When you invest in real estate, you’re not buying what it is today—you’re buying what it will become a few years from now.

That’s especially true in multifamily, which, despite all the noise, remains one of the most compelling long-term plays out there.

Unlike stocks, you don’t get a live ticker reminding you every five seconds what your property is “worth.” And that’s a good thing. Real estate moves slowly, and that patience rewards people who can see the story before it unfolds.

The national headlines are confusing right now—depending on who you read, the sky is either falling or it’s never been brighter. The truth, as usual, is somewhere in between.

Mortgage rates are still above six percent, affordability is strained, and national price growth has flattened. But beneath the surface, there’s an entirely different story playing out—one that favors multifamily investors who understand that real estate is always, always, about location.

Some markets are clearly soft. A few urban centers built too much too fast, and it’s showing up in higher vacancy and flattened rents. But other regions—think the Carolinas, Texas, parts of Florida—continue to thrive because people are still moving there in droves.

Jobs, climate, taxes, and lifestyle continue to pull migration south and inland, and those people need somewhere to live.

When you combine growing populations with a shrinking construction pipeline—new multifamily starts are down roughly 40% from their 2023 peak—you’re setting the stage for tightening supply and rent growth in the right markets over the next few years.

That’s the part that separates pros from spectators. Anyone can read a national report and call it a trend. But the investors who win are the ones who know their markets intimately—who’s building what, where the jobs are moving, and how local policies are shaping demand. In that sense, real estate offers the only kind of “insider trading” that’s perfectly legal. The better you know the ground, the better your odds.

For passive investors, that means something simple but crucial: partner with operators who live and breathe their markets. You want people who are plugged in at the street level, not just reading spreadsheets. Because in multifamily, the difference between a mediocre investment and a great one can be a single zip code.

Real estate, especially multifamily, rewards patience, perspective, and proximity. You can’t control interest rates or the national narrative, but you can choose where—and with whom—you invest. And if history is any guide, those who make smart, localized bets while everyone else is sitting on the sidelines tend to be the ones who look like geniuses a few years down the road.

This week on the Wealth Formula Podcast, I talk with a former professor and renowned real estate analyst who’s been studying these patterns for decades. We break down which markets are setting up for real opportunity, where caution is warranted, and what the next chapter of multifamily investing really looks like.

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at phil@wealthformula.com.

In terms of multifamily, it, it’s always a good long-term bet because in 70% of the markets we’re not gonna over build. You just have to, you know, to, to know that. But they’re gonna be a little bit harder to get into and, um, and they’re gonna be steady cash flow and, and some of the other dynamics that are helping multifamily long term.

Welcome, everybody. This is Buck Joffrey with the Wealth Formula Podcast. Coming to you from Montecito, California. Before we begin, I wanna begin with reminding you that there is a website associated with this podcast called wealth formula.com. Lots of things there for your, uh, viewing pleasure, including the, uh, opportunity to join the Accredited Investor Club, AKA Investor Club.

That is where if you are a credit investor, which basically means you make $200,000 per year, $300,000 per year, if you’re filing jointly or you have a net worth of a million dollars outside of your personal income, well congratulations. You are an accredited investor. You don’t need to do anything else other than be your lovely self and sign up for investor club where you will get deal flow.

Now that deal flow is, is. Coming to, uh, close to an end for the 2025 tax year. So if you’re looking for tax advantage stuff, uh, that will help you, uh, reduce your tax bill for 2025, make sure you sign up sooner rather than later. Uh, and um, again, that’s uh, wealth formula.com. So, uh, speaking of real estate, which we do a lot in the credit investor club, well.

The thing about in, when you invest in real estate, um, you have to remember now this, you know, you’re, you’re not buying what it is today. You’re buying what it will become a few years from now. Okay. That may seem obvious, but I don’t think a lot of people think of it that way. Right. It’s especially true in multifamily, uh, which despite all the noise, right, right now remains one of the most compelling long-term plays out there.

I think you’ll. Find experts across the board telling you that now unlike stocks, you don’t get a live ticker reminding you every five seconds what your property is worth. And frankly, I think that’s probably a pretty good thing. ’cause I, I could tell you the few things that I do have that are on tickers, I, I look at them too often.

Real estate moves slowly and that patient rewards people who can see the story before it unfolds. No. What is that story? I mean, the national headlines are confusing. Uh, and it depends on, you know, who you read. It depends on, it depends on what market they’re talking about. It depends on what class, because they’re all moving in different directions.

Right. We’re talking about, you know, the froth and data centers. Meanwhile, we’re talking about with multifamily being sort of on the floor right now, uh, waiting to be resuscitated right now. Of course you want to be on the side that’s. Buying when something’s being resuscitated. Not in the frothy space.

But anyway, the truth in real estate as a whole, it’s somewhere in between. Because of this, the reality is that mortgage rates are still above 6%. That really does affect real estate. Affordability, strain, national price growth has flattened. Um, but beneath the surface there is an entirely different story playing out and one that really favors multifamily investors who understand that.

Real estate is always, always about location. Okay? So some markets are clearly gonna be soft, and boy, I’m glad I’m not a New York, uh, New York City, uh, real estate investor right now. Can you imagine with the Mayor Ani, um. You know, nothing personal there, but communism doesn’t work. And uh, if I was a real estate, uh, investor in New York, I would be absolutely terrified right now.

Right. Uh, but other regions, think about the Carolinas, you know. Florida, even Texas, continue to thrive because people are still moving there in droves because there’s jobs there, because there’s some affordability there. Jobs go, that’s where people go, right? Jobs, climate, taxes, lifestyle. These are the things that are continuing to pull people south.

They’re moving inland. I mean, people moving away from California in droves. Why am I here? Well, because I am, I don’t know. I guess I’ve got something wrong with me now. When you combine growing populations with a shrinking construction pipeline, you know, for example, new multifamily starts are down roughly 40% from their 2023 peak.

So yeah, there’s more supply out there, but the new starts, meaning starting construction, new stuff, they’re way down. Right? You’re setting the stage for tightening supply and rent growth in the right markets over the next few years. Now, knowing this kind of thing is what separates the pros from spectators, right?

Anyone can read a national report, look at these big trend lines and all that, but the investors who are gonna win are the ones who know their markets very, very well. You know who’s building what, where the jobs are moving, how the local policies are shaping demand. And in that sense, real estate offers something very interesting that is not available in the publicly traded equity markets, and that is insider trading.

Insider trading in real estate is perfectly legal. Okay? Now, for passive investors, that means something simple but crucial. You may not be the one living in all these markets to know all the nooks and crannies, but you gotta partner with someone who does. You have to partner with operators who you know who are on the street, have other properties in the area are living and breathing it.

You want people who are plugged in not just reading spreadsheets, because in multifamily, difference between a mediocre investment and a great one can be a single zip code, right? Real estate, especially multifamily. It rewards patients’ perspective and proximity as much as we’d like to. We can’t control interest rates, we can’t control what’s going on with the economy, although I think it’s important to try to understand which way it’s going.

For example, again, rates are coming down. What does that do for real estate? Right? But aside from the macro stuff, you know, if history is any guide, those who make smart localized bets. While everyone else is sitting on the sidelines, tend to be the ones who look like geniuses a few years down the road. So this week on Wealth Formula Podcast, um, we’re gonna try to put some of this together.

Uh, I’m gonna talk with a former professor and renowned real estate analyst who’s been studying these patterns for decades, and we’re gonna break down some of these interesting ideas like markets and opportunities and all that. So make sure to listen in and I’ll have that interview right after these messages.

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My guest on Wealth Formula podcast is Professor Norm Miller. He is a Professor emeritus and former earn w Hahn Chair of Real Estate Finance at the University of San Diego. He’s one of the most respected data-driven voices in real estate economics. Author of hundreds of studies on valuation forecasting market behavior.

Former VP of analytics at CoStar, where he, uh, helped institutional investors interpret property data. Professor, thanks for joining us. My pleasure, buck. So let’s, uh, start with a question that I think a lot of us are wondering. Um, you know, where are we in the cycle, right? You’ve seen every major cycle in real estate for decades.

Um, we’ve got lots going on right now. Mix of high rates inflation, low transaction volumes. So, so what are we looking at?

This is a little bit unusual in that, um, we are in a mixed rag where certain property types are, are doing well and others are not doing well at the same time. And so, uh, for some property types we’ve not bottomed out yet, or maybe we bottom that and we’re just turning the corner.

And for other property types, we’re clearly, um, uh, doing fine. So, uh, clearly a mixed bag right now.

Can we break that down a little bit? Like what’s, what do you think has turned the corner? What has not turned the corner? Um, give, give us a little bit of, uh, insight on that.

Well, um, residential housing, which is important because it helps drive the rental multi-family market is still soft and our is about 30% below historical normal and housing is not that affordable.

So that. Itself is one market we look at to, to understand multifamily that keeps pressure on multifamily rents. However, it turns out to be very location specific. Certain markets have added too much supply, particularly, you know, Texas, uh, markets, as an example. Other markets remain tight. Coastal markets.

Like the Carolinas, for example.

Yes, yes. And so we’re, we’re seeing a rent softening in, um, in some metros, metros while they, they stay tied in, in others, uh, in, in multifamily. Um, on the other hand, we look at data centers and we’ve overbuilt a little bit, but long term we know the demand is just going to fill everything that it possibly can as long as they can get energy resources.

So. Long-term data centers are great right now. They’re in a little bit of a soft spot. Uh, you need pre-leasing. Industrial continues to do well because e-commerce continues to do well. Um, it’s taking a little bit of a hiccup with, uh, the tariff impact maybe in, uh, end of this year, early next year. But, uh, but warehousing in general is a good long-term play.

Office is a mixed bag. It’s turned around in some markets and leasing is on the upswing, and you can still get office properties for 50 to 80% below cost to replace them. So if you have a conversion use or you’re in an AI driven market, you can do well. Um, so as I said, it’s a mixed bag. A retail’s pretty much already gone through the shakeout.

Of e-commerce. You know, most of the new tenants are services, experience based restaurants, and, um, and so retail can be a good play. Again, you need to pick the right markets.

Um, audience is generally very interested in multifamily and if we go back to that, um, talk about some of the dynamics that are sort of creating that softening and.

Kind of what, what some of the variables are that you’re looking at to see when this, you know, bottoms out, starts to take off. Give us a sense of that.

Um, in the multifamily market, we have some really large developers and builders, both in, sometimes they do single family and multifamily both and. I think what’s happened is they, um, they get so much brain damage on the coastal markets, markets like California and others where it’s so hard to get entitlement and develop that they’ve retreated to the markets where it’s easier to get permits.

Supply is more elastic, we would say, and so they’ve concentrated in those markets. There’s a lot of capital. Sitting on the sidelines, uh, and the large developers with a good track record attract that capital and they continue to put it to work, but, um, they’ve overbuilt in pockets, uh, multifamily that is existing product, uh, is affected by that overbuilt, uh, stock because the, the new high quality stuff beats out the, the older stuff.

Um, and so in terms of multifamily, it, it’s always a good long-term bet because in 70% of the markets we’re not gonna over build. You just have to, you know, to, to know that. But they’re gonna be a little bit harder to get into and, um, and they’re gonna be steady cash flow and, and some of the other dynamics that are helping multifamily long term, our home ownership rate appears to be.

Stabilizing, maybe even declining because of the higher interest rates. And also, we must keep in mind that the standard deduction for a household is now, uh, what in a low 32,000 range. And it turns out that 60% of the households in the United States cannot take advantage of itemized deductions. That is when they take their mortgage interest, property taxes, charitable deductions.

They don’t get that number. And so, um, there’s not as much benefit to home ownership as there used to be.

Is there a difference when you break down, even within multifamily, because you were talking about certainly in certain parts of the country where there’s overbuild obviously mentioned, there’s some areas that are, you know, looking betters like the, the coastal areas in Carolinas and stuff.

But, um. What is the differences that you see between, say, the, the units that are competing with the, the new builds are usually class A units, right? But there’s also sort of the more working class stuff, you know, the B class, uh, you know, those type of workers. Can you, can you segregate out what’s happening to those kinds of properties as opposed to sort of the ones that are competing for that, you know, a class new build.

Yeah. So one of the problems that we have in the, uh, real estate industry is that depending on your market, uh, entitlement development fees might be fixed per unit, and if they’re high as as they are in the coastal markets. So let’s say that your development fee, by the time, uh, you get a unit set up approved to build it might be a hundred thousand dollars.

You know, very high regulatory cost, entitlement cost. Yeah. Now, if it’s per unit instead of per square foot, then you have an incentive to build a larger unit. You can’t really build a small, affordable unit when you start with this fixed cost that’s so high. And so most of the development of multifamily is done at that higher end, high quality class A and larger.

Within the market as a whole would typically want for the working class housing market, which is very strong. Um, but they can’t afford to build the small units. They can’t, they can’t make it feasible. So we really have a regulatory problem. But as long as we tend to lean towards charges per unit instead of per square foot, you’re gonna see it’s very difficult to add working class housing in this country.

Yeah. So, um, let’s switch to another topic. Um, there is certainly not as much liquidity the multifamily market as there used, used to be a few years ago. Uh, one of the reasons, um, talk about cap rate spreads context, essentially. Um, essentially the yield investors expect from real estate, usually trade above treasury yields.

Um, that spreads narrowed dramatically. And, and so. How unusual is this historically and what does that tell us about pricing pressure or investor sentiment? Right now,

you’re, you’re right, in terms of the yields right now, let’s just use logic. Uh, if you can get 4% in treasuries and inflation is running 2.5% and you want a real yield of 4%.

Then you need at least six point half percent going in. Right? And, and so we’d expect to see cap rates in, in that range or above. And uh, and in fact for multi-family, we do see cap rates in, you know, and that’s six to 8% range depending on where you are. Um, the large institutional investors, I think they have so much money that they have to allocate.

That they’re gonna have a tough time getting out of the single digits. Uh, in terms of their long-term yields. They’re just gonna outbid each other because they need to deploy so much capital so quickly. The private wealth investors that can go down a little bit lower than the institutional place, a little bit smaller asset size can, can consider a a five to 10 million.

Property, they’re generally gonna see a premium of, uh, between 103 hundred basis points, higher yield than some of the institutional players for a similar risk property. And so, um, you may not have a choice as an investor. If you’re stuck with a pension fund and you’re allocate some of your real estate, you’re gonna get those lower yields, um, because they have to allocate capital.

And because you have so many layers of fees. Um, if you have discretion that private wealth investors are going to get, uh, higher single digit to, to low teens on the typical existing stabilized properties, uh, with a little bit of leverage. Now, leverage is not that easy to use right now because the interest rates are high.

But some of the players are using variable rate debt, and if the rates drop, they’re gonna refinance and they’re building that into their proformas. And it’s likely over the next 10 years, we’re gonna see some of that. So you might go in with a, a, a cap rate of six point half and still come out with a yield of, uh, 10, 12%,

right?

Um, these interest rates drop. Would you expect more of that money to come out of treasuries and join the market? I mean, part of, part of what I’m seeing right now is, you know, the, the big players, I mean it’s, it’s not like it was a few years back where, you know, multiple properties are out there. There’s not a great amount of liquidity, there’s not a lot of properties moving, you know,

so right now there’s at least $3 trillion sitting in money market funds.

And I bet a lot of your listeners have money market funds. I have money in tips. I had money in money market funds. I have money in places that I normally wouldn’t keep it except that I’m being defensive with the stock market right now and, uh, and not over allocating. Um, you’re absolutely right. As interest rates drop, uh, that’ll be less appealing as a place to park money.

And that money, 1,000,000,000,002 trillion is going to go back into stocks and to real estate. And, and so that does help keep cap rates down in values up. And, um, and we can expect this interest rates go down. Yes, absolutely. The, the asset values gonna are, are gonna start moving positively. Even, even office property.

Yeah. Um, let’s talk a little bit about valuation. You know, appraised values haven’t fallen nearly as much as actual deal prices. Right. Um, so why do valuations lag in private markets and when do you expect price discovery to finally catch up? I mean, I guess part of it is just human nature, right? Like you bought something at a higher price and you don’t wanna sell it if you don’t have to, but, you know, what’s the inevitability?

Well, you bring up a good point and, and appraisals have fallen closer to their transaction prices in the UK and in Europe, but in the United States with our big institutional players, nobody wants their appraised values to be quickly marked down to market because if your competitors don’t do the same thing.

And they’re part of the index and benchmark that you compete against, you’re going to underperform. And so we’ve traditionally had a lot in appraised values for real estate among the institutional players, especially. You don’t get this out of the private market, but you get this from the nare players, the institutional type players.

And, um, and everybody’s uh, uh, fearful of underperforming that index. I would prefer as a private investor just to go ahead, bite the bull and mark it down. Now take the pain if in fact you’ve seen it go down and, and some markets have seen property values go down 30, 35% even in multifamily. But, but they’ve bottomed down in the transaction market and, and absolutely the, uh, the appraisers are gonna have to bring it down and the owners are gonna have to ease up that pressure.

Say, yes, I want a realistic appraisal. But, um, but there is that fear of underperforming the index, and that’s, that’s what’s holding up the American appraisal firms.

So we are seeing, um, you know, just in terms of, uh, transactions I’m seeing and, uh, you know, not as many deals, but the deals that, uh, fall through the, the deals that come to us rather, um, tend to be.

Ones that are distressed financially, right? They may not be distressed in the sense that it’s not a, a nice asset, but they’re underwater and, and something’s coming up due, or, you know, there’s a big fund that needs to close out and you end up getting a 30% discount compared to sort of the highs of few years ago.

When you see that at this point, uh, in time in the cycle, does that, you know, certainly not asking you for investment advice, but. Do you see that as like, okay, you’re 30% down now. Is there any reason not to pull the trigger?

Well, it takes guts to pull the trigger and to say we’re at the bottom. Yeah. It takes guts to do that.

Now, when we get a couple years past it, everybody else will say, oh yeah, you know, uh, buck, buck luck that it’s not luck. It’s it’s guts. In fact, we probably are at the bottom in some property markets. So yeah, you, you know, go, go ahead and, and rephrase that for me, please. Well,

I, I think the point is like, people are seeing deals now, right?

We’re seeing deals. I’m seeing deals, and it is, it is a good asset. And all of this sudden you’re seeing somebody, you know, a group having to get out of it, and they’re losing all of their equity. 25, 30, 30 5%. The question I think a lot of investors are asking themselves is, is there any reason for me not to do this right now?

Because it sure seems like, you know, I’m, I’m getting a good deal. I mean, is I, I guess what I’m asking, is there blind spots that we should be focused on? You bring up guts, which I think is, you know, I mean that’s, that’s my own take is that, yeah, I mean, I, I think that if you look at the macro trends and rates coming down and you’re getting something 30% marked down from a few years ago, it’s probably a pretty good bet.

But. I’m just curious on in terms of your, you know, you know, just as a, a macro real estate person, like blind spots or things to think about or, you know,

let me put it in context. In 2008, 9, 10, 11, we saw a lot of deep distress and the money was the, the smart money was ready for it. Now, there’s a lot of people with dry powder, as we say.

Ready to p on the market hoping for some distress from those who cannot refinance now, whose, whose CMBS loan or other money is, is rolling. A couple points there. One is, I think you’re going to see more loan modifications this cycle than last time because they realize it’s temporary and they realize that not all properties are in trouble.

And these tend to be the higher leverage properties. The smart private wealth investors tended to use conservative leverage over the last several years knowing we’d hit a cycle and, and they probably are 65% or less. Leverage some of the, um, greener newer investment managers might have gone up to 80% and might have even used variable rate debt when they shouldn’t have.

They’re the ones getting nailed. They’re losing all their equity and that property is distressed. So there’s not that much of it out there, but there’s a little bit, and I would certainly pounce on it if you can find it right. It’s, it is a good opportunity and, and again, it’s, it’s because of a small subset of investors, not the whole market, but 20, 30%.

Went ahead and over leveraged and used ary debt and they cannot roll now.

Yeah. Yeah, a hundred percent. And, and that’s what we’re finding. It’s like there’s not that many deals. Right. But when there is, it’s like, you know, all the things came together. It’s a, you know, for example, um, you know, we have one where a partnership broke down.

Nobody wanted to do anything with it. Uh, they were underwater already. They just wrote it off. You know, we’re an institutional group that had a fund that they need to close the fund out. They’re just, you know, they’re done and you know, they’re gonna, they’re gonna write it down. The rest of the fund is okay, whatever.

Those are the kinds of things. We’re not seeing a lot of it. But, um, let’s talk a little bit more. Uh, you know, I, I know you talked a little bit about the regional dynamics, but. You know, for our listeners, talk a little bit about how migration and, and job growth really change, you know, reshaped the landscape of these markets over the past few years that, that, you know, that are doing well or maybe some that you thought were going to do well, people thought were gonna do well, that didn’t.

Well, what’s interesting is predicting migration has been an economic nightmare because we just. Haven’t been able to get the assumptions down correctly. Uh, it’s interesting when Trump was in his first term, the data from the budget office suggested that immigration would drop very low until the end of this term, and then whoever was the next president would, uh, dramatically increase the immigration rate.

So it was, it was real interesting. It was like a four year drop and then five year increase, and then more immigration and um, and in fact, uh, it, it took a couple years after that for the immigration to come back, but now it’s going back towards, uh, zero again. So, yep. We now have to look more at fundamental in that population growth to know which markets are growing.

And that’s jobs, right? I mean, is is the biggest thing right there is jobs. Where are the jobs? That’s where the people are gonna go.

Well, jobs are part of it, but we also have these baby boom baby boomers like myself. Yeah, yeah. That are location free uhhuh. And we had a big exodus from the big cities, you know when, when we hit COVID and a lot of people were retiring.

We’re still seeing decentralization. So we moved from the first tier cities to the second and third tier cities where people were chasing lower cost of living, selling out the more expensive house and buying the same type of house in a smaller city. Um, we’ve seen that. I think we’re going to continue to see that, uh, and, and the immigration that’s being pulled back.

It’s interesting that it actually hurts the markets that demographically haven’t been growing the most. If you look at the New England states, they’re already in net zero population growth. A couple years ago, if you only had your domestic births minus deaths, so they needed immigrants, and we tend to think of the immigrants going to Texas and California.

That’s true. But they have positive demographics still in terms of births minus deaths. So, um, it matters a lot. Um, and the retirement matters a lot and we’re, and we’re getting this flow not just towards jobs, but towards, um, cities that are well managed that are not quite as expensive. Those second and third tier cities have benefited from.

The work from home movement to the demographic trends, the location free baby boomers.

Yeah. What, what are some of the, uh, what are the, some of the markets right now that are sort of the fastest growing?

You’re going to see some of the ones that have high vacancy rates and lower rents and lower prices grow pretty fast over the next few years.

They’re being pulled in by the overbuilding and the oversupply and the high vacancy. So you’re gonna see really positive numbers in Texas for migration. It doesn’t mean that it’s the best place to invest in, in terms of all the, all the markets there, because it takes a while to absorb that oversupply.

So, um, you know, I, I tend to look longer term as cities where it’s not as easy to build and they’re well managed. So I look for cities where they don’t have huge physical debt deficits where they don’t have old pension overhangs. Cities like Denver tend to be fairly well managed, fairly well planned.

They’re good for the residents that are living there, and they tend to attract migrants as well. Now, one of the problems that we get into is cities that attract people. Seattle did for years because of jobs and, and it was fairly well managed for a while. Um, the problem is, uh, they start putting up more regulations and making it more difficult to, uh, to add supply.

Um, but that’s only added to their pricing power and, and to the investment returns. So, um. I, I would tend to focus on cities that benefit from the AI tech boom and well-managed cities that don’t have big pension overhangs. Some, um, I hate naming names on the negative side, but there are a lot of cities out there that are the verge of bankruptcy.

That means they’re gonna be raising taxes on companies and those companies are gonna look elsewhere. And, um, and I would avoid them, but, uh. We have a lot of good markets.

Yeah. Certainly one of the example, uh, uh, advantages of Texas, a lot of companies moving, there’re on an ongoing basis just because of the tax advantages and that kind of thing.

So, um, let’s talk a little bit Yeah, go ahead. And

long term, long term, they, they would do the same thing. You know, they’ll start adding more regulatory barriers and making it harder. Right. And um, and if you can find this dress in Texas, sure. You can do very, very well. Let’s zoom out a little bit.

You mentioned ai.

Um, and it’s a, it’s a very interesting thing to me to think about the big picture effects, um, the artificial intelligence, uh, you know, this era accelerates automation, reshapes the labor market. How do you think this ripples through real estate? And, and I’m not, I’m talking beyond just data centers, right?

I’m talking about. People have to live somewhere. And how does AI affect that? How do the jobs, it’s an incredibly complex thing to think about, but I’m curious what your take is.

So think about PropTech and if I’m working with an investment manager, I want them to be utilizing PropTech that works. So as an example, PropTech that works and eliminated some jobs.

Um, investor reporting, I should have a portal that I can use to get on. To see where my investment is and how it’s performing, and, and you’re gonna get that with your leading vendors, Juniper Square and, and AppFolio and, and those types. Not, not to endorse anybody. Mm-hmm. Um, think about tenant communications and management.

I wanna work with an investment manager that gives every tenant an app they can put in a work request and makes it easy to schedule. I want to work with a property manager that knows how to let people use their phone instead of a key to get into their unit and they control their air conditioning and their TV and their internet, and it turns out they’re willing to pay 50 to $75 more per month for a sophisticated property management system.

And the return on investment for the property owner is terrific. So there are a lot of apps in terms of. Working with tenants, working with investors, valuing property, managing property, energy efficiency, and all of that was originally AI driven, if you will. It’s technology, it’s data mining. Um, I want to know that my investment managers utilize some of them, but I don’t want them to chase everything because 80% of these PropTech vendors are going to be outta business in five years, so they have to pick.

Cautiously and carefully vendors that will stay in business, um, but it is revolutionizing how we do business. Uh, another example, uh, a burgeoning market is single family rental. Single family rental was very difficult to manage 20 years ago and before, I mean, you, you had to buy a cluster of them so that you could get your maintenance guys and your property managers to efficiently.

Take care of those properties. Now, it, it’s all on a phone app and it’s all done through the internet. I can do the leasing, I can have documents signed, I can collect rent. Um, I can manage that property without necessarily having to, to be there. Now, I may have to have a good, you know, handyman network that can get there and have some economies of scale.

That’s an example of where AI technology has really expanded an asset type and that will continue, um, a third of the rental market now are single family homes more than a third. That’s incredible. It might continue both for reasons that we discussed before about the standard deduction, but it might also continue, uh, to the extent interest rates stay out for a while and it’s a much easier asset to manage.

So, um. You do need to utilize PropTech. You do need to expect a change, will change the labor market. Um, there will be some people put out of jobs, but that’s no different than happened when we had been at the loom or the tractor or, or the internet started, or, you know, any number of other technologies.

Yeah, no, that’s right. So I mean, net, net AI. Like many businesses makes them more efficient, uh, with real estate. I mean, AI is gonna help with probably bringing expenses down and, uh,

yeah, and, and it will, and, and some people are, are fearful that we’re gonna have this huge labor layoff with ai. It’s gonna take a long time before we’re replaced by robotics.

And if you go to an Amazon warehouse, they’ve been doing that already for many years. They’ve been using these little devices that carry things around and, and automate things. It’s just gonna be a progression of that. And then when we lay off people, there’ll be new jobs that, that you and I haven’t ever heard of before.

Um, you know, I, I have a stepdaughter that on the side is a yoga instructor. I doubt that we needed many yoga, yoga instructors 50 years ago. I have colleagues that do life coaching, career coaching. Those jobs didn’t exist 50 years ago. Um, and I bet, I bet we’re gonna see a lot more evolution of, of jobs that don’t even existed.

That

what’s, uh, one. Yes. Golden piece of advice you’d leave, uh, investors with today, A bunch of investors listening to you to talk and, you know, given where we’re at, uh, what’s going on today, how, how, how should they approach, you know, the market. How should you know if you had any words of advice for them?

M my own biases would be don’t work with an investment manager that is so big that I’m nothing more than a social security number. Um, they are the market. They, they drive the market. I would, I would think the most important thing more than telling somebody where to invest is finding people that are experienced that I can trust.

So coming up with that trusting relationship. Doing your due diligence on the people, more so than on the property now, you should look at what they’re buying and have some opinions and, and some views on that. But finding experienced people you can trust, uh, to help manage your money, that’s the most important thing.

Yeah.

Professor, thanks so much for joining us on, uh, wealth Formula Podcast today. Uh, it’s been, uh, uh, good talking to you. We have, uh, do you have, uh, anywhere that you post or, or write that we can look up?

I, I do write a number of places. I write on LinkedIn sometimes, um, I write for the Property Chronicle and, uh, in fact, I just did a review on the economy with a little more detail than we went into today and.

Some property type reviews and um, uh, and, and what I usually do is post this on LinkedIn after they come out and there’s a few other publications as well. We have a University of San Diego Brimore Real Estate Center. Well, I will publish as well. Uh, and communicate. Sometimes it’s career advice for the, uh, grad students, but um, sometimes it’s the economy and, and the commercial real estate market.

So, uh, I’d be pleased to have people connect on LinkedIn and see some of my blogs.

Thanks for joining me at today.

Thank you.

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And, uh, that is something that, uh, I, I think, uh, you probably, if you are in. Investor club, you know what I mean? We’re just, uh, that is an ongoing theme here that Carolinas are looking. Right for investment. Anyway, hope you enjoyed this show. I know it was sort of uh, uh, sort of broad strokes on a lot of things, but I think it’s important to have an idea of what’s going on from the perspective of an analyst who’s been around for a long time.

Uh, that’s it for me this week on Wealth Formula Podcast. This is Buck Joffrey signing up. If you wanna learn more, you can now get free access to our in-depth personal finance course featuring industry leaders like Tom Wheel Wright and Ken McElroy. Visit wealth formula roadmap.com.