Invest cautiously, but invest!

“My retirement funds are down a large percentage because of the stock market. I don’t want to take another risk investing in Real Estate with the increasing interest rates.”  

 We heard this quite a few times these past months. 

We are often asked, Chris & Maricela, what are you doing about this? Are you still buying Real Estate?

Our thoughts. What if the market goes down another 20%? Even with the Interest rates increasing, this is a great time to purchase Real Estate with the right lending, team, and conservative underwriting. You can’t time the market, but you can strategically diversify so that your overall portfolio risk is negligible. 

The number one rule of investing from Warren Buffet – is don’t lose money.

The rule of buying Real Estate from Grant Cardone – Don’t buy on proforma. 

Strategic diversification is one of the best ways to lower the risk of investing. 

We are continuously researching and educating ourselves on the Real Estate market. Where is it currently at, and where is it headed?  

You might know that the Multifamily market has been changing by the month and by the week. This is the market we are very in tune with. There have been ongoing residential real estate market changes, but this blog will not address them other an to say interest rates jumped higher and faster for residential (over7 %) than they have for multifamily (recently locked rate below 6).  

Increasing interest rates, inflation affecting consumers’ purchasing power, and lending changes are only a few issues concerning the RE market.  

Throughout these times, we continue to acquire assets. 

As long as your underwriting is conservative and the deal works from a projected returns standpoint, then, by all means, move ahead. 

These are some things we do with our teams to set up successful investment opportunities:

• Underwrite assuming conservative rent increases 
• Low leverage of the asset (<50% LTV when possible)
• Consider all debt options that provide low variability of interest rates. 
• Partner up with strong partners to show a strong team and leverage each other’s experience and strengths.  

Believe it or not, having an experienced team can save you money (also known as investors’ profit). The more experience the team has, the better lending terms you can get, better services from vendors, sometimes preferred or discounted rates for repeat business, the economy of scale, and more accurate estimates of budget and planning for capital expenditures.  

In summary, Apartment/ Group investing (AKA syndication) has been the safest investment alternative to creating wealth. Those who understand the name of the game look to preserve wealth. Not the same as creating cash flow, although it still occurs. 

In multifamily investing, aside from analyzing the deal, the syndicators also need to be evaluated. They can make or break the deal successfully with their management style and ensure the business plan is being implemented well.

Chris & Maricela continue to acquire performing assets. If you are moving forward with investing, make sure you vet; the deal, the team, the market, and the business plan.  

Great wealth is created during the economic recession by those who take a calculated and controlled risk – Grant Cardone.