The Real Estate Preacher with Randy Lawrence

This month, the Fed raised rates a quarter point, and another increase looks likely. I'd figured it was coming – a lot of it ties back to the ongoing situation in the Middle East. But the move itself isn't what I want to spend our time on. The real question is where the opportunity is.

For the last six to nine months I've said the same thing: higher for longer. And when you step back, this isn't a high-rate market at all. The last 15 years of very low rates were the exception. Across the last 30 or 40 years, this is a normal rate environment. That's what's expected.

That's why the old 2011-to-2021 playbook (buy a value-add deal in multifamily or commercial and exit into lower rates) doesn't work today. A lot of people are still penciling deals on the assumption rates come down in 24 to 36 months. You don't have that certainty. This may simply be the new normal.

So where's the opportunity? Two places I'm focused on.

First, distress. Over the next 12 to 24 months, a wave of REO and bank-owned properties is coming to market. When you can buy at a significant discount to a property's value, you get cash flow now and the ability to exit at today's market and still make a strong profit.

Second, single-family homes. Higher rates have slowed housing and made it harder for sellers – and that's opened a real door for a team like ours. We've bought and sold hundreds of homes over the years, and we've put real energy back into it because of what we're seeing right now.

One caution, and it's not about real estate: the stock market has run for four or five years, but every asset class is cyclical, and a retracement always comes. Be watchful there.

Bottom line – the opportunity is there, but only if you look at it with intentionality and through the right lens.

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If you've been watching real estate content lately, you've probably heard a fresh wave of people telling you rates are finally about to come down. In this video, I'll walk through why I'm reading it differently, and what it means for the deals in front of you.

Here's what happened. Headline inflation cooled to 3.5%, below the 3.8% forecast, and core eased to 2.6%. Energy prices fell as the Iran ceasefire took the pressure off, and the market immediately started pricing in cuts. On the surface, it looks like the all-clear.

But I've said the same thing for two years: higher for longer. One soft, energy-driven month doesn't undo the structural picture, and the Fed meets this week still expected to hold. Warsh has signaled he'll follow the data - and if energy flares back up, as it nearly did again this month, that clear path to cuts narrows fast.

So what does that mean for you and me? It means a lot of investors are about to underwrite their next deal on a cut that isn't promised. And it means the rest of us have to stay discriminating, factoring today's rates - not tomorrow's hopes - into every deal we look at over the next two to three years.

But here's what's also true: the opportunity is real. Distressed deals are still coming into the market at a basis where the cash-on-cash return actually works. And single-family residential, which tends to be less rate-sensitive than commercial, is softening in ways that are opening real windows.

Real estate isn't out of favor. It just rewards the investor willing to dig deeper and underwrite with a clear, discriminating eye.

This video breaks down how to think through all of it.

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Interest rates have a profound impact on the economy, and in this episode I discuss the critical relationship between interest rates and commercial real estate. Whether you're a seasoned investor or just getting started, understanding these dynamics is key to making informed decisions in changing economic landscapes.

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This episode was originally uploaded on April 26, 2024.

Partnerships can create synergies that make everybody better off - and real estate is no different. In today's episode, Randy discusses the key strategies to structure effective partnerships and maximize opportunities with real estate investing.

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This episode was originally uploaded on April 18, 2024.

If you've been watching real estate content online lately, you've probably heard a lot of people telling you rates are about to come down. In this video, I'll walk through why the data says otherwise, and what it means for the deals in front of you.

Here's the question everyone's asking: how high will interest rates go, and how long will they stay there?

The latest data gave us a clear signal. Headline inflation came in at 4.2% against an expected 3.8%. Core inflation sits at 2.9%. The 10-year Treasury jumped another 20 basis points. And with the Iran conflict keeping energy costs elevated, inflation is proving stickier than the market wants to admit.

Kevin Warsh has signaled it will follow the data, and if inflation stays sticky, that could mean rates move up, not down. We've said it for two years: this is higher for longer, a new normal, and it's not reversing anytime soon.

So what does that mean for you and me? It means a lot of investors who bought last year betting on an 18-to-24-month drop in rates are going to feel it. And it means the rest of us have to be more discriminating, factoring higher rates into every deal we look at over the next two to three years.

But here's what's also true: the opportunity is real. Distressed deals are coming into the market at a basis where the cash-on-cash return actually works. And single-family residential - far less rate-sensitive than commercial - is softening in ways that are opening real windows.

Real estate isn't out of favor. It just rewards the investor willing to dig deeper and underwrite with a clear, discriminating eye.

This video breaks down how to think through all of it.

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Do you ever wonder how real estate investors pick winning properties? It all lies in the power of underwriting - the key process for projecting a property's future cash flows and net operating income. In this episode, Randy explains the basics of underwriting in commercial real estate and how investors use this process to pick winning properties.

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This episode was originally uploaded on April 12, 2024.

Ready to make the most of your multifamily investment? In this episode, I show you how to fill your apartment buildings with tenants and keep them happy in order to sustainably maximize cash flow and return on investment. Here's my guide to property management for multifamily real estate.

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This episode was originally uploaded on April 05, 2024.

What is a real estate fund? Real estate has become one of the most popular alternative investments outside of stocks and bonds. As a result, the financial markets have evolved to a point that there are now a multitude of ways that you can invest in real estate. Real estate funds have revolutionized the way that investors like you and I access and benefit from the real estate market. In this episode, I explain what a real estate fund is and why many people find them appealing.

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This episode was originally uploaded on March 29, 2024.

If you've been watching commercial real estate content online lately, something probably feels off – and in this episode, I'll tell you exactly why.

There are three types of people dominating the conversation right now, and each one is giving you a distorted picture of the market. The first is the seasoned operator acting like the last five years never happened: no distress, no pressure, no problem. The second is the newer player with $30 or $50 million in transactions who's convinced that makes them the master of the universe. And the third is the straw man – the one who points to everything going wrong over there so you'll think everything is going right over here.

None of these perspectives are giving you the full picture.

The reality is this: interest rates skyrocketed in 2022 and have stayed elevated. Insurance costs doubled or tripled in major markets. Wages went up. The 10-year Treasury is higher today than it was six months ago. The Fed isn't cutting anytime soon. And the Iran conflict is keeping energy prices – and inflation – elevated in ways that change the math on deals across the board.

But here's what's also true: distressed properties are starting to come into the market. We're talking 35, 40, even 50% below today's stabilized value. That window is opening, and over the next 12 to 24 months, it's going to widen.

The investor who understands what's real, what's noise, and what is the one who's going to be positioned to act on it.

This episode breaks down how to think through all of it.

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Tired of property management headaches? Discover this solution: The Triple Net Lease. If you're seeking tenant flexibility and freedom from property upkeep, this leasing technique could be helpful. In this episode, Randy explains how a triple net lease works and how it can simplify property management for commercial real estate investments.

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This episode was originally uploaded on March 22, 2024.