“The best investment you can make is an investment in yourself…the more you learn, the more you’ll earn” – Warren Buffet
What Is Your One Thing?
I recently read a book titled The One Thing, where real estate entrepreneur Gary Keller argues that the key to extraordinary success is focusing daily on the “One Thing” that’s most important for achieving your goal, rather than scattering yourself in many directions. Keller and co-author Jay Papasan explain how to determine your goal or life purpose, then focus intensely on getting there, while avoiding pitfalls such as multitasking, relying on an unprioritized to-do list, thinking too small, misunderstanding willpower and discipline, and neglecting your personal life.
Keller, the founder of the world’s largest real estate company Keller Williams, says that success comes from choosing and doing the right things sequentially, each connected to and building on the previous one, rather than doing a lot of disparate things, regardless of value, simultaneously. When you know and focus exclusively on the most important thing every day, everything else falls into place.
You start by thinking big – imagining extraordinary results – then narrowing your focus until your thinking small – that is, focusing on the most important thing you can do at the moment to help you get where you ultimately want to go. Focus on it exclusively, and when you complete it, move on to the next “One Thing” on your way to your goal. Extraordinary focus on “One Thing” brings extraordinary success.
Do You Have A Balanced Portfolio?
I recently read an article titled The 60/40 Portfolio is Dead. Long Live 33/33/33. The author discusses the traditional 60% stock and 40% bond investment portfolio allocation recommended by many financial advisors and investment gurus. He also argues and provides evidence that, especially in a high inflation environment, alternative investments, such as real estate, private equity & private debt, will not only provide the benefit of diversification but also substantially increase annual returns, while simultaneously strengthening portfolio stability and decreasing risk. The article goes on to explain how allocating just 30% of your investment portfolio to real estate can serve as a supplement to fixed income as a vehicle to improve yield for investors with a lower risk tolerance, while providing a hard asset that presents an opportunity for real income. The author also explains why many financial advisors do not offer alternative investment options…basically because their business model is to sell the product that offers THEM, not necessarily you, the highest profit margin.
Read the full article here: https://www.kiplinger.com/investing/604101/the-6040-portfolio-is-dead-long-live-333333
These Assets Classes Are Most Resistant To Inflation
Inflation is the risk factor investors are watching the most closely this year—but each commercial property type has unique nuances in terms of how it interacts with inflation. In this video John Chang, senior vice president and director of research services at Marcus & Millichap, discusses how periods of high inflation tend to be relatively short—a few years or less. He goes on to say that this shouldn’t be a primary commercial real estate investment driver but it could nudge investor decisions a bit. Real estate is generally a long term investment with multi-year hold periods, so while you factor in inflation and other short term risk, investors need to keep their eyes on the horizon. Check out the 4 minute video below.
2022 Real Estate Outlook: Multifamily’s Robust Growth To Continue
Investors looking for income generation, appreciation, diversification and other benefits often turn to commercial real estate. Physical properties tend to perform independent of the stock market and provide a hedge against inflation. Additionally, property owners can enjoy certain tax benefits, such as deducting interest expense on a commercial property loan and offsetting gains with depreciation.
For many individuals, multifamily properties arguably present the most accessible, relatable and rewarding real estate investment available. Everyone needs a home, after all, and owners generally have the ability to increase rental rates yearly as leases renew or residents turn over.
CBRE, the world’s largest commercial real estate services & investment company, noted In its 2022 US Real Estate Market Outlook that “The multifamily sector is set for a record-breaking 2022”.
Several factors are driving these projections. Higher single-family home prices and low inventory, which is driving buyers to the rental market, are two of the most prevalent. The lifting of eviction moratoriums, projected rent increases of seven-to-eight percent and occupancy rates expected to exceed 95-percent are also on the list. Most importantly, Net Operating Income (NOI) is expected to rise. Since multifamily property values are often based on the NOI, the value of the asset will rise accordingly.
So, what does it all mean for buyers and owners of multifamily properties? Owners who intend to hold on to their properties will see lower vacancy rates, higher incomes and increased values. Buyers who purchase early in the year will be able to take advantage of positive changes to increase the income and value of their properties as the year progresses.
How To Solve The Affordable Housing Crisis
I recently received my ADU Specialist Credential and am assisting homeowners, investors and developers understand site eligibility, local regulations, development process/costs and the return on investment.
Accessory Dwelling Units (ADU) are also known as secondary units, in-law units, granny flats, backyard cottages, etc. No matter what you call them, ADUs are an innovative, affordable, effective option for adding much needed housing in California. They are self contained residential units on the same property as a single-family home or a multi-family building. ADUs must have a kitchen (or efficiency kitchen), bathroom, place to sleep and a separate entrance from the main property. You can use an ADU to house family or friends, or lease to a rent-paying tenant. New policies are making ADUs more affordable to build, in part by limiting development impact fees and relaxing zoning requirements. By design, ADUs are more affordable and can provide additional income to homeowners and often the rent generated from the ADU can pay for the entire project in a matter of years.
If you or someone you know might be interested in learning more how to help solve the current affordable housing crisis while also creating some additional and passive income, please contact me.