At least once a day, someone asks me where I think the real estate market is heading. First and foremost, we are fortunate to live in a region that has been thriving. Greenville and its surrounding areas have witnessed a significant real estate boom for several years now, with predictions indicating that housing values will increase by another 10% year over year. This is undoubtedly positive news for homeowners and investors alike.

However, real estate investors focusing on single-family and small multi-family properties are facing several headwinds:

1. High material costs and uncertain supply availability
2. Contractor and labor volatility
3. Inflation concerns, influenced by federal spending, among other factors
4. The complexities of eviction moratoriums and rental challenges
5. The suspension of foreclosures

Overcoming Challenges with Strategic Approaches

These challenges, largely attributed to the ongoing impact of COVID-19, require innovative solutions and resilience. Here are some strategies to navigate these issues effectively:

1. Adapting to Material and Labor Constraints: Engage with your subcontractors and explore alternative materials when necessary. Employing old-school tactics like reusing wood and repurposing other materials can mitigate some of these hurdles.
2. Maintaining Contractor Relationships: For those involved in flipping properties, it’s crucial to sustain and strengthen existing contractor relationships. Increased involvement can help overcome current challenges and ensure project continuity.
3. Leveraging Inflation: While inflation poses concerns, it can also benefit long-term asset holders like rental real estate investors. As costs rise, there’s potential to adjust rental rates accordingly to offset additional expenses.
4. Navigating Eviction and Rental Issues: Despite the eviction moratorium, the silver lining is that the majority of renters are fulfilling their payment obligations. Our client portfolios have demonstrated a stable default rate of 1.5% in recent months, with nationwide rates varying between 7 to 12%.
5. Monitoring Banking Practices: The financial sector’s stability is crucial for preventing a repeat of past downturns. As banks continue to utilize stimulus funds and other measures to maintain solvency, we remain cautiously optimistic. However, there’s a limit to how long eviction and foreclosure delays can be extended without broader implications.

Seizing Investment Opportunities

With the market still on an upward trajectory and financing costs at historic lows, now is an opportune time to invest. Identifying and capitalizing on opportunities is key. Remember, one person’s challenge may present a lucrative opportunity for another. Stay informed about the issues outlined above, but don’t allow them to deter your investment goals.

(Disclaimer: I am not a financial advisor, and my insights are based on personal experience and observations.)

To your success!

Thank you for your business! Interested in renting or selling your property? Contact us today.

Robert