, went up, I mean, things slow down.
00;06;22;04 – 00;06;39;27
Rod
So now they don’t have enough analysts to they they don’t have enough to do new business. They also don’t have enough to do servicing properly. So, you know, for example, if you’re changing management companies, it takes forever to get their approval. I’m dealing with that on an asset right now. It should have taken a week. It’s already at about 5 or 6 weeks.
00;06;40;00 – 00;07;04;12
Rod
So try to get a new management company approved or, you know, a lot of the a lot of the, draw requests are taken forever. So a lot of times. A lot of times, these lenders will hold money that you draw on to do repairs. And the request to get those draws out are taking forever, which is killing.
00;07;04;14 – 00;07;24;24
Rod
You know, these operators ability to, to handle these properties, because they, they put the money out, they don’t get it back in a reasonable amount of time. We’re seeing that on our deals as well. So, you know, that, that, that relocation of of analysts, they were already didn’t have enough. And with the reallocation and now pulling them back in and everything, it’s just a mess at Fannie and Freddie Mac.
00;07;24;24 – 00;07;59;01
Rod
And so, you know, that’s really impacting these operators as well. But you know, so so anyway, that’s in the multifamily space now in the single family, you know, I will tell you that I think home sales are going to remain constrained right now as long as the rates stay around 6%. Here’s the reason a lot of people, 86% of the homeowners out there have have rates under 6%, you know, so it’s the rate is going to have to get closer or below that before owners are going to want to sell.
00;07;59;01 – 00;08;24;23
Rod
And so that’s also constraining inventory and constraining sales. And you know, I’m going to tell you that the federal Reserve doesn’t see inflation, going sub 2% on a consistent basis until 2026, which could mean, you know, higher short term interest rates. They’ll decline, but they’ll still still be higher that they won’t decline them like they raise them to try to curb inflation.
00;08;24;26 – 00;08;46;00
Rod
You know, these past couple of years. So, you know, the only kind of bright thing in the whole piece here is that there’s a huge growing supply of newly built homes. So the supply for new single family homes is rising. And, you know, like it’s, it’s about two and a half times the level of his existing family supply.
00;08;46;02 – 00;08;57;29
Rod
So you know that that that will affect pricing as well. So we’ll see, you know, but of course, prices are very geographically driven and, market dependent, you know, based based on the inventory.
00;08;58;02 – 00;09;21;07
Mark
So we’ll talk about that here. Okay. Right. Because because that’s that’s big time what we’re seeing here in the market. Right. These areas that had huge booms during Covid, places like Florida, Texas, Arizona, etc. those are the places that are the coldest right now. The places that were the hottest are now the coldest. And the places that were the coldest then are now the hottest.
00;09;21;07 – 00;09;44;27
Mark
Right places like the Midwest. If we’re looking at the places for this year with the highest rent growth, you’re seeing places like Kansas City, Milwaukee, Cleveland, Pittsburgh, Columbus, Ohio, Indianapolis, Cincinnati. I know you own some assets and a few of those places there, and then places with the biggest rent declines. Obviously, Austin, everybody knows that one. Raleigh you mentioned the Carolinas, Jacksonville.
00;09;44;27 – 00;10;05;23
Mark
Some of my properties are getting rent declines right now Texas, Phoenix, Tampa, Dallas, etc.. So what are your feelings on if you were to give advice to the listeners short term, you know, and then long term, do you see those places coming back in terms of Florida, what are your thoughts on still where to buy right now and maybe over the next 12 months?
00;10;05;23 – 00;10;06;19
Mark
What would be your advice?
00;10;06;26 – 00;10;27;16
Rod
Well, I’ll tell you, the reason they pulled back is because they grew exponentially. I mean, we saw one year in Tampa, rents went up 32%. I mean, do the math on that. Okay. It’s insane. And so it was inevitable they were going to pull back some. So that was inevitable. But, you know, they’re we’re in some economic uncertainty right now.
00;10;27;16 – 00;10;44;24
Rod
You know, the proverbial, you know, what’s hitting the fan. And you know, God knows what. It’s what the election results are going to, you know, how they’re going to impact what’s happening. But, you know, every one of those markets you just said are great markets. I’ve got assets in most of them. Yes. We’ve seen rents pull back.
00;10;44;24 – 00;11;03;07
Rod
Yes. We’re struggling on some of them to, to get occupancy up and get and keep. But you know and, and you know, we’ve had to cut back on our return projections. But you know that’s that’s that’s business. That’s part of this business. And and so you know those are all great markets to still invest in. Now I don’t have a crystal ball to go short term or long term candidly.
00;11;03;07 – 00;11;26;29
Rod
But I will tell you I would invest in every single market. You just said okay. And and so, you know, yes, you’re right. That initial group of, of markets you mentioned, which included Cincinnati and Kansas and some other markets, you mentioned those, those are those are doing better right now. And I will tell you when, when, 0809 happened, that whole Midwest region was fairly stable.
00;11;27;01 – 00;11;52;21
Rod
We saw the biggest price increases and decreases in the coastal cities and of South Florida, Vegas, California, they all had huge price increases. And then they crashed. You know, when my portfolio crashed in 2008 and nine, I was at a 30% loan to value in 2007. In 2009, I was upside down. Okay. So that means my portfolio dropped more than 70%.
00;11;52;25 – 00;12;14;11
Rod
So yeah, you’re going to see these big fluctuations in these coastal and southern markets. But I will tell you I’m still very bullish on on the South. I’m still very bullish on Texas where we’ve got a ton of assets, the Carolinas, parts of Georgia, Florida for sure. Now, of course, there’s a whole insurance dynamic, that’s going to impact things in a big way.
00;12;14;13 – 00;12;34;04
Rod
You know, I was in, I was in Europe when Helen and Milton hit. And, you know, when Ian hit, I had about $1 million worth of damage. I settled for under $1 million on my compound. Well, this time, luckily, I didn’t have any damage to my buildings, but my boat ended up three houses away. My jet skis ended up in my backyard.
00;12;34;11 – 00;12;53;00
Rod
My, you know, my dock is destroyed. It’s hilarious. It looks like something out of Doctor Seuss because it’s leaning different directions as you walk it down. It’s hilarious. But but, you know, yeah, insurance is going to be a real problem for for any of these areas that were impacted by those by those storms. I mean, look at what’s happened in the Carolinas.
00;12;53;00 – 00;13;05;25
Rod
My God, they’re still searching for bodies. It’s horrific. I thought I thought candidly that Milton was going to be a lot worse because it was coming in at one in the morning. I thought I was going to get flooded. Thank God it wasn’t as bad as I hoped. I mean, yeah, people died, but not as many as I anticipated.
00;13;05;25 – 00;13;30;21
Rod
So. So anyway, you know, insurance is going to be an issue for any asset, in those markets. And we’re just going to have to, you know, muddle through and pricing is going to have to adjust based on, on what’s happening with insurance. So, you know, that’s what happens is the market adjust this pricing. And that’s why the politicians need to stay the hell out of it, because the market will will adjust based on what’s happening.
00;13;30;21 – 00;13;48;24
Rod
And you know, when they when, you know, politicians print money is when things get get screwed up. I mean that’s why inflation I mean, I think their base and the inflation numbers candidly, maybe you’ve heard me talk about this on the show. I mean, literally, our debt is going up $1 trillion every hundred days. I mean, it’s insanity.
00;13;48;27 – 00;14;07;15
Rod
We’re paying over one point, 1.2 trillion a year so far on that debt, about, 2 billion a day, I believe it is. I mean, it’s insane. And so and in the last four years, 80% of the currency has been created. Up until 2020, only 20% of the currency was in place. Since then, we’ve created another 80%.
00;14;07;17 – 00;14;16;19
Rod
I mean, hello, this is why we have inflation and and, you know, so don’t get me started on politics. In fact, we should probably talk about the election. You want to talk about that.
00;14;16;20 – 00;14;49;18
Mark
But well, before we do, really quickly, I’ll have to give you some data that supports exactly what you just said. And obviously places like Texas and Florida, they still have the long term fundamentals, right? Oh, sure. Still going up. Population is still growing. So I totally agree with you. And if we look at there’s I have a chart here and it talks about what were returns in the real estate market after every time that the fed started cutting rates, 2007 was actually the only one in the past 50 years to where returns actually went down over the next 2 or 3 years.
00;14;49;23 – 00;15;06;12
Mark
So the dotcom bubble in 2000 returns over the next 2 or 3 years after the fed started cutting rates were massive 1989, 1984 and 1981. I don’t know if you can speak to what those were, but apparently the fed started easing rates at those and there were massive turns after that. And there were.
00;15;06;12 – 00;15;10;18
Rod
Crashes. Then the SNL crisis. There were crashes then. And so, you know, that’s.
00;15;10;18 – 00;15;11;25
Mark
What’s so.
00;15;11;25 – 00;15;13;22
Rod
Right. Right.
00;15;13;24 – 00;15;26;02
Mark
I can’t speak to that. That’s why I asked. But there were still massive returns over the next 2 to 3 years. So it’s not something to be afraid of. But yes, let’s talk about the election. I know you mentioned, well, where do you want to start insurance or like.
00;15;26;03 – 00;15;45;24
Rod
Oh, no, I mean, we talked about insurance, I think, I mean, I well, let’s, let’s talk about the election next. Let’s do that. So, so, you know, what’s the impact of the election results going to be on the housing market, Fannie? Okay. Oh trust me, they’re huge. Freaking huge. Okay. If if Kamala Harris gets elected I mean, guys I you can hate me for this.
00;15;45;24 – 00;16;12;24
Rod
I don’t give a shit, okay? I think I think we’re doomed. Okay. She’s suggesting a $25,000, credit to go to first time homebuyers. Okay, well, who pays for that? I mean, hello, how fair is that to the people, to the first time homebuyers that are buying right now. I mean, come on, you know, also what she’s talking about putting in is a removal of tax benefits for investors that own more than 50 single family homes.
00;16;13;01 – 00;16;40;06
Rod
Okay. And so obviously that that that hurts our business. Okay. She thinks that’s going to help. You know, I get a lot of hate online from people like, you know, you shouldn’t have owned 800 houses. You know, you’re driving up prices. That’s BS. And and I’m going to tell you that, that any time politicians screw with the tax benefits and the real estate game is when we have serious problems, as evidenced by the SNL crisis.
00;16;40;06 – 00;17;00;23
Rod
That was an example of that. You know, the politicians got involved and it created this crash, in savings and loans that were loaning a ton of money on commercial real estate. You know, she’s she’s done a pledge to build 3 million new houses over four years. Well, that’s great, I mean, fine, that’s good. You know, a tax incentive for homebuilders to build more starter homes and rental properties.
00;17;00;23 – 00;17;06;00
Rod
I agree with that one. Okay. But the 25,000 thing to me is insane okay.
00;17;06;00 – 00;17;09;23
Mark
Oh no. Yeah. No. You know money to people. Yeah.
00;17;09;25 – 00;17;39;17
Rod
Somebody’s got to pay for that stuff. I mean that’s just like the whole student loan, you know, thing where they were going to pay off all the student loans. Well, you know who’s paying for that? And what about the people that actually had to pay, like my daughter for her student loans? You know, that’s not fair. You know, so when you remove these key tax benefits for major investors, it discourages, you know, investment and and that’s, that’s a, that’s the death knell of any Democratic society is, is when, when when investment is discouraged, you know, it hurts affordability as well.
00;17;39;17 – 00;17;57;14
Rod
And I’m going to tell you, you know, there are build to rent investors out there, that are, you know, that are providing family sized housing that if they get, you know, if they go to if she goes down that path, that’s going to discourage that as well, you know, whether she likes it or not. We need investors to invest in single family rentals.
00;17;57;20 – 00;18;22;07
Rod
And, you know, more capital invested in single family rentals means lower rents for families. And so removing those tax benefits is going to increase rents, you know. And so, you know, I disagree with most of what she’s trying to do. And I mean, if you listen to me, you know, I’m definitely on the other side anyway. But but but you know, Donald Trump’s housing policies is he’s going to reduce illegal immigration and ban mortgages for immigrants that don’t have a legal status.
00;18;22;07 – 00;18;48;16
Rod
I mean, hello, that to make sense to me? Okay. People that don’t have legal status here, he’s going to open up federal land for home construction. I think that’s brilliant because there’s millions of acres of federal land that that could help with that. And he’s the big one. He’s going to eliminate a lot of the costly regulations to make homes less expensive to build, because, I mean, a lot of these, these municipalities, they make it damn near impossible to get something built here in Sarasota.
00;18;48;16 – 00;19;11;11
Rod
Don’t get me started. Good Lord. It takes forever to get permitting done. The regs are ridiculous. And so, you know, that’s a big one. That one really will help if you can minimize the frickin governmental red tape so you can build. And then, you know, he’s encouraging construction of houses on the outlying areas, like the periphery of cities and suburb, suburban areas where the land is cheapest.
00;19;11;13 – 00;19;20;06
Rod
So, you know, I think that, that, you know, well, you know, where I’m at on that whole conversation, but but.
00;19;20;08 – 00;19;37;23
Mark
Yeah, totally agree. You think about these things logically when whenever the government gives out money, it always comes back to bite you in the ass. Think about exactly why did that. Why are we in massive inflation? Because the government printed money and just gave it out to everybody, and now it’s costing everybody way more. Same thing with the housing.
00;19;37;23 – 00;19;54;07
Mark
If if Kamala or whoever it is just gives away $25,000, all it’s going to do is just inflate housing prices even more, right? It’s just going to they’re just going to add that. Right, right on the back end. And houses prices are just going to go up by 25,000. Yep. Right. I know we’re throwing a lot of data.
00;19;54;08 – 00;20;07;00
Rod
Yeah. Yeah guys. Yeah. Exactly. Guys. So you know you may want to listen to this again. But Mark, Brian cut this out. Mark asked the interest rate question that you had on there. Well, where they got fed.
00;20;07;03 – 00;20;15;02
Mark
Rate really quickly before I was going to do that, I was going to say, we’re throwing a lot of data for people that want help and maybe some coaching and things like that. Where can they get it if you,
00;20;15;04 – 00;20;35;14
Rod
Okay. All right. So so do that. Do that again. And, I want to can I, I’d like to mention the boot camp and crush. Okay. So I’d like to do both. Okay. But but, ask. Okay. Ask your question. Ask your question. And then after that, after I answer, get into the interest rate one. Okay.
00;20;35;17 – 00;20;38;02
Mark
Okay. Of like why interest rates have gone up.
00;20;38;04 – 00;20;48;15
Rod
Where where are they going and why? You know the fed rate cut but mortgage rates went up. What. You know what happened and I’ll, I can I have a lot of answers there. So go ahead with the other thing first.
00;20;48;17 – 00;21;06;10
Mark
Okay. So I know we’re throwing a lot of data at people today. Elections, interest rate. All the all these things impact the housing market. It’s complicated for people that might want some help to learn, you know, some of the basics or maybe even get, you know, some mentoring and coaching from you specifically. Rod. How can they do that?
00;21;06;12 – 00;21;32;01
Rod
Sure. Well, you know, I’ve got my boot camp, my live boot camps coming up here November 8th, ninth and 10th in Orlando. It’s the only live one I do each year. It’s three days. It’s not a big sales pitch. I literally talk about my coaching for, like, 30 minutes, and, And you’ll leave knowing how to pick a market, how to evaluate a market, how to find deals, how to evaluate them, how to build a team, how to finance them, how to raise all the money you need for them, how to syndicate, how to joint venture at a property manager.
00;21;32;05 – 00;21;53;19
Rod
I mean, everything you’re going to leave knowing all that. So if you’re interested in attending that that live event in in Orlando, if you put the code when you check out, you want to go to Multifamily Boot camp.com. But when you check out Use the Code podcast and you come for $197 and it’ll include my my document library and my finding deals course.
00;21;53;19 – 00;22;25;29
Rod
Okay, so you know how those two things alone are worth ten times that. So again, go to the Multifamily Bootcamp website, then use the code podcast when you check out for 101 97 price and you’ll get those two bonuses. Now if you want to move faster, you know, I’ve got my Warrior Mentorship coaching program. And you know, we’ve got, I don’t know, 15 to 1700 warriors around the country, literally in every market they own somewhere between 210 and 220,000 units that we know of, which I’m very proud of because I’ve been teaching a little over six years.
00;22;26;07 – 00;22;43;15
Rod
And if you’re interested in applying to that and basically paying for speed, as it were, that’s one on one coaching text the word crush to 72345 about this. If there was ever a freaking time to get into this business, it is right now because the stuff is coming. Guys, I’m just telling you it’s coming. So.
00;22;43;23 – 00;23;02;25
Mark
And by the way, I’ll just throw in my $0.02 real quick because I invested in Florida, during the Covid boom and made a ton of money. Right now, those things are hurting. The only reason why I’ve been able to pivot over into the Midwest is temporarily, for a couple of years to get better returns, is a warrior group, and been able to do multiple deals this year with other warriors.
00;23;02;25 – 00;23;09;02
Mark
There’s there’s no way I would have been able to just jump and do a whole new market and do it all myself if I didn’t have those connections.
00;23;09;04 – 00;23;09;15
Rod
Right?
00;23;09;16 – 00;23;30;13
Mark
No. And now I’ve been able to do two, two deals this year and whole brand new markets, and we’ve been killing it on them. Love it, love it. So just thought I’d mention that. So last thing, we’ll get into interest rates right. Another confusing topic. The fed started cutting rates temporarily. After that. Interest rates have actually gone up about half a percentage point here in the past few weeks.
00;23;30;15 – 00;23;35;13
Mark
So where do you see these rates going and what’s that going to impact and what’s what’s going to happen.
00;23;35;16 – 00;23;59;15
Rod
Well what I’ll do is I’ll tell you what each of the big, organized governmental organizations and associations have predicted for interest rates. Okay. So Fannie Mae’s latest forecast predicts that 30 year mortgage rates are going to end at the end of this year, around 6.2%, but they’re going to drop into the 5% range in 2025.
00;23;59;18 – 00;24;25;24
Rod
But, you know, by the end of next year, they could fall to, you know, 5.7, for example. That’s Fannie Mae’s opinion. Okay. Now, Freddie Mac, in September said they think rates are going to decline further this year but remain above 6%. You know, they also said that, you know, because the the fed is shifting their expectations, it could cause some temporary volatility, which is what we’re seeing literally right now.
00;24;25;25 – 00;24;51;17
Rod
Okay. And so the Mortgage Bankers Association is very similar to Fannie Mae. They think rates are going to end in 24 around 6.2 and continue to trend down through 25. And they think they could end in the end of 25 around 5.8%, and then hold steady in 2026. Now the National Association of Realtors Nar, they think 30 year mortgage rates are going to end in 24 at 6.1.
00;24;51;17 – 00;25;09;25
Rod
These are all very similar bottoming out at 5.8 towards the end of next year. And then after that ticking back up again. And by the way guys, to give you some context, okay, you’re thinking oh my God that’s high. When I was when I got into this business, when Mark wasn’t even a twinkle in his dad’s eye, we’re talking 1978.
00;25;09;25 – 00;25;30;11
Rod
Interest rates were 18%. Okay. And I remember just getting super excited when they hit 7%. I’m like, Holy crap, they’re 7%. Just to give you some context and you can make money at any interest rate. Prices have to adjust, obviously, for you to make money. So Realtor.com predicts that the mortgage rates will end this year at about 6.3%.
00;25;30;18 – 00;25;53;25
Rod
Think there’s probably some credibility as they’re all similar. I mean, nobody’s got a crystal ball, but you know that that’s my opinion on interest rates. So but guys again volatility is here. Deals are here. They’re coming even more. The market is is is just kind of going crazy. We’re seeing auctions starting to pop up. That’s brand new deals are here guys.
00;25;53;25 – 00;26;10;29
Rod
So again if you’ve been thinking about this at all get your butt to my boot camp or, you know, text crush to seven, two, three, 4 or 5 or go to the boot camp website, multifamily boot camp.com, use the code podcast. And, and I’ll see you in Orlando.
00;26;11;02 – 00;26;23;06
Mark
For final words of wisdom on this here, rod, for people listening that are taking in all this data, what would you recommend is is now a good time to buy? Should people wait now something now’s a little bit what should they do?
00;26;23;06 – 00;26;41;12
Rod
I get that I get that question all the time. Should I wait to buy because you’re talking about a crash coming? No. Get up to speed now. It’s going to take time to get up to speed. You got to build relationships. You’ve got to learn this business. And and that takes time. And so, you know, there’s no time like the right now to get up to speed.
00;26;41;13 – 00;26;56;16
Rod
Now, while you’re searching for deals, you very likely will find some now. Okay. But you’ve even if you don’t, when they hit, you’ll be up to speed. You’ll know what you’re looking for. You’ll know how to evaluate them. You’ll love. You know, because I’m going to tell you the first time you evaluate a deal. Take you all day.
00;26;56;22 – 00;27;16;03
Rod
But but you get to a point where you can do it in 15 to 20 minutes. But that takes time. Okay. And so again, the key is get up to speed right away. If it’s not with me, with somebody else, but get up to speed as fast as you can because you don’t want to miss this opportunity. Because it could be a once in a lifetime opportunity to capitalize on great deals.
00;27;16;06 – 00;27;24;25
Rod
Okay, so that’s my $0.02 there. We’ll see you in the next episode. And, I appreciate you listening. And I hope I see some of you in Orlando.
