BPI Episode #9: Thriving in Tough Times: Why Now’s the Time to Invest

Welcome to Building Passive Income, the podcast for professionals, entrepreneurs and investors who want to build wealth, diversify beyond Wall street, and create financial freedom through passive commercial real estate investing. Your host is Wayne Courageous iii, a seasoned investor and founder of CREI Partners, a leading commercial real estate investment company. He spent nearly two decades navigating and educating others on the commercial real estate, from multifamily to storage to retail. Each episode is under 15 minutes, intentionally short, easy to understand, and packed with insights that help you grow your income and protect your capital without becoming a landlord or sacrificing your time. If you're ready to learn fast and invest smarter, you're in the right place. Let's get started.

Welcome back to another episode of Building Passive Income. I'm your host, Wayne Courageous. This is an exciting time to be investing in commercial real estate. When I look back like 2007, 2008, 2009, so many people were running away from real estate investing. Markets were crashing, things were over leveraged. It was a bad time for many, many, many people. But the investors that took an opportunity to buy properties at a discount, that did extremely well. I'll give you a few examples of what we've been doing. Two years ago we bought a property seller financed 6% fixed rate deal. This was a time where a lot of loans weren't happening, interest rates were extremely high, things were extremely challenging. And instead of like saying, okay, the market is tough, like we're not going to be able to make deals and do well for our investors, we were like, no, this is a time to like look for those one off opportunities. Even though it's a lot of work and you know, it's, it's hard to find. And when we got this deal in Houston, that property has cash flowed every quarter consistently and then extremely well for our investors. Another deal that we did last year is we were able to assume an existing loan at 3.82% fixed rate for another five years. Again, consistently, cash flowing quarter after quarter, it's done extremely well. Again, when people think it's like they're not buying because of the markets or they feel like there's no good deals out there, like for me, I'm like, man, this is the best time to buy, best time to source deals. And that's what we've been doing. Now recently, we got a property under contract in San Antonio. This property, we're buying this property, $3 million less than what they bought it last year. And get this, it's not even a distressed property, it's a distressed Portfolio because the seller unfortunately had, you know, over leveraged or prior deals. And, and so they, this property was a casualty. But this is the time for you to learn about passive investing. Because I really believe that we're at this point where there's going to be an incredible amount of opportunities. And if you're educated and you're ready to go and you've, you've networked and you're ready to, you know, take action, you will benefit from this time that we're having. Where property values are have been decreasing, so why have they been decreasing? Well, of course interest rates have taken, you know, been higher insurance, but I don't see it happening further. I think the prior two years definitely, you know, cap rates, interest rates, things starting to happen. But as for us, like for buy, as we buy deals, we're, we're underwriting to today's norm and putting in very conservative rent growth and expense growth and cap rates, all these things that are, are important. And you're like, hey, what is a cap rate? Well, think about it as a business multiplier. Like if you're an entrepreneur and you're looking to sell your business where your net operating income divided by like that, that business multiplier for that industry, it's the same thing with cap rates. And so if the cap rate is say a 6% for that area and you know, you're certain you have a certain income, then that 6% divided by that income gives value of that property. Well, this is an incredible time. Just a few years ago, that cap rate was compressed. I mean it was 4% high threes. And so people did extremely well during that time. I think things have stabilized. I think things are back to a new norm. I don't see interest rates going higher. If anything, I see them coming lower. And part of this is like just the massive debt that the US has. I mean there's not, we can't really drive up interest rates. I know, you know, the thought is like we drive up interest rates, demand lowers, inflation lowers. But the reality is, is that a lot of the levers that had been used previously in the economy, really, it's a struggle to, you know, have that done today just because of the amount of debt that the US has. But that's good for real estate investors and inflation is really good for real estate investors. To think about it. As inflation rises, typically rents rise. But what stays stable is that fixed rate debt. And so when you have the increases in rental rates and your fixed rates debt, it's an inflation hedge. So I'm super bullish in this market and I'm super excited for those listening in and going to take action of learning about passive income because this is an opportunity that I see when I was back at CBRE during 08 and 09 where I saw a lot of people running, but those that were running towards the investments and buying great deals and realizing like, hey, there are good deals, you just got to find them, they did extremely well. I encourage you to continue to listen to this podcast. Share, subscribe, let your friends know. Like, hey, this is a moment in time where true wealth and true growth is going to happen. It's this time, not when everybody's hungry and bullish and things are frothing like they're just everybody wants part of the deal. When that happens, that's when you want to sell, right? That's when people are coming and fighting over, you know, buying that property. You want to be an investor that buys now. And that's why I'm very bullish, you know, on real estate investing in today's market, finding those fixed rate deals, finding the one off loan assumptions that still has good Runway for solid growth from an investment perspective, locking in again, Fannie Mae, Freddie Mac type fixed rate debt with long term amortization, two to three years or more of interest only payments like these are things that just drives the income and helps reduce risk for our investors and provides the cash flow and the equity upside that we all, including myself, living apart, everybody wants. We want a diversified approach that's risk adjusted based on what's going on in the environment, the political environment. That is so just something to consider. I know that, you know, the prior episodes were education based and all. I wanted to always put in some of my commentary about where we are in the market, where we're on the cycle. Every city is going to be a little different and then every submarket within that city is going to be different. It's a big reason why at CREI Partners we're really focusing heavily on Houston and San Antonio. We'll look in Austin, the surrounding areas, we'll may look in Dallas, but we're really targeted on Houston and San Antonio because we know those areas and we're bullish on those areas. They're fast growing markets. The population growth say in San Antonio was the number one fastest growing city in 2023 according to the U.S. census. And so we have two properties that we're going and buying, you know, in San Antonio and we're going to continue growing there just like we have in Houston. So from a macro standpoint, know that the time that you're giving this podcast and learning about real estate investing is an exciting time. A lot of people have gone to other investment. They're going to like car washes and ATMs. And I always view it's like the herd mentality, like once those cows move into a different herd mentality, they start going and they don't look back and they don't, they just go across the plains, I guess. But that's where true investors like yourself, myself and others who are seeing opportunity when others are not. And so I just encourage those that are listening to know, hey, there's always risk in real estate, But I would rather go in at a time when there's not a lot of people jumping in because that's when you get the really great deals. That's when you get the opportunity to do those seller financing, to do the loan assumption to buy a property $3 million less than that was purchased last year. Like, this stuff is incredible. And so get excited about it, keep learning. And you know, like I said, please tell your friends about this podcast, your family members, because the whole idea is to get you educated. It's not necessarily to invest with us. Like, I would love to build the relationship and have you invest in our deals, but more so wherever you are around the world, if this is something you want to do, this gives you that tool to be educated, be excited and to know, like, this is a really great opportunity. Now, every opportunity requires due diligence. It requires obviously the education that obviously you're doing, being part of this podcast or listening to it. So just know that you're on the right path, you're on the right steps. Check out our passive investor coaching program@ passiveinvestorcoaching.com A lot of great free knowledge of videos and such to help you, guide you through that process. And, you know, join us the next time on our, on our next podcast if you ever need anything. Also check out our website@creipartners.com there you can become part of our investor network and we can all grow together. So be excited. Know, like, this is a great time to be learning. If you haven't invested before, this is an amazing time because again, if you're on the uphill, right, and you're buying properties at the peak of the market, it's, it's, it's sort of a hard drop. Like it, you know, the cycles do go up and down. Luckily, these cycles aren't like our stock market in today's environment where it's like every day, every hour, things are going up and down like, you know, multifamily. In particular, real estate, you know, has longer periods of ups and downs. But I hope this gives you a little excitement about what we're doing and what you're stepping into as a, as a passive investor. I hope everybody is doing well and excited to share more on our next episode of Building Passive Income. Thank y'. All.

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