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Investing In Real Estate Podcast

The US has been facing an affordable housing crisis for years now. Especially since the Great Recession, the number of homes available has been exceptionally low. And in recent years, the pandemic, rising interest rates, and high rates of inflation have only worsened the matter. Estimates vary on exactly how much housing is needed—but the numbers are certainly in the millions.

There are a few reasons why there’s such a shortage in homes. On today’s show, we’re going to dive into the main factors driving up the cost of housing, plus some realistic solutions that investors can use to bring more supply to the market.

More About This Show

The first thing you need to know is that at its core, the affordable housing crisis comes down to a supply and demand imbalance. But below the surface, there are many factors creating a lack of supply.

  • Builders have been burned before, and they’re hesitant to pick up the pace. New home construction came to a screeching halt after the Great Recession, and the industry has never fully recovered.
  • The costs of both materials and labor are making it expensive to build affordable housing. The National Association of Home Builders a 9% decline in the sales of new-build homes as of August 2023, citing concerns of affordability. Everything from lumber to the cost of land create difficulties for builders to keep up with demand while turning a profit.
  • Higher interest rates are impacting purchasing power, putting a halt on homebuying purchases across the country. More and more people are choosing to delay selling their home because they’re locked into lower interest rates on their existing mortgage, further putting a crunch on availability of homes.

Obviously, this is a complex situation, and there is not a straightforward solution to addressing the housing shortage. For decades, policies intended to address the lack of housing have come up short. Because affordable rentals are in short-supply, real estate investors are in a unique position to add relief to the situation at hand. Here are a few ways to relieve some of the pressure of the affordable housing crisis:

  • Adding more supply to the market through offering affordable rentals. Adding more supply to the housing market helps provide homes and reduces the overall inflation of rentals in the market.
  • Consider offering programs like Section 8 to low-income individuals and families. Section 8 can be a great opportunity for landlords, because it guarantees rental income directly from the government.
  • Charging a fair market rent. Of course, your real estate investments are a business, and you want to turn a profit. Look for cash flow of around $100, after the mortgage and expenses are paid. But be the type of landlord you would want to have.
  • Look for special offers, like buydown credits, to help offset costs.
  • Work with a team that is able to build in bulk in order to keep the overall costs down for everyone involved, from the builder down to the tenant.

One of the most important elements of making a solid investment is buying right. And in an affordable housing crisis, that can be difficult to do. Right now is an especially difficult climate since since interest rates are high, supply is low, and homes are overpriced in many markets.

At Morris Invest, our new construction rental properties offer positive cash flow, solid appreciation, and massive tax benefits. Because we buy in bulk, we’re able to offer savings that are passed down to the investor. If you’re interested in learning more, you can schedule a free call on my website: morrisinvest.com

Episode Resources

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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion. We recommend them because they are helpful and useful, not because of the small commissions we make if you decide to​ use their services. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.

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Posted on

November 23, 2023

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