Dear Investor,
Let's take a trip down memory lane and explore some of the major economic events that have dramatically impacted the real estate investing market over the years and see how MLG has adapted with the times to continue providing our investors with smart, profitable, and low-risk real estate investments.
By way of disclosure, we have an advertising relationship with this MLG Capital, meaning we get paid for making this introduction and sharing this content. As always with these types of deals, consider this an introduction and not a recommendation. Every deal is unique and the responsibility to vet any and every deal you invest in still lies with you. This opportunity is available to accredited investors only.
In the mid-1980s the Regan Tax Bill was passed putting rules in place that defined passive losses specifically as they related to real estate. When these laws changed, an incredible supply of real estate was created, not because of the large demand for real estate, but instead because of the immense tax efficiencies that real estate provided to owners. This excess supply caused prices of real estate to dramatically fall, creating a real estate specific economic cycle and recession simply because supply outpaced demand on such a large scale.
In the 2008 financial crisis we saw a very similar fact pattern that was driven by much different variables. Banking regulation made it too easy to buy multiple homes and too easy to qualify for home loans. This was one of the factors that led to the over development of single-family homes on a very large scale and subsequent crash in the housing market and greater economy.
What is the commonality between these two economic cycles? A large imbalance between real estate supply and demand, specifically housing supply and demand.
Are we dealing with the same factors in this current cycle? No! MLG's analysis, and the analysis of many other industry peers, shows no major imbalances in our housing market. Instead, they see a very intact supply and demand story that fluctuates some market to market, but largely shows a lack of housing supply across the country.
In summary, supply and demand has proven to be a major factor in the build up to the past two real estate cycles, though in the current cycle the supply and demand for multi-family housing remains in check. Utilizing smart underwriting with believable and achievable assumptions, factoring in higher interest rates, and focusing on finding (1) areas of high demand and (2) human error in the marketplace allows for continued investment through all economic cycles.
Don't sit on the sidelines, put your money to work for you! Learn more about investing now by getting connected with a member of MLG's team: Get Started Here!
Learn more about MLG Capital today
Jim and Brett
James M. Dahle, MD, FACEP
Founder, The White Coat Investor
Brett Stevens, MBA
COO, The White Coat Investor
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