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Neal Bawa explained that rent prices follow housing prices with about an 18 month lag. There is a set of would-be homeowners, richer than renters, who have bee

Neal Bawa explained that rent prices follow housing prices with about an 18 month lag. There is a set of would-be homeowners, richer than renters, who have been since been priced out of the home buying market, so they outspend the previous set of renters, driving prices up. REI074: Data-Driven Real Estate Investing W/ Neal Bawa https://www.youtube.com/watch?v=tzeTx1KE600 https://www.youtube.com/watch?v=tzeTx1KE600 A major takeaway from this podcast is that 4-plexes are the best economic investment because they are liquid, ie. 5-plexes incur more scrutiny from the bank, the downside of multiplex is you may need a property manager, so after scraping zillow and doing some machine learning to deduce the most profitable market, Mr. Bawa builds seas of 4-plexes with all administered by a single property management office.

clomond 5y ago
That’s a theory, utilizing reversion to the mean as it’s basis but it is not a rule. With different market conditions, housing prices could also correct for rental prices. Meaning if rents stay down after decoupling from an increase in housing stock value, the house prices could adjust down in the event there is over-supply and the market at the margins decides to rent rather than buy because it’s cheaper.
cronix 5y ago
> Neal Bawa explained that rent prices follow housing prices with about an 18 month lag. I'm assuming that has a lot to do with leases and rental contracts? If you have a 2 year lease I can't raise your rent until it expires even if the property increases in value 10x during that time.
- xx511134bz 5y ago
  This came up. He is no longer renewing 1-year leases, he expects to increase rent twice in 2022, so he is moving to a six-month lease. He also said 2022 will feature the largest rent increase in American history.
MeinBlutIstBlau 5y ago
I worked in commercial lending for a little while and all assessments you've made on commercial properties is wrong. We (as do most) financials underwrite the business, not the property. If the business has several years of a solid, stable income as well as can afford it, we don't care. We just want a low risk borrower whom we just set and forgot until balloon renewal. Obviously we also don't just give out a loan to anyone with money either. There is no good investment in real estate unless youve got money to pump into them continually until your rents far outweigh even your personal expenses.
- xx511134bz 5y ago
  I just quoted the podcast which I linked. This isn't about commercial, its about residential.
  - MeinBlutIstBlau 5y ago
    >4-plexes are the best economic investment... 4 plexes are commercial properties. Just because they're for residential purposes doesn't not change that it is zoned as a commercial property.

clomond 5y ago

That’s a theory, utilizing reversion to the mean as it’s basis but it is not a rule. With different market conditions, housing prices could also correct for rental prices. Meaning if rents stay down after decoupling from an increase in housing stock value, the house prices could adjust down in the event there is over-supply and the market at the margins decides to rent rather than buy because it’s cheaper.

cronix 5y ago

> Neal Bawa explained that rent prices follow housing prices with about an 18 month lag. I'm assuming that has a lot to do with leases and rental contracts? If you have a 2 year lease I can't raise your rent until it expires even if the property increases in value 10x during that time.

xx511134bz 5y ago
This came up. He is no longer renewing 1-year leases, he expects to increase rent twice in 2022, so he is moving to a six-month lease. He also said 2022 will feature the largest rent increase in American history.

MeinBlutIstBlau 5y ago

I worked in commercial lending for a little while and all assessments you've made on commercial properties is wrong. We (as do most) financials underwrite the business, not the property. If the business has several years of a solid, stable income as well as can afford it, we don't care. We just want a low risk borrower whom we just set and forgot until balloon renewal. Obviously we also don't just give out a loan to anyone with money either. There is no good investment in real estate unless youve got money to pump into them continually until your rents far outweigh even your personal expenses.

xx511134bz 5y ago
I just quoted the podcast which I linked. This isn't about commercial, its about residential.
- MeinBlutIstBlau 5y ago
  >4-plexes are the best economic investment... 4 plexes are commercial properties. Just because they're for residential purposes doesn't not change that it is zoned as a commercial property.