I want to tell people that to borrow $300 million; you have to be spot on with the management. As you know, management is the key for real estate, businesses, the government, and everything else, so the first thing that you always need to look at is affordability, and I think there’s been no time other than right now when people are talking about affordability,
which means what does it cost in rent and what does it cost in mortgage plus all the other things that it might What is evident to me is that if you focus on the western United States and some of these locations, most of the folks in these areas will probably be looking at renting rather than buying due to economic difficulties.
As an investor, you’re looking for a large gap between homeownership or mortgage price and rent. You want as large a gap as possible because the ability of a renter to move from a renter to a home is more difficult in these areas due to affordability. Here are some facts: in 2021, Arizona added 98 000 people. Texas grew by 310 000 persons. North Carolina gained 93 000 persons, whereas Florida gained 211 000. Okay, those are the numbers; they’re all over the internet; just look at this.
Of course, these people are retired, young, displaced, or they intentionally move there for whatever reason, so there are many reasons why people are moving to these spots. However, they are the four top spots from a population growth standpoint, and what that does is that it puts a tremendous amount of pressure on the area’s resources, so people are moving.
That implies your mortgage payment might potentially grow if variable and not fixed. On the buy-side, you’ll have property taxes, and governments around the country are going after homeowners and landlords for property tax increases. Of course, the second aspect on the buy-side is all of the capital work. Think about roofing and landscaping and all of those types of things. Another is, of course, property insurance, which is completely different from renters’ insurance. One thing to keep an eye on in 2022 is that when mortgage rates rise, the affordability to buy falls, and people will shift to the rental market, causing those bubbles to grow even larger.
Lacey Hunt was one of the people with the Dallas Fed, I believe, and he was talking about GDP gross domestic output equaling money supply m2 times velocity of money when they don’t measure up and what broken glass do you know? Danielle, when you walk around the shopping centers, many places are empty. That’s broken glass. That means they don’t measure the losses; they measure the gains in GDP.
However, they don’t measure the number of closed stops, so it’s not an accurate number. So ever since lacey hunt said that I went to our friend’s place, I’ll mention his name, and he was trying to sell me the entire top floor of this building. I walked into that . Now consider the benefits and drawbacks of renting.
One advantage is flexibility; you can sign a six-month lease and relocate at any time. Two, you can fix your rent. You can ask the landlord for a long-term deal at a fixed rent, hedge all of the inflation that’s happening, and have some certainty on what it will be. Three, you have no capital work, which means the landlord is responsible for the roofs, landscaping, etc. You should probably acquire renter’s insurance, although it won’t be as expensive as property insurance.
Five There is no property tax, which the landlord pays, but all things being equal, this is a lot more short-term. This is more long-term, and if you can cover it with a tenant, the renter can pay down your mortgage.