We’ve seen dramatic changes in the U.S. political environment. What does this mean for 2021 especially for those investing in real estate? Repeat guest, Michael Zuber is back and keen to share his thoughts on what we can possibly see happening this year and how you should go about investing today.
Michael Zuber is the creator of the YouTube channel One Rental at A Time and author of the similarly named bestselling book on Amazon.
As the COVID-19 pandemic dragged 2020 into a recession, Michael knew he had to do something.
So he looked at this rental portfolio of a couple hundred and identified around 10 tenants that are possibly at risk: units rented out by those working in retail or in restaurants. Michael had to deal with tenants who were just plain unable to pay and problem tenants who wanted to take advantage.
He gave rental credits, and so far the rent collection has been fine for the last 12 months. But his portfolio value has gone down by $60,000, though it wasn’t as bad as he expected.
With the CDC order, landlords can now evict for cause. But evictions take a long time, taking 60-90 days. The steps for getting an eviction starts with a 14-day notice after a tenant has failed to pay. Then a landlord has to wait for a court date, which is where the hold up happens. Following that, a sheriff lockout happens.
But with the current CDC moratorium in place which could be extended beyond January, it’s hard to say if Michael can finally evict the problem tenants.
The last year has seen his YouTube channel and social media presence gain more followers. People just love the story of One Rental at A Time.
He also created a private group for his students. He initially started it as a repository for his frequently asked questions, but it has quickly morphed into where his students could collaborate and help each other.
Last year, Michael made 250 offers, all MLS deals. But deals could not be found. Michael thinks there’s a lack of move-up buyers as they have decided to stay put and update their current home.
Michael expects people to realize that they have more equity now. As developers have also started constructing again in Fresno, he expects 2021 to be a great year and expects the selling season to be amazing. Michael sees a 1-month supply coming in. Also, Fresno has seen a 15% increase and with record savings rates and low-interest rates, Michael believes people will trade up.
Michael has a mindset of abundance and not scarcity. So he does co-marketing for The Hub. He sees now people who he knows and respects, who are in one space and have now done more deals together than they would have been able to separately.
Michael’s morning routine includes reading the financial news. All he does is reads then talks to a camera to record for his channel. He loves helping people, inspiring people, and giving back. Those are all fun for him.
From what Michael has watched, he typically focuses on some things. He is keen on the consumer because he knows the consumer drives the American economy.
Then his second focus is on the cost of capital, so he wants to know where interest rates are going. He’s also waiting for what will be the decision about the $2,000 stimulus cheque.
He is also thinking about what other stimuli could get done quickly. He expects money to be thrown out to bail out for the states, for the hospitals to hasten the vaccine roll-out, and the schools to help the kids that are failing in schools.
In all, Michael expects $1 Trillion going out quickly by March 1st.
Last Jan 6, 30-year mortgage rates went up an eighth. Michael also sees that 10-year notes, which have been going down, will start going up.
He believes that debit would get more expensive moving forward. So people should pay attention. Raising capital for free and clear ideas is probably not a bad idea now.
Talking with different investors is fun for Michael as he gets different opinions. With the current environment, Michael sees multifamily as a greater risk given the debt structure compared with single-family.
Today, it is all about the debt structure.
Due to rent challenges, apartments are considered the hardest thing to own. Houses typically do not have rental issues. Also, people no longer want to live in condominiums or high rises.
It is just a cycle. Multifamily and single-family homes don’t go in the same cycle. Houses now present a huge opportunity.
Michael’s strategy is by looking at the California Affordability Index. The index is affected by average income, average price, and average interest rate.
When it gets down to 20, Michael plans to sell everything he owns just as he did before which saved him in 2008.
It’s been 15 years since Michale has started his real estate journey. He believes it’s fundamentally the same thing. Just do the work. Once he finds something, he can do it over and over, and he doesn’t get bored.
Get focused. Focus on your market, and be the best expert. If you do average deals then later you’ll make greater deals as long as you do the work, sacrifice, and don’t get flashy.
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