Webinar: Economic Report for 2022
Hello, ladies and gentlemen, I’m Stephanie Walter with ERBE Wealth. Who am I? I’m the CEO of ERBE Wealth. I’m a capital raiser and syndicator. I recently retired and sold my insurance agency of 16 years by following the key principles I learned from the wealthy investors. I’ve worked with over the years, the key principles are so powerful I have written an e-book. The Business Owners Guide to Generate Passive Income been featured on several popular real estate podcasts to help teach professionals how to generate passive income.
I also recently launched my very own popular podcast called The Stephanie Walter Show, where I featured great content like multifamily real estate investing strategies, slashing your taxes or even multigenerational wealth considerations. And in other episodes, you’ll hear from a variety of guests, including highly regarded experts, along with normal but very savvy investors who have already taken the plunge are already seeing strong results and want to share why they’ve done that.
I was also featured in the publication Think Realty March 2021 issue of women to watch in real estate.
I’ve acquired over a 175 million dollars of real estate since 2018, consistently returning my investors returns of 20%+ annualized returns.
Thank you for joining me today. Let’s get off to a quick start, shall we? I’m going to give you some very clear and encouraging, but very sobering information about the U.S. and world economies in 2022. I’ll also help you understand how your view of multifamily real estate investing should be adjusted to not only survive, but to profit and thrive in these times.
There’s an ancient Chinese quote that states “may you live in interesting times”. Boy, are we ever it’s mid-March 2022, we are living through the following: inflation for the New York Times inflation surges to 7.9% on an annual basis. They state this is the highest inflation in 40 years.
Gasoline prices are well over $4 per gallon nationwide and growing, reaching record all-time highs, according to USA Today.
Russia is at war with Ukraine, and absolutely nobody knows how that will turn out and just how bad the economic will be for the rest of the world. Then there are supply chain issues. The New York Times predicts that a normal supply chain is unlikely in 2020 to anticipate it may be years before things get back to normal.
I talk a lot to investors daily who are very on edge about all of these issues and why shouldn’t they be when the value of our dollar is disappearing right before our very eyes.
My investors want to know in this inflationary, uncertain world, where’s the best place to really grow your assets with confidence. Should they stay parked in stocks or make a change to reflect the times? I believe the answer is very clear, and that answer is the best way to not only hedge the risk of inflation, but to actually come out on the other side, wealthier is to focus on carefully selected cash flowing multifamily apartment communities, and I have three very specific, very strong reasons why multifamily is the asset class of choice for savvy investors during these inflationary times.
Reason number one is multifamily real estate provides a direct path to profiting from inflation. Will Rogers once said something funny but true. “Invest in inflation. It’s the only thing going up.”
Inflation simply means that the price of assets and commodities goes up. And so, it takes more money to buy the same stuff. You see it at the gas pumps right now very clearly. Maybe it used to cost $40 to fill your gas tank and suddenly it costs 60 or 70 bucks or more. That’s inflation. Now, do you know who is not at all bothered by that inflation? Anyone who owns oil wells, they’re making more money now than they were before because they invested wisely and the value of their asset is booming in response. You should do the exact same thing, but with a much better asset class.
Multifamily real estate has a great advantage over virtually every other asset class. It holds intrinsic value. It’s in limited supply and it’s a cash yielding asset. You get everything in one place cash flow, intrinsic value and clear price appreciation. This means the real estate becomes worth more money, and that always happens much, much more quickly during inflationary times like ours.
For these reasons, here at my company, ERBE Wealth, we see real estate as the king over all other asset classes and multifamily real estate as the high king over all other types of real estate. And that’s primarily because of its ability to not merely withstand but to profit from inflation. One of the ways that we actually profit from inflation and even optimize the inflation profits we generate is by staggering lease expirations in our properties, since most residential lease terms are 6, 9 or 12 months. This allows us to reset the rents we charge to tenants on a very frequent basis to reflect the current economic realities as inflation goes up. We’re able to adjust very quickly and directly and immediately profit from inflation.
Other asset classes like stocks can’t do that in the same way, and so they provide no protection against inflation. Even other types of real estate can’t do it anywhere near, as well as multifamily real estate. Take retail or office real estate, for example commercial leases frequently have durations of five or more years, so there’s really no way to reset quickly on the basis of changing economic situations.
But with multifamily real estate, we are able to adjust and profit constantly and on purpose, but that’s just the first. Reason why multifamily real estate is the king of the hill during inflationary times.
Reason number two is strong historical stability.
If you look back over history, multifamily real estate is one of the more reliable ways to achieve capital preservation. It is a safe investment that frequently provides day one returns on the investor’s capital contributions, and day one results are a source of overwhelming financial peace in times like ours when financial peace is in short supply. And since nobody has to be convinced of the overwhelming value of financial peace, a strong suit for multifamily real estate investment, we’ll move on to.
Reason number three, that multifamily real estate thrives in inflationary times. Inflation busting tax advantages.
Did you know that as inflation goes up, taxes tend to do the same? Taxes are the fee the government charges for its services, and those fees go up just the same as anything else. And this makes tax efficiency a paramount importance during inflationary times. Fortunately, you probably already know that real estate is just about the most tax friendly asset class of them all.
In fact, it’s pretty common for clients and our multifamily projects to get to take huge tax deduction in year #1 of our projects. And sometimes they’re even able to deduct the entire amount they invest in the project. What’s more, you can actually spread your income tax benefit over multiple years if that’s better for you. The tremendous tax benefits are obvious, and I won’t bore you to tears by discussing tax law right now, though, if you’re interested in seeing how these benefits can become a reality for you, I’m happy to tell you more. In a one-on-one call, you can set up a complimentary consultation with me at the URL you see on screen, which is ContactStephanieNow.com and I’ll be happy to discuss it with you personally.
But suffice it to say, real estate is a game changer for your tax situation during inflationary times, so those are three strong reasons for participating in multifamily real estate during inflationary periods.
But maybe even a better reason is that housing is a necessity-based asset. People absolutely need shelter, period, and it’s very expensive and inconvenient for people to move once they’re in a location. All of which makes this asset class even more predictable and all the more attractive.
The communities I recommend to invest in have a very active investment manager with a philosophy. We strive to create a culture in our communities where our residents have a personal connection with their neighbors and the property staff. Now you may ask yourself whether you can get the same benefits by investing in single family rental properties rather than multifamily properties. And that’s a fair question. But that comparison absolutely comes down in favor of multifamily real estate for a very clear reason. Shifts in demographics and customer preferences.
Baby Boomers are downsizing, freeing up cash and avoiding taking on new mortgage liabilities in this current chapter of their lives. Unlike their boomer parents before them, millennials are forming households far later and are still scarred from the financial crisis. Gen Z is just entering the workforce and their savings rate is at historic lows, and they will struggle to save for a down payment for a home purchase. All of this makes the case for multifamily real estate even stronger.
But all of this has been hypothetical so far. For the final few minutes of our time together. Let’s go over the few real world case studies of our existing projects, so you can understand our strategy and why it is working so incredibly well.
Case study #1 Oak Park Apartments, which is in our absolute favorite market of Tallahassee for Florida, amazing things are happening in Tallahassee, Florida. The city is growing like crazy up to its highest population ever in 2021. We know this market has a real shortage of housing and the projected population and job growth projected both to grow by a whopping 38% in the next 10 years.
So, we acquired Oak Park Apartments in Tallahassee, an off market 32 two-unit community where we initially predicted 23% returns to our investors at acquisition. We started to implement our business plan of completing micro renovations and increasing rents. But what really matters here is the results our investors received. We initially predicted a 23% annual return for them, but we were wrong. That number turned out to be a whopping 30% ROI. An absolute home run by any standard whatsoever, 30% handily beats the 7.9% inflation rate we’re all facing right now, doesn’t it? And that’s the entire point.
So, moving on to example, Project #2 Cape Summit in Cape Coral, Florida, one of the top 10 cities in America for millennial migration, according to the Milken report and one of the very best places to retire in America. When we look for a great investment project, we’re always looking for a couple things a great local market, which Cape Coral certainly is, and we’re looking for a great deal.
This one was a great deal because the developer was willing to sell at a discount because the property was still entirely empty when we bought it. So, what happened in the real world? We knew demand in the area was very high, and so the property had already reached 100% occupancy by the time we closed our purchase of the property, which is great for a brand-new property. What’s more, rents have already increased by $500+ since closing, which is even better than we predicted. But most importantly, our investors returns are coming in at 24% annualized a year.
So, an example #1, we had a 30% return. In example #2 we have a 24% return. There are many more similar examples with similar results I can show you. The things they all have in common are: strong returns, great tax benefits and substantial cash flow.
But the reason our results are so consistent is because of what we call the ERBE multifamily investment model, which is a very demanding set of requirements that we have for each and every individual project. Now, in the interest of time, I won’t dig into the details, but what you should quickly consider is the consistency of our results.
Case study #1 one showed a return of 30%.
Case study #2 showed a return of 24%. If I shared the details of Dior apartments, you’d see that the returns there were 32%. And if I told you about Tara Palm Aire, you’d see the returns there were 29.62% percent.
In fact, if I told you about every single project I’ve recommended to date, you’d see that the results on every single one of them exceeds 20%. And that’s what you’ve got to have to be able to overcome. And that’s what you have to be able to achieve to overcome the ravaging effects of inflation and to overcome the overall economic malaise that this country hasn’t experienced since way back in the Carter administration.
Remember, not everyone suffers during economically strained times like these. Some people are smart enough and sufficiently well positioned that they actually not only profit, but they thrive. And there’s absolutely no reason that shouldn’t be you. So, if that’s what you’re looking for, I’d be happy to chat with you and let you know about other opportunities available right now. Just request a free consultation with me by visiting ContactStephanieNow.com and when we chat. I’ll tell you about any opportunities that happen to be available at that time. And together, we can determine whether you’ll be a good fit for ERBE projects and vice versa. So again, reach out for a complimentary consultation appointment with me right now by visiting ContactStephanieNow.Com