Looking to increase your cashflow passively but also wondering if you should RUN far away from investing/real estate after some unpredictable ups and downs? This episode’s for you!
Meet Randy Lawrence, a former wealth advisor who made the BOLD move into full-time real estate investing. Known for his laser-focused discipline, Randy dives into the story of how he pivoted from traditional finance to harness the power of real estate for creating steady, passive income.
He shares the smart strategies that helped him build a thriving portfolio and lets us know if we should be investing or holding tight to our pocketbooks right now!
Randy and I will also take a closer look at the current housing market, breaking down what’s happening right now and where the opportunities lie. We keep it real about the ups and downs of real estate investing, especially in these unpredictable times.
Whether you’re a seasoned pro or just curious about getting started, this conversation is PACKED with insights and actionable tips to help you navigate the market with confidence.
Don’t miss out on this lively discussion filled with practical advice and inspiration from two pros who know how to make real estate work for them!
Passive Income Calculator: https://bit.ly/4cqWqHq
Randy’s Links:
Website: https://pcpre.net/about-us/
TRANSCRIPTS
Speaker 1 (00:00):
Multifamily is here to stay. And I know that there’s a little bit of a sour taste that sometimes people have right now. And even some things I’ve eaten a little bit of a sour taste, right, but is let’s say the person was on a two year or three year loan and then now the value’s down. They’re not in a position to be able to refinance.
Speaker 2 (00:37):
Hello, my fellow Ripples. This is Chris Miles, your cashflow expert and anti financianal advisor. Welcome to our show. That’s for those of you that work so hard for your money and you’re now ready for your money to start working harder for you right now. You want that freedom and cashflow today where you become work optional. You work because you want to, not because you have to, but most importantly guys, it’s not just about living a rich life or about getting rich, it’s about living a rich life. Because as you’re blessed financially, you have a greater capacity to create a ripple effect and bless the lives of those around you. Thank you for tuning in today, guys. Thank you for being a part of our show. If you have not done so already, if you also follow on social media, any type, whether it’s Facebook, Instagram, TikTok, whatever, hey, go follow at Money Ripples.
(01:17)
You’ll find our stuff there. Love to always keep giving you good short little bits of information and things like that help you on your financial freedom journey today. Hey guys, so I’m bringing back a return guest here, bringing back Randy Lawrence. Now, if you haven’t watched some of our previous episodes, Randy started out as a wealth advisor, much like myself back in the day in the early two thousands, and then the mid two thousands he sold off that business, got out of it, and then focused more full-time into real estate investing, specifically around multifamily. And I know the big thing that you guys keep asking is, okay, when’s the time to actually buy multifamily? When’s the best time to actually buy into apartments? Is it a good time now? Do we wait? How do we know? The one thing I respect about Randy is that one fully honest, transparent kind of guy, but then two, this guy has a lot of experience, has a lot of discipline when he does his investing. And a lot of the things that he does to be able to find the right deals are the same kind of things you should learn for yourself too. So Randy, welcome to our show.
Speaker 1 (02:15):
Awesome. Hey, thank you so much for having me back, Chris, great to see you and great to be back here with the money and look forward to just making an impact and hopefully providing some good insights for the folks out there today.
Speaker 2 (02:30):
Oh, heck yeah. No, I’m super excited for this one. I mean, like I said, when I reached out to you, I’m like, I got to get your take on what’s going on because let’s be honest, the news is throwing things out left and we hear cries of recession, we hear cries of soft landing or cries of whatever. And of course when it comes to apartments in the real estate space, it’s kind of that time where everybody says that’s a bad place to be, right? Yeah,
Speaker 1 (02:55):
For sure.
Speaker 2 (02:56):
And I’ve learned in my experience, so usually when everybody says something’s bad, that’s usually when it starts to become good, right? Yeah,
Speaker 1 (03:00):
For sure. A hundred percent. Yeah, I was just going to say it’s kind of the old Warren Buffet kind of deal. It’s like when there’s blood in the streets, so to speak. And I think taking a step back, looking at multifamily, it’s like, okay, we have invested in multifamily based off of what I would say is a multi-decade thesis, that there is more of this country becoming rent by necessity. That demand level’s going up. Our country is really bifurcated where it’s a service-based economy. You have a majority of the jobs that are created are these 40 to $75,000 a year jobs. Majority of those people are probably not going to end up being in home ownership and just based on the pricing of homes. And so when you think about that, that’s an underlying pin of demand for multifamily. Now, what’s happened in the last three years, we’ve seen inflation just skyrocket the fastest it’s been in 40 years, interest rates moved up the fastest they’ve been in 40 years.
(04:01)
And then that’s had a direct and immediate impact on commercial real estate and a lot of multifamily properties that were bought in, call it 2021, even 22, with floating rate debt or bridge debt with rate caps. And so a lot of those projects maybe were bought thinly underwriting, maybe not the best, and we talk about some of that and as a result of that, it put significant pressure on those properties. And then you’ve seen where a numerous things, whether it’s been foreclosures that have taken place or properties that have been in distress as a result of that, and then that has cascaded and you see kind of in the news where they talk about loans maturing and office here, multifamily here. And so all of these factors combine give that like, oh, maybe multifamily is not good, and people have added an investment they made with somebody and either lost their money or maybe they made an investment.
(04:59)
And that investment’s really underperforming because of some of the things we just said has really created a very negative vibe for many people as it relates to multifamily. That being said, and some of those things no doubt are actual and true and real. That’s what’s really taken place depending on the market. But when you take a look at the overall demographics, there is a continued demand. Even some of the new construction that just came into the market in the southeast this past year was virtually all absorbed, which was there was a little bit of like, oh my gosh, there’s going to be this excess supply. And it just shows the relevancy of the need and the demand for affordable housing or cheaper than what the home price purchases are.
Speaker 2 (05:51):
Yeah. Now, I know we brought this up on an episode a few months back, but it seemed like it can really confusing for people a lot of times when they see the stress that happened, we hear about the variable loan rates and things like that that put people on a pinch and people think, okay, fine, it costs more money, but it’s not just the loan rates that go up because a lot of times the rents should cover that, but it seems like it’s much more than that. It’s like the value of the property, which we find out apartments is not valued like single family homes, single family homes based on what somebody will pay for it. Here we have things like cap rates, how much risk potential is there versus the interest rates going up and then all of a sudden you watch the values almost overnight disappear, like 15 to 25% depending on where you are. What do you’ve seen, what kind of happened there that even shocked you
Speaker 1 (06:43):
As, yeah, there’s a number of things I think, and you hit the nail on the head too. So we’ve bought a property, I can reflect back to when we bought in 22, drove the NOI by about 40% in about 18 months. That’s monster. That is killer to the bone stellar performance, however you want to describe that. That’s a home run kind of performance. Now, normally speaking, and again, not exact figures because deal size changes things, but this was a smaller deal. I think it was probably in the neighborhood of about 13 million in change, but that would’ve driven the value by about $6 million. So home run in terms of equity and value creation. But because of what you said is the cap rate went from a five to a six in the market in Florida, interest rates went from a four to a nine on a bridge loan or a call it a four to a six and a half, six and three quarter on a Fannie Freddie.
(07:45)
Now back down to about six, maybe a little lower than that now with the 10 year treasury dropping. But as a result of that, instead of creating 6 million in value, it created a million and a half in value. And that’s where people got to understand that there’s more of the mechanics of commercial real estate because it is driven by the numbers. Now the other thing though that has been gone on in many cases in places is that people that bought a project like that, maybe they didn’t implement the business plan, like what I described. They didn’t drive NOI by 40%, maybe they drove it by 15. That’s not been enough to overcome that juxtaposition of the cap rate moving up. And so their property value actually went down because of that. And so the other factor that we saw a lot of times too when I’ve looked at different structures or deals is that people underwrote things that were not necessarily achieved where maybe in Houston, a lot of what went on there was people bought a C-Class apartment and underwrote valet trash and parking fees for upfront in a straight up C-Class apartment.
(08:58)
People aren’t paying valet trash and parking fees, you know what I mean? Or they underwrote, Hey, we’re going to get 1500 rent. And it’s like not in that market. You know what I mean? It’s just not doable. And so those factors combined ended up being where instead of getting that NOI from here to there, NOI only went to here, and then the cap rate expanded by a point or more depending on the market. And every market’s a little different based on the supply and demand factors. And then that caused that value to go down. And then now what happens also there from a distress standpoint of view is let’s say the person was on a two year or three year loan and then now the value’s down, they are not in a position to be able to refinance. Or if they did refinance, they’d have to bring a large chunk of money to the table and they weren’t able to do so. And so now the only real equation was they had to sell the property and that’s where they had to sell it for maybe 20% less than they bought it.
Speaker 2 (09:56):
This is almost like 2008, 2009. But instead of single family homes, this is now happening in apartments, right? Because you’re like don’t have enough equity. Like you said, if the NOI wasn’t quite right or whatever it might be, there’s not enough equity for the banks to say, yeah, I’ll refinance that because they want equity in that property, usually at least 20 plus percent before they’ll even give you a refinance, right?
Speaker 1 (10:15):
Yeah. And some guys, their business plan was going to do a takeout refi with a 75 80% loan from Fannie Freddie, and that’s not the case right now. The case right now is like 65, 68 probably on your best day based on interest rate and DSCR coverage ratios. So it’s important to know when you’re going into an investment, the conservative nature of the underwriting we’ve shared through our email and sent it out to our group and all that stuff like that, properties we bought in 21 and then sold in 23 for a profit because we bought it at a good number and we had those conservative factors in place. So we were genuinely in a time when it’s still been a difficult interest rate environment to be able to execute, get the income up where it needs to be, and then still sell at a profit.
(11:06)
But we also bought at a good number when we bought it. You know what I mean? And so real estate is kind of the old adage, you make your money when you buy, there’s true. There’s truth to that. And the other thing I think that’s served us well, that again, these are, as I say, these things, I want the audience to, you can be looking for ’em on the other side in the overall marketplace. I’m telling you stuff we do that’s best practice. You can look for it and say, is that happening in this deal? I’m looking at, we would always be certain to be the settler and never the pioneer. So when I’m looking at this deal and I’m saying, Hey, we’re going to get 1350 rent. There’s already three people getting 1350 rent in the market right down the road from me. I’m not guessing that I’m hoping for 17, and maybe I get it, maybe I don’t.
(11:55)
I know I can get 1350 if I do the work to improve the property, make it nicer, update the unit, that kind of thing. And so I think it’s critical to look at those underwriting pieces because right now that’s what we see happening in the marketplace. Maybe some of these misalignments that were there are now coming to fruition in the form of properties that have to sell and the pricing structure is lower than what it was. Now, that being said, we sold six deals last year because we’d reached the business plan and we were able to sell profitably, and we were off probably 10 to 12% from from a couple years ago. But I mean, I’m more pragmatic. It’s like we were making money selling, so that’s a win for our investors and a win for us. But now some of the thing that I would say is a little bit different from oh 8, 0 8, there was just a avalanche of stuff coming into the marketplace in the single family space.
(12:51)
I don’t really see that. I think the banks have learned their lesson because properties that are in maybe a little bit of a struggle, the banks are more apt to work together with the person to try to navigate through. It’s only when really the person’s not working with ’em or not participating, then the banks just move ahead and be like, all right, we’re going to for sale or foreclose, that kind of thing. So I think there’s more properties that are going to be coming into the marketplace. I don’t believe it’s just a complete avalanche. I think there will be those properties coming in that have to sell because the bank’s like, okay, hey, if we’re going to extend your loan, you need to bring two more million dollars. And then the parties can’t bring the two more million dollars, so their only option is to sell.
(13:39)
And so that creates opportunity for your listeners and for us. And now it becomes a question I think of like Howard Mars, he’s written a lot of good books on the stock market and investor psychology, Oaktree capital, it’s the pendulum, right? In 2021, the pendulum was way over here with everybody. Yeah, man, go, go. Now the pendulum’s back over here where it’s like, oh my god. You know what I mean? And realistically, by the end of this year and in the next year, the pendulum’s probably still over here, but you need to be moving forward because as we look to buy a deal, and we haven’t bought a deal in 18 months, we’re very conservative. We stick to our numbers, but we’ve been close, and I’m telling you now there’s going to be some stuff coming on the horizon and now would be the time to buy because it’s like we’re going to get a price that’s off of what the high was.
(14:31)
Rents are still high, rents haven’t gone down, and they’re not going down. And then we get a good interest rate on the loan. And then we also have the tailwinds of what would be projected over the next call it 24 months is interest rates would decline further, which then further boost the value of the property. So you’ve got demand that’s still going to be there. You’ve got a good interest rate environment and you’ve got what should be a declining interest rate. Interest rates won’t go back down to where they were, but they’ll go down from where they are. And so the question really becomes, does the psychology piece, can you as an investor swing from here to here?
Speaker 2 (15:12):
Right. Well, and like you said, kind of like Warren Buffet says, when there’s blood in the streets, that’s when he gets greedy. That’s when everybody’s fearful. He gets greedy. When everybody’s greedy, he gets fearful. Right? We’ve definitely swung the pendulum over the last three years, one extreme to the other. For sure,
Speaker 1 (15:27):
For sure.
Speaker 2 (15:29):
I want to ask you this before I ask about your buy box. I know that’s the thing why you say you haven’t purchased really much in 18 months, but before I get asked that, I’ve been hearing a little bit of whisperings lately that banks, although they’re still lending, I know they’re still money supply there. You see the M two money supplies mean the feds are pumping out money more now than they were even just earlier this year, which is ironic saying they want to fight inflation, but that’s almost like they’re trying to pump more money to create more inflation. But at the same time I’ve been here whispering that although banks are lending, they’re taking a lot longer to process. Are you seeing that same situation your end too?
Speaker 1 (16:02):
Yeah, for sure. I mean, I think that they’re being more meticulous, you know what I mean? More thorough. There’s been, and again, same kind of thing going back here to 2021 kind of thing. They’re just going and going and going man and slapping loans together and moving as quick as they can and just kind of printing money through making loans. And then a good number of those loans struggled. And so now they’re moving in a more meticulous pace to try to check all the boxes. Fannie and Freddie actually just came out with some things where they’re going to be a little bit more verification going on with what they want their desk lenders to do because of some of those issues that have happened. And that’s also that kind of think about this professional people, it’s the same pendulum. So the lenders are pendulum swing over here, and they’re being a bit more conservative how they look at it, both in the amount that they underwrite to meaning percentage of loan to value, also in the amount of time that they’re spending just digging through the file and vetting and et cetera, et cetera. So
Speaker 2 (17:09):
Yeah, they’re really looking for good solid deals, aren’t they?
Speaker 1 (17:13):
And their preference would be exactly that to loan on stuff that’s better rather than worse, you know what I mean? And so again, if the worse the potential deal, the more they’re looking at it in a real fine tooth comb.
Speaker 2 (17:27):
And I’m sure it doesn’t help that there’s layoffs and things like that in the banking industry had clients that have worked in those departments say, yeah, they just laid off a whole ton of people out of our department as one slowed down, they just went, they cleared out. Oh, for
Speaker 1 (17:38):
Sure. Yeah. I mean, those layoffs have affected ’em, and then they’re slow to hire back. And so that’s part of the equation as well too. So I mean, there’s definitely money that’s there for if you’ve got a good deal, you can get a good loan, reasonably speaking, it’s just that. Yeah, I mean, it’s going to take longer to get through the process and it’s going to be a little bit more, everything’s a of a headache nowadays. That’s just true. You know what I mean? It just tougher push dealing with bureaucrats in a city and permit thing or dealing with the bank and jumping through their hoops. It really is part of the equation nowadays.
Speaker 2 (18:17):
Yeah. Well, speaking of equation, let’s talk about your buy boxes as you call it, right? What’s your criteria for what has to check the boxes for, you want to buy a property? And I think this is valuable because most of our people listening really want to be more passive investors versus just the active investor like you are. But I know a lot of these questions really go work both ways, and so what are some of those questions that you use that also they should be considering too when they’re looking at getting to someone passively to buy in the apartment space?
Speaker 1 (18:45):
Yeah, I mean, so location, location, location is definitely the old adage, and it hasn’t lost its luster. As an example, we looked at a deal, great basis up in Georgia, offered to us as a distressed property, we’re first phone call kind of thing. Hey, we got this property, want to give you opportunity. However, it was a larger size property and the area itself was a little bit of not depressed, but there’d been some, it’s more got criminal element and stuff like that, and just the harder work, you know what I mean? And so though the numbers on paper looked good and the price per door looked good, the location wasn’t the best for this moment in time, because again, especially if you’ve got economic slowdown or recession, you don’t want to have any of that kind of weakness there. That’s important to understand. The other thing I think is when you’re looking at it, what is your overall, not only the immediate location, but what does your MSA look like and what does the city look like? Is the city growing? Is there jobs coming into the city? Is there demand coming into the city? Are people moving into the city? We’ve bought in smaller MSAs before that are not high growth, but there were quality diversified job drivers. There was good inflow of people because of those jobs. Not like it’s massive, but still good.
Speaker 2 (20:10):
It’s growing, not dying, right?
Speaker 1 (20:11):
Yeah. You know what I mean? And then also not depending on one thing. It’s like, okay, you got the one plant that’s there and then that plant goes out and now you’ve got a ghost town or the one military base that’s there, and now it’s a ghost town,
Speaker 2 (20:25):
Not a one horse town. Yeah,
Speaker 1 (20:26):
Exactly. So that’s part of the equation as well. The other thing that you got to look at, and again now we are also opportunistic. We’re looking for unity that represents a goodbye and it represents a reduced level of risk with a beneficial or outsized upside return. And so to that end, we’re looking at value add. How can we have that and value adds got a little bit of a negative name to it, but realistically it’s not. I mean, value add means that I can take this property from where it is today and by doing certain added additional contributions, meaning construction work improvements, I’m creating value, I’m manufacturing value by, in that other example, driving the NOI by 40%, we did that by renovating units and now bringing the lease rate from 900 to 1350, and that was market for that market. So we’re looking for those type of opportunities, and it needs to be that we’re not, as I said earlier, driving the overall market.
(21:30)
There has to be proof of concept that if 1350 is the rent, other people are getting it. If it’s 1250, it’s 1250. And then the underwriting that we look at on the deal also is what does that look like in terms of positive cashflow in year one? What does that cash on cash look like? Is it positive going out of the gate or is there a six month ramp up? What we’ve been in this past two years is we’re not in a window where we wanted to have a neutral cash position. We want to have positive cash out of the gate just because of the economic uncertainties that we’ve been facing. So these are a number of the criteria, and I think that you got to look at when looking at the buy box and then also your entry and exit points as well. We’ve seen stuff that look good on paper, but when you’re looking at the exit, the exit should be let’s say one 40 a door based on the numbers, meaning the income is generated, but then you look at it in that market or that area, nobody’s paid close to one 40 a door.
(22:35)
It’s like that causes me a little bit of a pause because is it real that you can get that? We like to be able to see, okay, in this general market, there’s other transactions that have traded for that number and now we’ve got kind of proof of concept coming in. We’re getting a good price. If we’re able to execute the plan, then we should be able to get this price given the criterion that we have and what the market’s already shown us.
Speaker 2 (23:00):
That’s great. No, those are all I can tell. Those are all wise things. I can already think of other multifamily, syndicators people out there that were raising capital. They were trying to guess the market, trying to time the market by being ahead of schedule, by trying to get things without the proof of concept. And I can tell what you’re looking at is really what’s the sure thing. The sure bet if it means we miss the opportunity so to speak, you’re not really missing the opportunity because you make sure that people get the return of their money versus just a return on their money.
Speaker 1 (23:29):
And that’s critical. I mean, we’ve had properties that had challenge near Atlanta where evictions had been on hold God for up until even this past six months. So three years where by liberal agenda, they manipulated the laws to still people be delayed on eviction for nine, 10 months. But because of the things that I just shared with you, we’d had successful results even though having to surmount some of those difficulties. So I think it’s important that your underwriting’s got to stay conservative. The buy box meaning is like you got to stay conservative. It’s like, and my daughter who works with us and she’s 20 and she’s been work, I mean, good lord, she started off cleaning the office and cleaning toilets when she was probably 13, you know what I mean? So she’s been no stranger to it, but she’s also on our underwriting team, and we bought five deals that she was the lead underwriter over the years, beginning when she was 16, but we were able to successfully buy and exit.
(24:33)
In example, I told you in 21 exit in 23, because of that very reason, the numbers were proven out. So we were able to execute, even with some of the difficulties we encountered, still were able to execute and still got a reasonable execution on the backend. The numbers were already proof of concept. It wasn’t a hope of concept. I love that, and I think it’s important. And so again, when you look at those things, I can tell you tons of decks I saw over the years where the person’s targeting 1850 rent and nobody was getting 1850 rent and even deals we turned down in Atlanta or other markets where they’re pegging this purchase price at whatever, I’m just one 20 a door. And it’s like, well, your exit’s got to be 1 45 for your exit to be 1 45. The rent’s got to be 1850. There’s nobody on the planet that’s affording to pay 1850 anytime soon in that marketplace.
(25:29)
And so it’s not going to work. And so guys went in and bought that deal that we passed on, and those are also guys that are being forced to sell and losing money. You know what I mean? That’s right. I think it’s important that you look at things with an eyes open type approach, and especially as an lp, you want to make sure that you’re seeing these things that we’re talking about when you’re looking at a prospective deal. I see stuff now, and I just did a funny kind of video. It’s like deal, deal, deal, deal of a lifetime. You know what I mean? And because I’ve seen the 15th deal on the internet now on Facebook or whatever, that this is the deal of a lifetime. It’s the holy grail it. It’s a 28% IR. And I’m like, I could pick that thing apart, man.
(26:17)
It’s like, you know what I mean? It’s like the back end is what’s two thirds of the payday is on the thing yielding a 27.88% return. And it’s like I would venture to tell you that that’s most likely not going to happen. Exactly. But yeah, I think I step back from it though, and I come back to the original, what we started with, multifamily is here to stay. And I know that there’s a little bit of a sour taste that sometimes people have right now, and even some things I’ve eaten that’s a little bit of a sour taste, but one of my good friends that’s been in real estate, he is a real estate attorney investor, been in the space 40 years, he said a couple of years ago. He is Randy Real Estate’s absolutely great for eight, but sucks for two. You know what I mean?
(27:02)
And there’s truth of the cyclical nature of it. So we’ve been in this two to three year period of real estate and commercial real estate has sucked a bit because of the interest rates and the environment we’ve been in, but it was great for 10 years proceeding. We’ve gone to two to three years. We’re fixing to move back into that period of time where I would suggest we’re going to see good and great results. And ultimately we’re at a place where this country’s not going to change demographically. We’re not going back to a majority manufacturing type middle class demographic. It is not going to happen no matter how you want to slice it, any repurposing from China’s going to India, there’s marginal stuff coming back here to the US and this country will continue to be a service-based economy and it will continue to have an affordable housing need and it will continue to be in most markets, like I might here in Tampa, go to Atlanta, go to Charlotte, your starter home in this area here, God, a mercy two bedroom home is $400,000 a guy making 55 and his girlfriend or wife making 50, they can’t afford to buy that home period.
(28:18)
And so that’s a reality that’s not going to change, and we will see that picking back up. The question just becomes, are you a part of it here at the section of the pendulum? Or once everything’s going along swimmingly for another 18 or 24 months, people go, oh my God, that’s good. Again. It’s like, well, it was good back here. You know what I mean?
Speaker 2 (28:43):
Yeah, exactly. Well, if people want to stay in touch with you to know that timing, especially when you start to see things happen, what’s the best way they can follow you or even stay in touch on your email list or whatever it might be?
Speaker 1 (28:54):
Yeah, for sure. You can go to our website, www.pcp.net, those Prosperity Capital partners. You can look us up. We’re on the web and we’ve got a simple button on there. You can just click on it and then join our contact list. And so we’d be able to update you. And then also I send out weekly videos and commentary on the market commentary on the 10 year commentary on life and wisdom points. But a lot of it’s focused on investing, no doubt. So definitely would love to have you join with us there. And then also by becoming part of our insiders club, you’re the first that gets notified when we’re entering into a new transaction and we tell you that, Hey, here’s going on.
Speaker 2 (29:39):
That’s great. Like you said, the thing to do is be on the forefront of it, especially when things actually are stable and starting to come back again, so before the emotions catch up to it, right? As you were saying.
Speaker 1 (29:49):
Yeah, for sure it is. I’m excited about what we have ahead of us. There’s definitely been some wood to chop and some winds that we’ve navigated through on the whole of the commercial real estate side in these last 24 months, call it, but yet ahead of us, I think no doubt, we’re going to be looking at a good environment where we have interest rates declining. There’s definitely the likelihood there’s not going to be an emergency meeting. I know people were talking about that last week. It’s like that ain’t happening, but it’s like there will be rate cuts in September and the possibility, depending on the data of November and December, which would be phenomenal. I’m not guaranteeing or counting on that, but it’d be phenomenal. And then again, we move into next year, again, assuming with the same points of data, we’ll see rate cuts starting again in March. So those are all good things, and it’s going to set the tailwinds for the real estate and psychology moving forward. You already see the feds behind the curve because the tenure, I just looked at it before we jumped on was at like 3 85. You’ve got the fed at call it five 30. It’s like they’re already almost a point and a half beyond where the market’s at, because the bond market is telling you what the real interest rate is today based on supply and demand.
Speaker 2 (31:02):
And the feds follow the tenure treasury, not the other way around. Right, exactly. So they tend to follow suit, even if it’s slow and a little bit too late
Speaker 1 (31:09):
For sure, every time, right on the front side, they should have raised it sooner and oh, it’s transitory, and then now on the backside, they’re a point and a half behind where the real rate is. But again, I would just say this, I would probably think that the neutral rates somewhere like three point a quarter, something like that, so it ain’t going down to half a percent. People think, oh, rates are going down. It’s like they’re going to go down, but it ain’t going down like that because again, we were at a half a point neutral rate back in the day. I would probably think it’s somewhere around 2, 7, 5 to three and a quarter, maybe a S nudge higher than that, but that’s in that zone. And so it’s reasonable to think and see that. We could see in a year’s time from now rates down in that 3% range, that kind of thing on a 10 year.
(31:56)
And again, now that translates like your fanny loans at 5%. Your bridge loan could be 300, 350 basis points above that. So if you’re down there in that territory, now you’re talking a bridge loan at six and a half, six and three quarter 7%. That’s a good spot. Fannie Freddie down at 5%. Those are good numbers that make for good transactions. I mean, good lord. We bought plenty of deals where we made money where Freddie Macone was five and a half. You know what I mean? We made good money on it, you know what I mean?
Speaker 2 (32:28):
Well, I know we’re kind of out of time, but last quick question for you here. I’m going to switch gears on you a little bit, but Randy, what do you feel like your ripple effect is?
Speaker 1 (32:37):
Wow, great question. We have an intention, twofold to impact the folks that invest with us in a positive way. We genuinely want to make a quality impact in their life. We’ve got some folks that have invested with us for 20 years and impacted three generations of their family, which is, it’s super exciting because not everybody can be in the day-to-Day minutiae and battles of what it takes to operate real estate on a daily basis. And then the second part of that is at our community level, we’re really seeking to make an impact to improve the quality of the life for the folks that are living in our communities, both with making the community itself a better place to live, but also with social improvement programs that we want to implement there and we have implemented, but we’re on the process of doing on a whole scale basis, just like with our asset management, property management teams, doing two impact events a year at the community doing where we have financial education training programs at the community doing where at a certain point in the future, if you’ve lived in our community for a certain number of years, your kid could be eligible for some type of scholarship stipend.
(33:49)
Those are things that are in place or going to be in place, and so it really is a twofold dynamic where we’re making a difference not only in the investors’ lives, but in the people’s lives that live in our communities. Ultimately, that just really creates a greater ripple effect.
Speaker 2 (34:05):
That’s that win, win, win, right? Yeah. Everybody prospers and blessed from it.
Speaker 1 (34:09):
A hundred percent. Absolutely excited about it and excited about what you guys do too here with the Ripples. I mean, it’s a great blessing to call you a friend and be a part of the group and just to see the impact that you’ve made in so many different people’s lives, and then how that just continues on.
Speaker 2 (34:27):
Love it, man. Appreciate you having you on today. Everybody. Definitely follow Randy P-C-P-R-E. That’s Prosperity Capital Partners, RE like real estate, pcp r e.com. Follow him there
Speaker 1 (34:38):
Net. Do net,
Speaker 2 (34:39):
Oh sorry, dot net, not.com, dot net. Make sure that our team puts out of their show notes so that I don’t mess it up. There you go.
Speaker 1 (34:46):
It’s all good. Alright, man. Great seeing you, brother. So fun to be on the show with you.
Speaker 2 (34:52):
Same here. Everybody else who’s listening, remember, it’s not just about being a hearer of the word, it’s about being a doer as well, because the doers are when you start to see the real fruits of your faith, go and make a wonderful process week. We’ll see you later.
Speaker 3 (35:05):
Thank you. Yes. Hey,
Speaker 4 (35:14):
Visit us online@moneyripples.com for more resources to help you fix money leaks and get your money working harder for you. Now.