What's up, graham, it's guys here, so here's the deal. It's no surprise that, right now the real estate market is absolutely ridiculous. We're seeing some of the highest prices on record inventory is non-existent and from the outside, looking in, it appears to be the exact worst time to go and buy real estate. After all, the famous quote be greedy when others are fearful, is pretty much the exact opposite of what's happening right now.

Well, buyers are practically foaming at the mouth to buy any house, they can with four walls and running water, but even though the entire landscape of real estate has fundamentally changed throughout the last year, the market is beginning to flip and instead of property values rising faster Than you could blink the next big change is probably a topic that a lot of people are largely overlooking for some reason, and that would be rising. Rents reports are now highlighting an extreme disconnect between rents and home prices, while rents for single family homes see their largest gain in nearly 15 years. The la times braces people to expect rental prices to rise. National rent growth is already approaching a five percent increase from a year ago and starting now, a rental rebound is beginning to take shape across the entire country.

So we got to talk about exactly what's going on what this means and what you could do about it, because whether you're renting owning investing or even living in your mother's basement, most likely. This is going to impact you in one way or another. But before we go into that, it would help me out tremendously, if you flipped, that, like button for the youtube algorithm by raising it until it turns blue and best of all, if you hit the like button in the next 2.69 seconds, i will show you this Really cute picture of a cuttlefish, so thank you guys so much and also big. Thank you to policy genius for sponsoring this video, but more on that later.

Alright. So here's some background about, what's going on because i got ta say what's happening in the rental market - is completely different from skyrocketing real estate values see typically rental prices stay fairly stable, regardless of how the overall market performs, for example, as we can see here throughout The last 40 years, even throughout several real estate boom and busts rent only ever briefly sputtered in 2009 before quickly resuming their upward trend. Butkovid was a little bit different during the shutdown rents were hit, especially hard throughout. Almost every major city throughout the us rents began to decline as tenants lost, their jobs were unable to pay and landlords chose to accept whatever they could for fear of holding on to a vacant unit, not to mention rent strikes took place around the country.

Nearly a third of tenants said they couldn't afford to make their payments and rental discounts were everywhere for a qualified tenant looking to move in immediately, but something interesting was happening while rental prices were going down, housing values were going up. The fact that rents and housing values were moving in opposite directions was unprecedented and in some areas the discrepancy was just too big, not to notice, for example, in san jose home prices rose 14, but the area's rents fell seven percent. The same thing also occurred throughout the nation's richest cities from seattle, new york, boston, austin, san francisco, washington, los angeles and chicago. Meanwhile, however, housing values were rising at the fastest pace in history, in rents of overall declined.

Until now, today, rents are rising at their fastest pace in history, up 7.1 percent in atlanta 10 in san diego, and get this 17.3 in las vegas, which leads a lot of people to wonder. Why is this happening and how much higher can rents go? Well? First, we got to talk about why this is happening, and one of the most obvious reasons is that one people are outpriced by rising home values and they're forced to rent. Instead, that's caused rental prices to spike upwards as soon as the economy began reopening and we're on track to continue even further as long as home values continue to rise. The second there's simply not enough rental inventory on the market right now.

Builders are simply plagued by excess building restrictions, the rising cost of materials and the fact that, most of the time, it's easier to build and sell to an owner user than build a rent like by selling luxury units. One by one, a developer is able to recoup their investment rather quickly. They could redeploy that capital elsewhere to build even more and they don't have to wait three to ten years to break even on their investment, not to mention they don't need to manage a rental property as part of their business, although still on a big scale were In one of the worst housing shortages in history, with some people saying it would take a decade of building just to meet the current supply, so that ends up impacting the real estate market and with fewer homes available. Whatever is left ends up going for more money.

A third higher property values indirectly push up the cost of rent. That's because, in order for it to make financial sense to rent out a home, the rent needs to be enough to cover the minimum overhead associated with ownership, for example at minimum. It needs to be able to cover insurance, property, taxes, maintenance and repairs, and that's even before it needs to cover the mortgage. Then you have the mortgage.

On top of it, you have the opportunity cost of investing your money elsewhere. You have the time management to make sure everything is operable and you have the risk that the tenant won't just stop paying their rent and as their own costs go up that usually ends up being passed down to the tenant in the form of higher rent. Now. Fourth, we're just starting to see higher rents as tenant leases are expiring from a year ago across the board.

It seems like pandemic. Pricing is really coming to an end as tenant leases are expiring and they have to prepare for higher costs. Generally, rent increases are going to be realized on a year-over-year basis as lease agreements expire. So it would make sense that now rents are going back up and tend to reflect what another person is willing to pay.

The fifth, the extension of an eviction memorandum, means that less inventory gets added to the market, further worsening the existing supply. Now, i'll be honest, i couldn't find a reliable source of data that estimates how many families fall under this eviction memorandum, because that would really give us a good idea of how severe this problem really is. Instead, though, it does appear that two percent fewer tenants on average are paying their rent by the end of the month compared with 2019, and if we have 43 million rental households in the us, we might be able to extrapolate that roughly 880 000 families are at Least one month behind on their rent and of that half could be covered under the eviction memorandum, which gives us about 430 000 rental units above average. Now, as for what's normal in 2016, zillow reported that there were an estimated 2.35 million eviction filings and they estimated that number would be as high as 2.7 million in 2021, which mostly mirrors the exact same 430 000 estimate that i gave it's a really high number And at the end of the day, that lowers rental turnover and that worsens supply.

All of that combined really leads to the perfect storm for rental prices to continue higher and even into 2022.. Now, surprisingly, from all the data i was able to look at, there is nothing that points to rental prices coming down anytime soon and as long as home values continue going up. This could very well be the beginning for rental prices. So as far as what this means for you and what you could do about it, these are my thoughts and then, finally, i will address why i'm getting back into real estate, because i have a lot to say about this, but before we go into that, the Real estate market is not the only thing going up in price, because life insurance could also go up every year.

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So getting yourself, life insurance doesn't need to be confusing, it doesn't need to be complicated and you could save 1300 or more on life insurance by using policy genius to compare policies so head to policygenius.comgram to get started right now, policy genius when it comes to insurance. It's nice to get it right. So first, here's what this means for you and what you could do about it, because there are things that you could do ahead of time to be proactive about the situation like the first being sign a long-term lease. If you know you're gon na be living in the same spot and you're happy where you are see, if your landlord would agree to keep the same rent, if you don't move now, this does two things number one.

The landlord is guaranteed to get rent throughout the new term of the lease without the hassle of needing to find a new tenant and number two. You ensure that your rent does not go up now. Second, you could relocate or downsize as needed to saving the cost. Like if you have extra space or an unused bedroom, consider getting rid of it and saving the extra money instead, a third, you could also negotiate with your landlord.

For example, i offered a discount to a tenant who does all the landscaping themselves. Typically, this is a service that i was paying a hundred dollars a month for, but if the tenant wants to do it themselves and save the extra money, i'm all for it and fourth, if you're looking to move check the new listings, as often as you can From my experience, the most efficient landlords price, their rentals just under market value, so they'd rent it as fast as possible and to have their selection of best tenants. However, usually those listings are gone within about 12 to 24 hours, so the sooner you find one, the more likely you are to get one. I also highly recommend, looking through unorthodox places like craigslist and facebook marketplace, because there's a higher likelihood that you're just going to get a mom-and-pop renter who puts up their place at a really good deal because they don't want the hassle of keeping it empty.

And fifth, you got to know the market and what's available in this case, education is your best defense to rising rental rates, and if you know what else is on the market and what your place is worth you're going to be able to better negotiate the terms In addition to that understand your local rent control laws and regulations, so that you know your rent isn't being increased higher than what's legal. Most people have no idea how much their landlord could legally raise their rent and every county and jurisdiction is going to be different. So spend some time reading up on this and the more you know, the more likely you are to keep your rents low, but even despite all of that, the truth is rents are still going up. Even for landlords, it's getting more expensive to pay for materials, labor and other overhead costs, and at some point rents will need to increase to help cover that.

What most people don't understand is that renting is very much a high overhead business and it's especially common for small mom-and-pop landlords to barely cover their overhead costs, let alone any profit. So, just like everything else going up in cost most likely, it's inevitable that rental increases will continue to be even more common. But finally, let's talk about myself and why i'm going back into real estate, as some of you know, real estate, was how i built my entire career. I worked full-time as a real estate agent.

I lived extremely frugally and i saved up all of my money to then go and invest in real estate. It was also how i got started here on youtube by talking about the housing market and the basics of buying rental properties, although after nearly a decade of doing the exact same thing, i realized that i had to spend more time diversifying and broadening my interests, and So, in the beginning of 2020, i made the choice to take a break from real estate and instead focus my time on growing the channel and investing in the stock market. The timing of that happened to have worked out really well, as i was saving up for a down payment and happened to invest in the s p 500 right after it had dropped 35 percent. Now, in the beginning of last year, my goal was to have as much money invested in the stock market as i do in real estate.

That way, i would be able to build up a portfolio that encompasses a little bit of everything instead of spending my time trying to find the next rental property. Well, i'm really happy to say that, through a combination of investing consistently in the stock market going through a crazy rally, i've nearly hit that goal and even though i don't intend on stopping the current market conditions, are really making me rethink my strategies and where i Think the best opportunities are over the next 10 years. Now, on the surface, i admit it seems crazy to want to buy real estate right now. After all, prices have gone absolutely nuts, there's no inventory on the market and materials cost an arm and a leg, but i have to say it struck me as kind of odd to see so many institutional investors buying up large apartment complexes during a time where housing Was going through a record boom, however, as i started looking into it further, it became apparent that hedge funds don't care about values.

They're not trying to find off-market value-add wedge deals instead, they're buying for cash flow and if my assumptions are correct, they're buying large apartment buildings now, knowing that the next few years, rental prices could very well start increasing the same way that home values have. With this perspective, it starts making some sense to enter the real estate market again, but not in the way that i was doing before. At this point, it's extremely difficult to find a good deal when you're competing with owner users who plan to move in themselves as an investor. I want a place that no one else wants that's in disrepair that needs to be fixed up, or it's maybe in a location that most people don't think is desirable.

But here's the thing apartment buildings only appeal to investors and they're often sold based on their current cash flow. Those buildings are not necessarily seeing the same price increases as single-family homes are, and that's why i believe that they can offer a better opportunity. In addition to that, interest rates are still incredibly low and if we believe inflation is going to be an issue in the future, it makes sense to lock in a low rate for as long as i can and then have inflation whittle away at that over the Years now i do want to make it clear that i don't plan just to go and buy something and issue rent increases or go and kick out everybody in the building to re-rent at a higher price. That's never how i've done business and, throughout the last 10 years, as a landlord i have barely ever raised rents.

I would rather have a long-term tenant who stays forever is hassle-free and pays on time than i would extra money in my account from having a new tenant every few years. Instead, i focused on finding reasonable deals, keeping the rents just below market rate to incentivize people to stay, and then, if they end up moving out, i will re-rent it at the market rate. That way, i can keep the same tenants long-term. I have an extremely low turnover rate.

I have less work on my plate. Tenants are happy, i am happy and my rents, slowly, wind up increasing if the tenants move out - and i could re-rent it at the current price and as for the day-to-day aspects, i certainly plan to hire a property manager and i would probably be looking for about 10 to 30 units within about 30 to 45 minutes from where i live personally, i believe we'll continue to see an influx of californians moving into nevada, and i don't see that stopping anytime soon and let's meet kevin becomes governor. So i think las vegas is perfectly positioned to see more people moving in, and i think it's about time that i diverse find a multi-family housing. But overall investment aside, it's very obvious that we're experiencing a housing shortage across the u.s and, at the end of the day, the only thing that we could do to truly solve it is more development simply put.

We need building regulation that promotes the development of low-cost housing, because right now that does not exist. The building process is so time consuming and expensive, even for the most experienced developers that it makes it cost prohibitive to build anything other than a luxury unit and that further drives up the rental prices. The best thing that we could do is to continue to push for more development, understand that you can negotiate the terms of your lease to save you more money, and at least by now you have a better understanding of what's happening so that you could be better Prepared for rents to continue going higher, but that is not going to push the like button. That's going to be on you.

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