In my endeavor to stay on top of the commercial real estate market, I’ve interviewed Marious Sjulsen, EquityMultiple Co-Founder & Head of Real Estate.

EquityMultiple is a real estate investing platform for the self-directed accredited investor. They offer a diverse array of rigorously vetted, professionally managed commercial real estate investments.

Their per-investment minimums are as low as $5k, and they offer debt, preferred equity, equity, and fund offerings, enabling each investor to tailor their real estate portfolio to their investment objectives and risk tolerance.

EquityMultiple also offers robust in-house underwriting and asset management, as well as a dedicated Investor Relations Team. Their goal is to make real estate investing simple, accessible, and transparent for individual investors. EquityMultiple is also a sponsor of Financial Samurai.

As a landlord since 2005, I believe in developing a good relationship with my tenants. I treat my tenants as customers and want to provide the best living experience possible. This article provides tips for prospective tenants in a strong rental market.

If you are a landlord looking to find great tenants, this article should also help you make a better decision. Having great tenants really makes a difference in terms of peace of mind and your quest to build reliable passive income.

This article consists of two parts:

• An interaction I had between one prospective tenant and how it all unraveled. The interaction may help both renters and landlords better negotiate a lease. Since attending business school, I’ve found using real-life case studies to be the best way to teach and learn.

• Tips for getting the rental property you want in a highly competitive market. These tips are based off my experience as a landlord for over 15 years and new things I learned from my latest tenant search.

The best area to buy property in San Francisco is Golden Gate Heights. Golden Gate Heights is a quiet neighborhood that’s predominantly single family homes on the west side. During and post pandemic, the best area to buy property is in less dense areas with more outdoor space, more views, and more parks.

The best area to buy property in any major city is in areas that are farther away from downtown where value is much better. Given we no longer have to commute or commute as much, the best value is found in the previously overlooked areas. You want to buy property in major cities that have more space and less density.

The Best Area To Buy In Any Major City

If you want to buy real estate as an investment, it’s important the area not only has a strong domestic demand curve due to a robust labor market, but also a strong international demand curve as well. It’s the international demand curve that really lifts prices higher during good times.

Less than 0.3% of the housing stock is for sale at any given moment. It doesn’t take much to create a property bidding frenzy if you add international buyers to the mix of domestic buyers.

Prices in London are being driven by Russian and Middle Eastern tycoons. In Hong Kong, price are being driven by the wealthy Mainland Chinese. Prices in Singapore are being driven by wealthy Indonesians and expats.

While prices in San Francisco are being driven by the tech boom, low interest rates, restrictive building codes, limited land and foreign buyers from Asia, mostly China.

The global pandemic slowed down demand for real estate in San Francisco and other international cities. However, the demand is coming back. It is wise to buy big city real estate now before herd immunity is reached.

Hold On To Your Property For As Long As Possible

To sell property now is like selling Apple Inc. 10 years ago. Your property may have appreciated a lot since purchase, but there’s still a long ways to go if you can hold on.

Thankfully for buyers, couples will always get divorced, homeowners will always want to upgrade or downgrade, and companies will always lay off or relocate their employees. There just isn’t enough supply to meet demand in San Francisco, and it’s unlikely there ever will be enough supply with the rise of tech powerhouses such as Facebook, Google, Apple, Uber, Lyft, Pinterest and AirBnB.

Apple alone has gained more than $1 trillion in market capitalization since 2014 and employs over 40,000 people in the San Francisco Bay Area.

With over 10,000 newly minted tech IPO millionaires over the past several years thanks to Uber, Lyft, Airbnb, Affirm, and more, real estate prices in the San Francisco Bay Area are likely to see a boost in Spring 2021 and beyond.

I’ve spoken to plenty of tech IPO employees and they all want to sell some stock and diversify their net worth into real estate. Many of these employees have seen a lion’s share of their net worth locked up for 3-8 years.

The home remodeling industry is booming because everybody is spending more time at home. Unfortunately, home remodeling always takes longer and costs more than expected.

I’ve done four major home remodels before. None of them were pleasant experiences. All projects took longer than expected. After my first two home remodeling projects, I finally wisened up to the game some general contractors play to extract as much money from homeowners as possible.

If you are planning on buying a property and remodeling it, please know that the permitting and remodeling process can be a very big PITA. If you are not good with dealing with stress, buying an already remodeled home may be a better bet.

Let me share with you one home remodeling example that demonstrates the opaqueness of home remodel pricing.

The median homebuyer age in America is getting older and older each year. With the goal of increasing our asset-to-liability ratio to 5:1 or greater by the time we retire, buying a home too late may pose problems. Let’s do a little digging into why this is.

The median age of first-time homebuyers is now 33. This is the oldest age on record dating back to 1981, according to the National Association of Realtors. Back in 1981, the median age of first-time homebuyers was between 28-29.

It’s clear that the rising cost of homes, the rapid increase in college tuition, and the delay in household formation all have something to do with the first-time homebuyer age ticking up. Thankfully, we’re all living a little bit longer as well.

The median age of first-time homers increasing by ~14% since 1981 is interesting. However, what’s even more interesting is the fact that the median age of all homebuyers is now 47. This is a 51% increase over the median age of 31 in 1981. What’s going on here?

In a previous post, I estimated how real estate performs at various levels of a stock market decline. In my opinion, the sweet spot for real estate outperformance is somewhere between a 15% – 25% stock market decline. This post highlights real estate outperformance examples during the pandemic.

During such a level of decline, mortgage rates tend to fall as investors buy Treasury bonds for safety. As a result, real estate demand increases because affordability increases. Further, during a stock market correction, money tends to flow out of the stock market and into real estate and other more defensive asset classes like bonds.

Once the stock market declines by ~30 – 35%, real estate price appreciation tends to stall as potential buyers rethink their decision to buy any asset, including real estate. After a ~35% decline in the stock market, real estate prices are most likely falling as people fear losing their jobs.

This post was originally written at the beginning of the pandemic in 2020. It has since been updated every month with the latest update on how properties are doing. Real estate continues to do very well and is my favorite asset class to build wealth as we get out of the pandemic.

Let’s go through real estate buying life back in 2020 and now that we’re in 2021+.

No Open Houses Are Tough (2020)

We know that forced lockdowns have hurt the real estate brokerage business as potential buyers aren’t able to visit open houses and transaction volume declines as inventory gets pulled out of the market. However, please don’t confuse the real estate brokerage business with real estate prices.

When the real estate market eventually opens up again, sellers should negotiate for a commission discount while buyers should ask for a commission rebate. The coronavirus pandemic might finally be the catalyst to permanently lower commissions. However, I do think a great listing agent is incredibly valuable for getting too dollar.

In this article, I want to present to you an example of how one property performed during a global pandemic and a lockdown. It’s an interesting example given the final sales price and timeline of the sale.

I’ll then share many more real estate outperformance examples, including ones that closed more than two months into a lockdown.

The fact of the matter is, real estate values are rising well into the pandemic because:

• Mortgage rates are at record-lows
• More time is being spent at home so the intrinsic value of a home is increasing
• Input costs are going up (lumber)
• There’s a big desire for household and financial stability.

There will be distressed asset opportunities in commercial real estate. In particular, there should be distressed asset opportunities in hospital and office commercial real estate.

As a result, now is the time to get smart so you can take advantage. There are multiple efficacious vaccines that will likely lead to herd immunity by 2022 in my countries. Therefore, there will likely be a strong rebound in economic, which should lead to commercial real estate price growth and rent increases.

Reviewing Real Estate Opportunities So Far

Let’s first review what I’ve discussed about investing in real estate during the pandemic.

On March 16, 2020, as someone interested in buying a home, you read How Does Real Estate Perform When Stocks Melt Down. From this article, you learned that real estate tends to significantly outperform when the S&P 500 is down between 10% – 20%. If you bought residential real estate in 2Q2020, you’re likely doing well as demand for residential real estate continues to grow.

On March 18, 2020, you read How To Predict A Stock Market Bottom Like Nostradamus and decided not to freak out. Instead of selling stocks, maybe you even bought stocks. If you did, you’re sitting pretty given the NASDAQ and the S&P 500 rebounded to all-time highs.

If you’re still looking to build more wealth, your attention should now be focused on investing in lagging asset classes. In particular, I’m interested in investing in distressed assets in commercial real estate in hospitality.

According to Real Capital Analytics, commercial real estate valuations fell by 35% between August 2008 and June 2010. Despite the bull market in stocks and residential real estate so far, history could repeat itself. Therefore, we should be preparing now.

Today, the S&P 500 and the NASDAQ are at all-time highs. There is a tremendous amount of liquidity searching for investment opportunities.