EquityBricks Newsletter - August 20, 2024

Welcome Bricklayers - ready to stack some cash?

Today’s Quote:
"Landlords grow rich in their sleep without working."
- John Stuart Mill

Here’s what’s on the blueprint this week:

1. Rent Surge Alert - National rents are up, and the Fed’s sweating bullets. Why you should care.

2. Florida’s Sizzling Market - 66,000 new rentals and prices still won’t budge? Find out why.

3. New York Rent Frenzy - Double-digit rent hikes and historic low vacancies. Is the Empire State worth the hype?

4. Interest Rates Gone Wild - Landlords feeling the squeeze—what it means for you.

5. Mindset Upgrade - Sharpen your mental game to stay ahead in this crazy market.

HEADLINES 
Market Mayhem: Rent Prices and Regional Rumbles

The Deep Dive

Let’s break down the latest Zumper National Rent Report to understand the trends shaping the rental market, especially from the perspective of rental property investors.

The National Scene: Rent's on the Rise

Rents for one-bedroom apartments have increased by 1.5% in June, bringing the national average to $1,526. Two-bedroom units saw a similar rise, up 1.9% to $1,900. As a landlord, it’s important to note that these rent increases are outpacing median income growth in many areas, which means tenants are likely feeling the squeeze. This growing disparity between rent rates and incomes may lead to increased tenant turnover or difficulty in raising rents further without risking vacancies. Despite the Federal Reserve’s efforts to manage inflation, rental prices are continuing to climb—much like that one stubborn weed in the garden that just won’t go away.

Florida: Sunshine and Sky-High Demand

In Florida, the rental market remains strong, even with the addition of 66,000 new rental units. Cities like Orlando, Tampa, Jacksonville, and Miami have experienced only minor declines in rent prices, as demand continues to absorb the new supply. As a landlord, this suggests that while new developments are coming online, the market remains competitive, with plenty of potential tenants still in the hunt. Tallahassee is emerging as a more affordable option, attracting renters priced out of the larger markets. Think of it as Florida’s version of musical chairs, where some renters are finding a seat in less expensive, yet still desirable, locations.

New York: The Empire State Strikes Back

In New York, rent prices are rising sharply, with all four major cities in the state reporting double-digit annual increases. Syracuse leads with a 29% jump, and New York City’s vacancy rate has dropped to a historic low of 1.4%. For landlords, this indicates that demand remains robust, even in a high-cost environment. However, as rents rise, it’s essential to remain aware of tenant affordability, as pushing rents too high could lead to higher vacancy rates in the long run.

Big Picture

The key takeaway for rental property investors is that while rent prices are rising and demand remains strong, these trends are deeply market-specific. It’s critical to understand your local market dynamics to make informed decisions about rent adjustments and property investments. What’s happening in Florida may not apply to New York, and vice versa.

For those looking to gain a deeper understanding of specific markets, our premium newsletter offers detailed market deep dives. In real estate, knowledge of your market isn’t just a nice-to-have—it’s essential for success.

Quick Hits

Sky-High or Slide Down?: The August 2024 US Home Price Insights from CoreLogic have arrived, and the message is clear: homeownership is still out of reach for many Americans. For rental property investors, this is a signal that the demand for rentals is likely to stay strong. As home prices continue to climb, more potential buyers are being priced out of the market, which means they’ll remain in the rental pool unless something drastically changes. The report, rich with data on national and local trends, suggests that the current environment is creating opportunities for investors who are positioned to meet the growing demand for rental housing. So, while the housing market keeps pushing prices up, keep an eye on how this could benefit your rental investments. (CoreLogic)

Recession or Not, That is the Question: While nearly 60% of Americans are bracing for a recession, the National Bureau of Economic Research hasn’t officially declared one just yet. This recent CNBC survey reveals a stark contrast between the public's gloomy outlook and the more optimistic views of business economists and Wall Street. For rental property investors, this sentiment could mean more people staying in the rental market longer, as economic uncertainty often makes potential homebuyers hesitant. Interestingly, despite the concerns, 44% of Americans say they’re still living comfortably. So, whether a recession is truly on the horizon or not, it seems many renters are managing just fine—at least for now.(CNBC).

Safety First (and Space Later): Redfin's latest safety survey reveals that 45% of homebuyers are ready to trade in their urban lifestyles for the safety of the suburbs, with more than a third willing to stretch their budgets by 10% for a more secure location. Interestingly, 31% of buyers would even downsize if it meant living in a safer area. For rental property investors, this shift highlights a growing demand for properties in quieter, safer neighborhoods, as the appeal of downtown living fades in favor of peaceful cul-de-sacs and secure streets. Walkability is taking a backseat to peace of mind, and this trend could significantly influence where renters choose to live (Redfin).

Rising Tide, Rising Rents: Interest rates are climbing, and for landlords, that means higher mortgage payments, which might lead to rent increases to cover those costs. According to Business Matters Magazine, while this isn’t ideal for tenants, there’s a potential upside for landlords—a cooler housing market could boost demand for rentals, possibly giving landlords more leverage in tenant negotiations. It’s a mixed situation: selling properties may become more challenging, but with fewer new rentals entering the market, landlords could face less competition. In this environment, adaptability will be key as landlords navigate these changes. (BMM)!

MINDSET MINUTE 
Think Like a Boss, Invest Like a Pro

Developing the right mindset is crucial for real estate investors aiming for financial freedom. Here are some key insights:

1. Embrace a Growth Mindset: Successful investors view failures as learning opportunities. Instead of dwelling on mistakes, they analyze what went wrong and use these insights to improve future decisions. This approach aligns with the concept of a growth mindset, which emphasizes learning and adaptability over fixed abilities.

2. Focus on What You Can Control: Real estate is full of variables, but successful investors concentrate on controllable factors, such as their strategies and decisions, rather than worrying about market conditions beyond their control. Successful investors plan for potential market hickups, but dont let the unknown keep them out of the game or up worrying at night.

3. Stay Positive and Resilient: Maintaining a positive outlook and resilience in the face of setbacks is essential. Investors who persist through challenges and remain optimistic are more likely to achieve their financial goals. See number two.

4. Continuous Learning and Networking: Educating oneself and building a network of mentors and peers can bolster confidence and provide valuable insights. This continuous learning helps investors stay informed about industry trends and best practices.

5. Avoid Comparisons: Comparing oneself to others can be detrimental. Instead, investors should focus on their own progress and celebrate personal achievements, which fosters a sense of pride and motivation. There will always be someone a few steps ahead of you. Instead of comparing yourself to them, learn from their successes, and failures.

By cultivating these mindset traits, real estate investors can enhance their ability to identify opportunities, take calculated risks, and ultimately achieve financial freedom.

DEAL DEEP DIVE 
Only Available Through Pro Subscription

Join us for a weekly deal analysis deep dive where founder Brian Cowan breaks down a real estate deal submitted by a Pro member or chosen by the EquityBricks editors. Each week, Brian will guide you step-by-step through the analysis process, helping you learn how to spot cash flow opportunities and avoid costly mistakes. Pro members gain access to a new video each week along with a growing archive of past deal deep dives. It’s a fun and insightful way to sharpen your skills and find those hidden gems in the market!

MARKET PROFILE
New Braunfels, Texas

Welcome to New Braunfels, Texas—where the rivers are cool, the BBQ is hot, and real estate investors are diving into a market that’s growing faster than you can say “Wurstfest!” Nestled between San Antonio and Austin, this charming town boasts a booming population and a job market that’s as diverse as its famous sausage selection. So whether you’re looking to snag a slice of rental paradise or just want to float your worries away, New Braunfels is the place where investment dreams take a splash!

Key Metrics

Population: 117,400
Population Growth: 28.1% since 2020
Median Household Income: $105,541
Unemployment Rate: 3.1%
Employment Growth: 64% (2013 to 2023)

Pro Members Only

Median Rent 1 Bedroom: Pro members only
Median Rent 3 Bedroom: Pro members only
Rent to Income Ration: Pro members only
Median Days on Market: Pro members only
Seller Price Reductions: Pro members only
Rental Vacancy Rates: Pro members only
Appreciation Trends: Pro members only
Price to Rent Ratio: Pro members only

AND MORE!

Pro members get access to one detailed market report each month that includes the key metrics above, and a review of tenant-landlord laws, development plans, and school quality. Note: not all data is available in all locations due to legal and data provider restrictions. We always work hard to bring you a complete picture of every market we profile.

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• Deal Deep Dives

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