Not Your Average Investor Show
398 | Q2 2024 Jacksonville Real Estate Market Update
Join us for JWB's Q2 2024 Jacksonville Real Estate Market Update. We'll be joined by Gregg Cohen, Co-Founder of JWB Real Estate Capital.
Here's what we'll discuss:
• Current Jacksonville real estate market pricing, rents, and months of inventory (MOI)
* Interest rate expectations, and how they should affect buy or sell decisions
• JWB company stats and Key Performance Indicators
You won't want to miss this opportunity to spend some time with one of JWB's owners and learn more about how you can take advantage of the Jacksonville real estate market.
Join our real estate investor community LIVE:
https://jwbrealestatecapital.com/nyai/
Schedule a Turnkey strategy call:
https://jwbrealestatecapital.com/turnkey/
*Get social with us:*
Subscribe to our channel @notyouraverageinvestor
Subscribe to @JWBRealEstateCompanies
🌐 Facebook Group - https://www.facebook.com/groups/rentalpropertyinvesting
📸 Instagram - https://www.instagram.com/nyai_community
📸 Instagram - https://www.instagram.com/jwbrealestatecompanies
Join us for JWB's Q2 2024 Jacksonville Real Estate Market Update. We'll be joined by Gregg Cohen, Co-Founder of JWB Real Estate Capital.
Here's what we'll discuss:
• Current Jacksonville real estate market pricing, rents, and months of inventory (MOI)
* Interest rate expectations, and how they should affect buy or sell decisions
• JWB company stats and Key Performance Indicators
You won't want to miss this opportunity to spend some time with one of JWB's owners and learn more about how you can take advantage of the Jacksonville real estate market.
Join our real estate investor community LIVE:
https://jwbrealestatecapital.com/nyai/
Schedule a Turnkey strategy call:
https://jwbrealestatecapital.com/turnkey/
*Get social with us:*
Subscribe to our channel @notyouraverageinvestor
Subscribe to @JWBRealEstateCompanies
🌐 Facebook Group - https://www.facebook.com/groups/rentalpropertyinvesting
📸 Instagram - https://www.instagram.com/nyai_community
📸 Instagram - https://www.instagram.com/jwbrealestatecompanies
Today you are joining us for the grand pooba of the quarter. This is our quarterly Q2 2024 JWB Real Estate Capital Jacksonville Real Estate Market Update. It is historically the best attended. It's historically the most watched. It's historically, The one that Greg puts the most work into and brings his hot takes that prove to be correct over and over again. So hang on for this. We're going to be talking about like, where the economy is right now. We're going to be talking about where the Jacksonville market is right now. We're going to talk about the state of JWB, and we're going to answer some questions. Welcome everybody to the Not Your Average Investor Show. I am your host. Pablo Gonzalez. And with me as always, right here to my right is a man that I affectionately like to call GC because he's got genius concepts, which you'll hear about today. Good to see you. Knows how to generate cash flow, which we got an update on that today. Oh, yeah, because he's a great ghost Which is gonna be obvious and because his name is less obviously great. Cohen's.
Gregg Cohen:Hello. Great. Hello Everybody great to be with you
Pablo Gonzalez:and we are pumped to have you all going straight into the little tradition that we have around Here. Do you see what's that? No roll call, baby. Oh, come on, baby. We got the lead bishop checking in first Otherwise The MVP of the house, we got the mama bear in the house. We got the fairy godmother in the house. We got the early bird in the house. We got Christopher Lee from Fernandina Beach, which needs a nickname for sure. We got Pamela Myers, who also needs a nickname. I feel like I'm falling behind on it.
Gregg Cohen:You know what? I think, I think part of this is on us, and then I also think, you know, it's on you guys, too. You guys have nicknames. What's your friends called you in high school? Let us know. Help us out. Help us out. You get your own nickname. Here's a good one.
Pablo Gonzalez:The Ringmaster.
Gregg Cohen:Drew Barnhill.
Pablo Gonzalez:The Maven from the mountains of Denver.
Gregg Cohen:Leslie Wilson.
Pablo Gonzalez:We, I feel like Lewis Hudnall has a nickname that we forgot.
Gregg Cohen:Well, he's from the favorite place to, he's formally he of the favorite place to miss was, but now he's
Pablo Gonzalez:rocking Ruland Lewis. Good to have you back my friend. We got Leo Farnan
Gregg Cohen:Dun
Pablo Gonzalez:Far. Good to have you back rocking front of the Bay Area. Who else we got in here? We got the Shama
Gregg Cohen:Nadiem Shaw Nadiem. I do need to let you know that we sent out the replacement bracelet for you. It should be getting to you shortly there. There was a mishap in the mail. But your bracelet is coming to you, brother. There you go. We got Layla Powell excited for today's show. All right. JWT
Pablo Gonzalez:representing. JWT. Billy Green. Good morning from the haptically kaleidoscopic mountains of Colorado. I got you. I got you, Billy. We got, we got Kevin O'Brien. All right, Kevin. Kevin, we're back from Rhode Island. Phenomenal, phenomenal. Irish name. We got Vinancio Rivero. Vinancio is one of my friends from, um, Real Success. I shot him a text yesterday. Fellow Venezuelan, him and his son are doing a little, uh, real estate investing. New to the show.
Gregg Cohen:Welcome, welcome. Thank you for being
Pablo Gonzalez:here. Good to have you, man. We got Zenobia Lewis is back from Georgia. Welcome. Good to have you. So we got Tammy Game Time Gamison.
Gregg Cohen:That's right. Tammy Gamison, showing up. In
Pablo Gonzalez:Colorado. Good to have you. And Joe.
Gregg Cohen:Welcome, Joe. And Joe, not just game time, game time. And Joe
Pablo Gonzalez:and Joe and Joe. I'm not a good reader of things. All right. Who else we got here? We got Leo. You can, you commence new name, new name. I like it. I love it. Valerie, Valerie Dawson in the house. Teammate. I've had some meetings, but we got pop up in the house. All right. Pop up has to show up. I think for the court, he's an important guy. Uh, we've got our family to pronounce. And we haven't said it in a while. Aaron O'Neill. Into the light. Good to have you, Aaron. We got the number nine most attended show of last year.
Gregg Cohen:Misty Johnson recently put another J2B property under contract. Misty
Pablo Gonzalez:Johnson. All right, cool. That's it. We're gonna, we're gonna kick off. We told ourselves only five minutes of roll call today. Because it's a meaty show. It's a very, very meaty show. But you see, I know that you don't just want to thank the roll call folks.
Gregg Cohen:Well, there is so much to be thankful for here. And doing these quarterly calls is something that Pablo and I love to do. I love to sit back, reflect for the, call it the most recent quarter and just kind of reflect put together the thoughts of what's going on in the world, what's going on in the country, what's going on economically, what's going on in real estate, kind of put it all together. I really love this approach. I think it makes me a better leader on our team and hopefully a better steward of your money. But I just want to say thanks to you all. I don't know if you all realize this, it's coming up here pretty soon. We're on the cusp Of our 400th show.
Pablo Gonzalez:Can I tease real quick what we're going to do? Yes,
Gregg Cohen:go ahead.
Pablo Gonzalez:We are going to take a look back at all of the predictions that GC has made over the last four years, and see how he's done. We're going to have a look back of clips, we're going to show them, we're going to rate the prediction, how risky it was, how uh, out there, and how accurate you were.
Gregg Cohen:I think I'm going to get a lot of comments on my hair, because I've gone really gray over the last four years. It's true, it's true. If we're going to see the kid this year. The show has brought the gray out on you, my friend. So thank you all so much. It has been such a journey and we're on the cusp of 400. So I just think that is a community milestone that needs to be celebrated. Thank you all for being here, for giving us this platform. You know, Pablo, myself, our entire team put our heart and soul into making this a value for you. And speaking of the team, I want you to know that Your support goes well beyond, you know, the faces that you get to know here on the Not Your Average Investor show. We have a team here of over 100 individuals, close to 130 individuals now actually here at JWB, that are just supremely talented, hardworking, and absolutely care about your portfolio. So today use this as an opportunity to learn, to educate yourself, hopefully make some friends in the chat and whatnot. And when you have questions and when you want to take the next step, whatever that may be, a first conversation or adding properties to your portfolio, make sure you reach out to your team here at JWB. They're ready. They're willing, they're excited to help you. And for all of our current clients, just reach out to your portfolio manager. And for anybody who's not a client yet, but wants to become one you can reach out to Cody here is the mama bear. She's in the chat. You can send an email to info at JWB companies, or just sign up for a phone call at chat with JWB. com.
Pablo Gonzalez:Awesome. Awesome. GC. As you were saying all that stuff, I was just thinking about our conversation this morning when we ran three and a half miles, no big deal. Cause we're back, we're back. We're getting back in shape. I don't think we broke a sweat. Yeah. We're getting back in shape out here, folks. And this idea that. You know, we live in this world of like software and everything like that. But for all us Main Street businesses, particularly this, this business, the, the team is truly the, the thing that people are buying into, right? Like, I don't want to say the team is the product, but really, that is what, you Folks are buying into when you mention, you know, our, our, our service teammate that we get to have gives me really great solace to, to know that I have a phone number to call is not just 1 person. It's a team of people that are out there looking out for our own interest and behind that team of people that are in there to interface with everything. It's like, all the resources of all the way through. You know, from the hundred people that work here to the service providers that work here and the long standing relationships that you have. So I, I love that we, we're saying this cause we forgot to do it last time. But it really is, um, it really is suiting. And I've learned a lot about kind of how business is done based on that philosophy. So it
Gregg Cohen:is the great differentiator. It's the reason you should choose to do business with JWB is the team.
Pablo Gonzalez:There you go. So that being said, GC, you brought up this idea that this call brings out the best in you, man. We have kind of like lived it through you. You, you have developed a bit of a formula these days of like how you deliver this call, which is cool to watch you put it into a framework. We're going to start with. Basically what you, what, what we're out there believing, right, what we're reading, how does like the data with perspective that you love to bring to the equation before we jump into like actual market metrics and stuff like that. So, um, what's on your mind, my friend?
Gregg Cohen:Well, it's really about what's on your mind out there. I always sit down and as I'm preparing for this a couple of weeks in advance, I'm paying attention to. News headlines and articles and what conversations are being had with our sales team with the different colleagues that I have in the space and I really try to get inside your head a little bit here so that I can help as much as possible as I'm thinking about kind of the path that we have been on over the last year. Especially, you know, there have been times where people were just absolutely sure that there was going to be a recession and then, you know, that recession really hasn't happened. The economy is largely continued to, to pump along strong. And then, you know, certainly there was a time when everybody said, absolutely, there was going to be a real estate crash. And, you know, of course, we were one of the. The only people that I know who said that we didn't see that happening. You know, and that didn't happen in fact. Home prices have continued to go up as well as as well as rents. And I think people are in this state now where they're not expecting that real estate crash. Now they've kind of come to the understanding that it's, Um, you know, the recession, you know, you're starting to hear a lot of talk, or I've heard a lot of talk recently about a soft landing. And so people are, are, you know, open to that idea. It might not be a recession or whatnot. And I think people are just like, they're a little exasperated by all that energy that was expended there. And they're a little bit confused as to like, you Why it didn't happen, right? So I think there's some confusion there. And that confusion leads them now to like, what should they do? And in real estate, the question is, Is it a good time to buy a house right now? So these are some of the headlines that I just pulled really in the last week or so. Yahoo Finance says mortgage rates top 7%. Is this a good time to buy a house? People are just generally confused. And when people are confused, they don't know how to make the best decisions, especially when it comes to real estate, which for most people on this call, you either are invested in real estate or you're heavily considering it. So, you know, I think the biggest question right now, people are, are Um, in a much more stable mindset, as far as what the economy is, the fear of these crashes and of this big recession have largely gone away. And now it's like, you're just saying to yourself, well, I know interest rates are high. I know the economy is doing okay here. Inflation is tamed. Does that mean it's a good time for me to invest? Yep. But I think there's a lot of confusion. So that leads us to our next slide here. Over the years, I have used Gallup polls to help kind of reinforce what America is thinking. I think that's why we all use Gallup polls. Well, I stumbled across this Gallup poll, and as soon as I found this, Pablo and I were hanging out on Friday, and I said, buddy, I have some data here that I think is really going to underscore what you all may be thinking out there Our economy is thinking
Pablo Gonzalez:more accurately. You said Pablo. I think I found the best data ever.
Gregg Cohen:I think I found the best data ever.
Pablo Gonzalez:Yeah.
Gregg Cohen:Right. Yeah. And here's what it is. So Gallup just released their poll. And I'll show you the data in just a second, but the headline here is Americans expect home prices to rise. See market as poor 68 predict 68 percent predict higher home prices and 76 percent say it's a bad time to buy a house. When I read that headline, I just thought, that I needed to do a double take. Like I, normally when you read a headline from a Gallup poll, it is that they expected, Americans expected home prices to go down and they see the market is poor all day or they expect home prices to go up and they see the market is good. This is the first time that I have read this. What did you see when, when I told you this? What, what was your thought?
Pablo Gonzalez:As a marketing guy, I love the headline, right? It is, it is a total pattern interrupt, right? Like, because it, you're saying one thing and then the next thing doesn't really match expectation and it makes you wanna double click, right? Like the idea that. I'm expecting the price of something to go up, but right now is not a time to buy is a counterintuitive thing to think. So I'm wondering what's going on.
Gregg Cohen:Well, it pulled me in and pulling all of you in by default as well. So here's what the data actually shows. According to the Gallup poll, a very large majority of Americans think home prices are going to rise. That's what the graph here shows you here. So 68 percent of Americans think home prices are going to rise over the next year. You can see that this has continued to go up over the years. If you go back over the last 10 years, this is at one of the highest points over the last 10 years. So people are more confident that home prices are going to go up over the next year than largely I'm generalizing here, but largely since, um, Jeez, since back in 2006 timeframe here, right? There have been a couple of blips along the way. So there's something here. There's a lot of idea out here. And people have sort of understood now that home prices can go up, even though interest rates are so high, but they just don't understand why. So I'll try to break it down a little bit for you as we get into the data. But here's the, the thing that shocks me. I had never seen this graph before, but this is American's assessment of the U. S. housing market. And in general, they asked, do you think it's a good time to buy or a bad time to buy a house now? And we're setting historic lows right now, or is it a good time or a bad time to buy in terms of what Americans think? Only 21 percent of Americans believe that it's a good time to buy a house. And they have data on this all the way back since 1978, right? We've never been, you know, lower than 50 percent until. really right around 2020.
Pablo Gonzalez:Yeah.
Gregg Cohen:And it is just the bottom has fallen out here.
Pablo Gonzalez:It's interesting to see such a historic low. Like, I mean, you hear it, you hear the term historic lows and historic highs thrown around more often than ever. but this, graph is kind of shocking, man, to think that we have never been, you know, here you're looking at it, like we really haven't been below 50%. of people thinking it's a bad time to, thinking it's a good time to buy a house, basically ever until the last couple of years. And right now we are at half that less than half of that.
Gregg Cohen:Yeah.
Pablo Gonzalez:Yeah.
Gregg Cohen:And the timing of it really got me curious here. So now I'm thinking about, okay, there are all this time, listen, I've been investing since 2006. There are all these times over the past number of years, that either were really good times to buy a house or when home prices actually fell back in the day. But Americans at that time thought it was better to buy at those times than now. So I got really curious and I started to put some numbers to it. So I wanted to compare If you look at 2009 here, let's see. I, I think what the, the, the number here is? What is that? About 70%. If you go to the next slide, Pablo, it'll show it.
Pablo Gonzalez:I don't think the next slide shows it. No, I, in two slides it shows it. Yeah. Well,
Gregg Cohen:there we go. Yeah. In, in two slides there. Thanks for keeping me on here. Yeah. So I started to compare in 2009 when, when 70% of Americans thought it was a good time to buy versus 2021.
Pablo Gonzalez:Before, before we go there, you know, I think it's, I look at this thing, it's jarring, right? Like you see this big dip right here and I have to think that there is some qualifiers and we are thinking inside this community and what everybody responding to this thing is thinking, right? Like, I think this idea of us housing where market, is it a good or bad time to buy a house? I would say that the average person that's thinking about buying a house is generally thinking about buying a house to live in it, right? Like, I would probably say that that's the majority of people that are thinking about buying a house. And therefore, that has the different considerations that we would have as investors, right? So we're not the average buying decision. And there is some truth to some of this stuff in that. Yes. If I have right now, a historically low mortgage, and I'm going to go buy a home and my, you know, my mortgage is going to go way up for a smaller house or something like that. And I'm like, I'm choosing to live in it. I think that there is, there's some real. Teeth to the idea that for them, it might not be a good time to buy a house, but we need to call that out in order for as investors to be able to see through the noise and and, like, figure out what are the signals that we need to really be looking at. Right? So, like, I think, I think if you get, if you take this chart to somebody. And get in a conversation at a cocktail party and start railing about how like everybody thinks it's a bad time to buy a house. Some people, some people are gonna be like, yeah, because this and this and this, and you're gonna, you're gonna be able to say, yeah, you're right. You're right for you. It's a bad time to buy a house, but it's not a bad time for everybody to buy a house. And it's, and I think where we're headed is it's a different consideration for those of us that are using real estate as a way to build wealth.
Gregg Cohen:It is a different consideration for those who are using real estate as an opportunity to build wealth. And you're right, the opportunity to buy a house for you to live in is a different decision here. But you know, at the core, right, people need a place to live. Right? So it's either renting or buying, right? And if, you know, What, what I think is really staggering to me is if you believe that buying a home, that value is going up in future years, right? And you also believe that the cost of rent is going up in future years too. It's like, it's staggering to me. I understand it's more difficult and I don't want to be tone deaf to the fact that affordability is a challenge, but affordability is a challenge for renters and for homeowners. And if people think that home values are going up in a year, you know, and people understand that what that does as far as increasing their financial status, their net worth, their ability to have a more secure retirement years and years down the line, it's surprising to me that such a low number of Americans think that home ownership is a good idea, right?
Pablo Gonzalez:True, true. I guess I was, thanks for that reframe because to me I was like, well, you know, it's a different buying decision. I guess it's just the, is it time to go upgrade a house for the sake of upgrading house? You know, and how swapping because you want to swap. But if you are like, if you're a family that has three kids, you're about to have your fourth kid, your house with three kids is already too small for you. And you're thinking, nah, I better wait. I disagree with that too. Right? Because that house that you're going to need, no matter what in the next 10 years is only going to go up in price. And it's only going to get tougher to get into as well.
Gregg Cohen:Exactly. Okay, cool. Exactly. But, uh, and I think you're reinforcing something that. The value of buying the house versus renting the house doesn't seem to be something that is nearly cherished as much as it was back in the day. Yeah. But, you know, part of what I think I can do for those who are here and, you know, those in the Jacksonville communities, help people see how important home ownership is for the individual. Yeah. For the community, for society overall, for a country, you know, according to the National Association of Realtors, the average. A person who owns a home has 300, 000 of net worth. The average renter has only 8, 000 of net worth. And if we think about what we've all experienced over the last three, four years of the equity gains that have been made simply by owning a home, that's hundreds of thousands of dollars that our community could have been enjoying and setting their families up for financial success. So I think your point's really valid, but it's still to me, like only 21 percent of the people think it's a good time to buy. If they believe that it's going up in value, something just seems misguided here.
Pablo Gonzalez:You're right. You're right. I mean, I, I think I, I think I'm being influenced by everything around, right? Like I, like I agree. I see Roger Abbott's right. Totally understand your business. Oh no, not that. What he said before. I think many Americans think it's a bad time to buy because the prices are so high and they can't afford it. And that's super, super relatable to me. For me, it was a conversation with our friend, Tim Horvath. Who was like, yeah, but what do you think is going to happen? Like you're, you're still going to need to, your rent's going to continue to go up. It's, you know, buying a home, whether it is for investment or whether it is to live in, it's a matter of locking in your biggest cost. Right, like investing in investing in a rental property is about locking in that 30 year mortgage as cash flow goes up. If you're a resident, it's about locking in your, your monthly cost so that that doesn't continue to go up as rents go up. So to your point, I now can reverse and be like, okay, yeah, no, definitely if, if this is something that you're going to need to do. Then you are thinking like we're thinking and we need to go on with that.
Gregg Cohen:Like I would have expected the numbers to be more in line, right? Like maybe 50 percent of people think home values are going up and maybe 50 percent of people think it's a good time to buy a house, but that disparity there. Shocked me. Cool.
Pablo Gonzalez:All right. So now let's talk about, let's compare this to other times in history.
Gregg Cohen:Yeah. So then I got super curious and started to get into my data nerd ish type of routine here. And I started to say, okay, well in May of 2009, what did the market look like? And in May of 2021, which we can all agree was a great time to start owning and continuing to add. Your to your real estate portfolio. Let's compare and let's just see what the general public thinks. They know about it being a good time to buy in may of 2009, according to Gallup, 70 percent of Americans thought it was a good time to buy houses. And, I wanted to see what the fundamentals said. So at that time I was buying houses in Jacksonville, Florida. I was starting to build our rental property portfolio and starting to build out, you know, what would become our vertically integrated approach here at JWB to serve you all as clients. Well, here's what inventory looks like in May of 2009, there was 13, 500 houses on the market in Northeast Florida. We only sold 1, 200 homes ish. The previous month there and that kept gave us a excuse me, it should say months of inventory there of 10. 9 months of inventory. If I fast forward to May, 2021, that's all right, man. Only 51 percent of people thought it was a good time to buy. So a lot less people out there thought it was a good time to buy houses in 2021. But we had 3, 800 homes on the market, much less than 13, 500. We had 3, 300 sales. And so our months of inventory was only 1. 1. We'll get into that data a little bit more as far as what months of inventory means for some of the newer folks on the call. But just looking at that right there, I can tell you there should have been no reason why 70 percent of people thought it was a good time to buy in 2009 and 51 percent thought it was a good time to buy in 2021.
Pablo Gonzalez:Interesting. Interesting.
Gregg Cohen:So then I started to dive a little bit more. Okay. Okay, again, 70 percent thought it was a good time to buy in May 2009. Well, coming into May 2009, the previous year, you had negative 13 percent appreciation. You had home declines of 13 percent from the previous year. That probably didn't make people feel good. Like, what were people thinking at that time, right? Like, were they thinking it was the bottom at that time? And then it was going up. They were
Pablo Gonzalez:hoping it was the bottom. They were hoping it was the bottom. I remember being in rooms just like, Yeah, no, we've officially reached the bottom for a while.
Gregg Cohen:I got it. I got it. Sure. But I, you know, we've been around for a while now and people have been calling for crashes over and over and over again. And all we've seen are strong fundamentals in the market. So it's surprising to me that people would have been hoping, you know, to the tune of 70 percent thought it was a good time to buy. Let's look at foreclosures. 28 percent of properties in Jacksonville, Florida that sold in May, 2009 were foreclosures. Yeah. High foreclosures mean that you're going to have distress pricing. It's going to be an indicator of. Potentially home declines in values. And so what happened over the next 12 months from May 2009 to May 2010? Well, home values dropped another 13%. So, the majority of Americans did not get that one, right? If you're just looking at home home price appreciation for sure.
Pablo Gonzalez:Got it. Starting
Gregg Cohen:to look at May 2021, the numbers are much different, right? You had 17 percent home price appreciation coming into May 2021 which again, the other side of it, people were thinking, Oh, it's too high. It can't possibly go up, but that's not how real estate pricing works. Real estate pricing works based on fundamentals and supply and demand. Part of the reason that we came strong in May of 2021 and said that we didn't see the home values going down. In fact, we thought this was one of the best times to start acquiring is because we looked at the foreclosure rate, right? Foreclosure rates have been way low for many years. It wasn't just the foreclosure moratorium that we had, but foreclosure rates were less than 1%. And what happened with home price appreciation over the next 12 months? Well, we had some of the highest home price appreciation gains that we may ever see in the Jacksonville market and across the country home prices appreciated over 22 percent in 2021. So all in all, if you're going based on what the general American public is thinking, you might want to re think your strategy here, right? There's never been a bigger and better time. For a community like this experts on the ground here in the market, you're thinking about investing in who have been through up and down markets to give you guidance here and to get back to data perspective fundamentals. Because if we've been thinking about the last four years that we've been doing this show, we've talked a lot about headlines. out there that are eyeball catching, that catch your attention, that largely have been doom and gloom in the real estate world. And, you know, headlines are one thing, but when it influences people to make poor decisions or to not make decisions to start acquiring real estate, what happens is, you know, mom and pop investors like you and me, regular everyday people get influenced by those headlines. They make poor decisions or no decisions. And they ultimately leave hundreds of thousands of dollars on the sideline that that could have put into your net worth, could have put you years and years ahead towards a comfortable retirement. So never been a better place than right here, right now for us to get into where we see real estate going, not just now but over the next 12 months, next full market cycle, because that's the opportunity for you to take those steps and to use this information to your advantage.
Pablo Gonzalez:Okay. So before we get into that, Sam Mashburn, who's new to the show, nickname Smashburn. Love
Gregg Cohen:that.
Pablo Gonzalez:She's on JWB. Yeah. That's what I heard. Um, is asking, why would, you know, why would these 21 percent of people think it's a good time to buy? So I'm assuming we're about to go answer that right now.
Gregg Cohen:I think so. Yeah. This is a perfect segue. Okay.
Pablo Gonzalez:All right.
Gregg Cohen:Well, and I just want to address the elephant in the room that we're probably not, you know, surprising anybody that. Even though home values, people think home values are going up, people still think, you know, it's not a good time to buy. Only 21 percent of Americans. So I went back and I was like, Hmm, let's go back at another time. If you just didn't put a label on what, what the year was or what happened prior to this or what's going on. If you just looked at the fundamentals and found another good time that people generally thought, Okay. It was to invest. I chose 2016. And I would think most people in 2016 thought it was a pretty good time to buy. That's what the Gallup poll showed. so I wanted to say, let's remove all of the noise around. Is this a good time to buy or not or whatnot? And just simply look at the fundamentals for what's going on right here, right now in the market, in the real estate market here in Jacksonville. and so here's what we see, okay? In April of 2016, 65 percent of Americans, according to Gallup, thought it was a good time to buy. Okay? At that time, there was a little over 8, 000 homes on the market. We had sold about 2, 000, 2, 100, 2, 200 homes the previous month, and that gave us a month's inventory of 3. 8 months of inventory. Fast forward to right here, right now, only 21 percent of Americans think that it's a good time to buy. And here in Jacksonville, we have 10, 000 homes on the market. That's the inventory number. But we have a lot more sales too. We have 2, 600 sales that just happened the month prior. And so we have the exact same number. For months of inventory, 3. 8 months of inventory.
Pablo Gonzalez:Interesting. Interesting.
Gregg Cohen:Interesting how the perspective changes based on the noise that's going on around. But when you look at the fundamentals, this market has the same exact months of inventory as 2016.
Pablo Gonzalez:Okay. So if you have more inventory on market, but the same months of inventory, it essentially just means like there is a higher buying appetite, right? Like the demand for homes, has increased in Jacksonville while the supply has not increased at the same rate.
Gregg Cohen:Exactly. That's why months of inventory is such an important metric to look at because as a, as a marketplace, it is okay for you to have more and more listings coming on the market. It's healthy for you to have more and more listings coming on the market. As long as your demand is there. That's that measure of supply and demand that helps inform us of what prices are going to do in the short run. Got it. So then I also looked and said, okay, well, in April 2016, what did it look like coming into that year? And home prices had appreciated a little over 4 percent coming into April 2016. Foreclosures though 15% of all the homes that sold in April, 2016 were foreclosures again, foreclosure activity has a significant impact on home pricing. It basically tamps down what other appreciation would happen because when a home sells at foreclosure, it's a distressed property and typically sells below market value, but 15%. That's a relatively high number. The historical norm is about 10 percent of homes are sold at foreclosure in a normal market. And in April 2016, based on these fundamentals and a few others, we saw home price appreciation over the next 12 months of 7. 3 percent here in Jacksonville. Fast forward that to right here, right now. Okay. 6. 4 percent is what home prices appreciated year over year in April of 2024. Pretty similar to what happened in April of 2016. 4%, 6%, you know, you're very close there. But look at foreclosures. We only have 3. 6 percent of all of our activity here in Jacksonville right now going through the foreclosure process and selling. So only 3. 6 percent of all the sales that happened last month were foreclosures. So what does this mean for home price appreciation over the next 12 months? Well, we think that it means pretty good things, right? I can absolutely assure you that we don't see a crash coming. That, that train has come and left the system. We never saw that happening. Others did, but I think even others across the landscape are seeing that. As not being something that is in the vernacular right now. You know, obviously home price appreciation is largely driven by what interest rates do, but the reality is that we don't see interest rates going up a whole lot higher than this, if any, in fact, we see them going the other way.
Pablo Gonzalez:The conversation is that they're trying to bring them down. They just didn't do it this last time around.
Gregg Cohen:Exactly. So if you think that home prices are largely affected by interest rates, we know what this performs at in a high interest rate economy, and that's why So we're expecting a normal home price appreciation as we go, you know, into the following year here in Jacksonville, Florida.
Pablo Gonzalez:So if I was to look at the stuff, do you see the way that you're putting it, right? Like you did a really good explanation of all these numbers. Me as the noble fool here on the show. I see this idea of fewer people think it's a good time to buy. Right. And when we look at the numbers, we see similar months of inventory, even though there is more people buying. So there's an elevated demand to like a same supply, right? Like, to me, as a, as an investor, I want to be somewhere where demand is higher than supply, right? Like, that means price is going up. Versus prices going down. It means I'm buying something that more people that then, then actually have access to can buy, and that's, that's good, right? Like, scarcity is good for an investor. And then I look at this, I look at these numbers of home price appreciation. Makes sense to me that home price appreciation has gone up. If demand has gone up in a market while supply stays the same. I look at the foreclosure rate of 15 percent to 3. 6%. And to me, what I think of there is I remember in 2009. Or like 2010, the deal was like by foreclosure, because that's that's like getting a deal that's buying a dip, right? That is getting something at a discount. And I think at the end of the day that allowed a whole bunch of people to get in and buy, you know, there was like a whole kind of like season of people that were able to buy those those deals. At a discount. And I also have to assume that all those folks that ended up buying at a discount would've been people that would've bought at like full price out of necessity, maybe a little bit less. So I see this lower foreclosure rate as a further insulator, that home price appreciation. Like if, if there's something that could slow down home price appreciation would be for closures and the availability of like, Hey man, if I just do a little bit more work, I can get a, I can, I can get a deal here, right? I can buy a dip. Right? So like. The idea that the supply is up, I mean, the demand is up, the appreciation is up, foreclosure rates are down, to me it's just like a, a symbol of this stuff isn't, is definitely not going down, it's more than likely going to continue to go up, all things the same.
Gregg Cohen:It's hard to imagine home values declining without foreclosure rates significantly going up in a short period of time, right? And we're at a third, the historically normal rate of foreclosures. So to your point there, one of the reasons that we've gone really strong for years and said we didn't see a crash happening was because of this foreclosure rate. And we don't see that number getting high anytime soon too, because Americans have trillions of dollars of untapped equity in their homes. So, you know, it just doesn't seem likely that there would be a high foreclosure rate, even if people started to lose jobs, because it's in their best interest to sell the homes, tap into that equity rather than let it go to foreclosure.
Pablo Gonzalez:Cool. So we don't see Prices going down on their own. What we see more likely is the idea that interest rates will stay the same or go down here in the near future, because that is what the Fed has signal that they really, really want to do. So, let's talk about what happens when the interest rates drop.
Gregg Cohen:So I think the table is set even in a normal environment here of like, call it a normal interest rate environment. We've clearly seen from 2016 and the subsequent years that the table is set. For future home price growth, but what 2016 didn't have that we have right now is high interest rates, higher interest rates. And what I'm trying to communicate to all of our not your average investors out here is that the normal public, the normal average investors out there are looking at high interest rates is a reason to not buy a house right now or to not invest in real estate. And we are looking at high interest rates as the reason that right now is the best time to be buying a house. And it's because of what happens as the Fed has signaled that they want to lower the Fed funds rate. What happens next indirectly is long term mortgage rates will come down as well. And we look at what happens to home prices over decades when you see a significant drop in interest rates. And what happens is, home prices go up almost all the time. So I put this data together. This looked at every time that average interest rates, 30 year mortgage interest rates, have dropped at least 1 percent year over year. And when that happens, what happened to home price appreciation the following year? And what you can see here is that it's only happened 6 times. So it's not normal for home, for interest rates to drop that much. We're in a special time there. But 5 out of those 6 times, you had higher than normal home price appreciation in the Jacksonville market. The only time you did not was 2008 2009, which was the Great Recession, which was caused by real estate. So if you take that one out, What should become very clear for everybody is that there is an opportunity for you to get additional equity to tap into additional equity by buying before interest rates drop. And that's really what we think is going to happen here.
Pablo Gonzalez:Yeah. And you know, that is something that we talked about here a couple, like a week or so ago, this idea that We got so conditioned to this 2008, 2009 dip in prices to expect, like buying the dip in real estate as when prices go down, when in reality, the thing that is going to dip is the interest rate, not the prices. And that has a particular effect that we believe we'll see. Right.
Gregg Cohen:That's what we think. That's what we believe is going to happen. It's based on data over a decade showing that, you know, this, this This phenomenon happens it hopefully it makes sense to everybody out there. You'll read a lot of articles now even when interest rates drop call it a quarter point or an eighth of a point. You'll start reading articles on on your news sources that will say mortgage applications up because rates dropped an eighth of a point. It's that's what happens. And mortgage applications. Meaning that there's more buyer demand that turns into more buyers, that turns into more sales. And that turns into home price appreciation, holding all other things constant. So how can you as an investor tap into that and make a decision so that you can set yourself up financially, and potentially cut years off of how long it was going to take you to reach that financial goal. So I put the numbers here. I think this is, this is what I'm trying to communicate to folks, right? In April of 2024, 2024. The folks who closed in April of 2024 in Jacksonville were buying with generally a 7 percent interest rate. I went back and I looked at what interest rates were 45 to 60 days before, and so you can assume that most people were closing with that interest rate. The purchase price was 361, 600 for the median home sales price in the Jacksonville market. And I run, I ran the payment numbers because people make decisions in real estate based on payments. And so it came out to about, to 1, 925 for a monthly payment of principal and interest with that type of loan. But what if interest rates dropped to six and a half percent? And what if interest rates dropped to 6%? What effect would home values have as they rise? And what effect would that have on monthly payments? Saying it another way, how much could home prices rise while still keeping that monthly payment, which determines action in real estate for almost every purchase? How could we keep that the same? How high could prices rise? And in Jacksonville, if interest rates were to drop to 6 percent here, home values can rise another 11 percent without increasing payments. Making this more, even more tangible for all of us who are investors out here. If that happens, Those that buy now would be able to pocket an additional 39, 900 of equity, and that would substantially increase your rate of return. So I think this is the opportunity that we all have to make really educated, wise decisions and get the fast track towards whatever your financial goal is to acquire the properties.
Pablo Gonzalez:So to smash burns question, why do 21 percent of people believe that it is a good time to buy real estate right now? They're looking at this. They're looking at this idea that, Hey, this price is never going to go down. It's not going to go down in the near future for me. What's more than likely is that prices are going to go up in the near future based on things staying the same, going to get accelerated. If interest rates drop, therefore the best thing to do. Is to lock in this price that would likely won't see again for a long, you know, maybe ever and, and get in now the old adage of don't wait to buy real estate by real estate and wait, because of the fact that once you buy real estate. You control that greatest variable that you have, which is your mortgage payment when you're doing a long term loan or whatever you're doing, right?
Gregg Cohen:Yes. You know, the idea of like timing, the market and real estate is not something I've ever really played into. Right. We've talked about it over and over and over again on the show. Right. The reason I love this asset class is because you buy it. You have it professionally managed, you hold on to it for a full market cycle and it takes care of you when you need it to take care of you as you're getting closer to retirement or whatever other milestone you may have. So that's just kind of a standard approach. But there have been a couple of times in our history here on the show, and especially with our clients that we've been serving for almost 18 years now, where I see an opportunity for you to have an outsized game. There's an urgency to it. And in 2021, it was the debt.
Pablo Gonzalez:The debt. The debt was
Gregg Cohen:so low. And I said, guys, you need to stock up right now. The urgency, the opportunity right now is regarding interest rates because we are expecting interest rates to drop significantly at some time. We don't know when, but we expect that to happen. When that happens, data shows us that home prices tend to go up. And especially against the backdrop of a growing market like Jacksonville. Right? Even if you didn't have this interest rate kind of accelerator that we're talking about now, buying the dip, meaning the dip of interest rates, you would still have a lot of reasons. I would still be saying to you, hey, listen, your long term goals dictate that this is a great time for you to start buying real estate because the fundamentals are strong. But here the fundamentals are strong and there is an urgent, there is an opportunity that I see kind of a displacement in the marketplace that you can take advantage of. And push forward your investments in real estate, because especially in a growth market like Jacksonville, because I think it'll set you up for success.
Pablo Gonzalez:Got it. Just see. And so, so everybody knows this is the investor perspective, right? Like what we have. Grown to start this updated call with in a second. We're going to go into the actual Jacksonville market data numbers and break that down. Then we're going to go into the JWB numbers. Cause you really want to know how strongly the operators is functioning. But first we're going to take some Q and a
Gregg Cohen:love it
Pablo Gonzalez:before we jump in the Q and a GC, just give a I'm going to allow you to just put a bow on this thing. Should I buy now or should I wait?
Gregg Cohen:Yes. And I've been saying this for a couple of quarters now. Okay. That I think this is a special opportunity to, to buy now. So I put a couple of the, The reasons here you know, obviously we've talked a lot about how I think lower prices are lower today than they're going to be in the future. And prices are likely to go up as interest rates go down. It's a special time for JWB's inventory as well. If we go back years and years and years, you know, it is, I can't remember a time when we had more assets that were already cash flowing day one, already rented day one. So you can buy a performing asset. You know, 90 percent of our available inventory already has that long term resident in place, which is a special time. And then we have some incentives that we have been offering as well. We have our maintenance incentive, which is available to every person who buys a property. Now, you don't have to reach a certain minimum of properties, but you'll get between 4 dollars of a maintenance credit per property. And so that's on your 1st property to 5, 10, however, many you invest in, but we do also have additional. Bundles, you can be the MVB, the most valuable bundler, like Patrick Mahomes and, for our clients.
Pablo Gonzalez:Just for the record, Patrick Mahomes took that from
Gregg Cohen:us. He did, he did. We're still waiting on the royalty. He should at least buy a couple properties. That's true, that's true. Yeah, I'll have his people call my people. We'll do launch. Please. Um, so, so for those who are looking to push for, so if you can take this information that I'm talking to you about right now and you use this, you sit down with our team, we put a plan together and your plan is to invest in, call it three properties or five properties over the next few years. And you have the opportunity to push that forward. Not only will you take advantage of the market dynamics that I'm sharing, especially about interest rates going down, but we also have incentives for those who purchase multiple properties at one time. So if you buy three or more at a time, you'll take 5, 000 off the purchase price. I had a friend that I helped build a portfolio for, he bought seven properties. So it was 35, 000 off the purchase price for that.
Pablo Gonzalez:Just like a three series BMW off the purchase price. All right, GC, let's get into some of these questions, right? So again, new clients, if you haven't invested with JWB before, go to chat with jwb. com, reach out to Cody, who's in the chat right now. And she will hook you up as well, or shoot an email to info at JWBCompanies. com, get the ball rolling. Current clients like myself, like many of us that are here in our community. You just reach out to your portfolio manager and they'll walk you right through that process. Do you see, let's get into some questions. We've got a new listener. I'm not sure if this is the full name, but here it says HSTN. So hello, Greg and Pablo. Hello. I'm fairly new to JWB and learning a lot. How can I view previous webinars? HS. All this stuff is on YouTube, right? So you can go to NYAIS. com where not your average investor show. com, right? NYAIS. com in the JWB website. And you can see like the most recent past shows, or you can go straight to YouTube, put in not your average investor. It'll take you to the channel. Cody's here right now. I'm sure she can link the, the YouTube channel in the, in the chat for you so you can just click it one time, subscribe, rate, like share with your friends, all that good stuff. But we have it all there. And if you're more of an audio person like me, I don't like to like sit down and watch YouTube. I like podcasts. If you go to whatever podcast player you put, not your average investor you'll find. Almost 400 episodes of the podcast that you can dive into based on the title or based on whatever you're trying to learn. So it's all out there. Anonymous attendee has a question here asking fixed or variable rates for investment properties. What's your thoughts?
Gregg Cohen:Well, I think, you know, there is no one set way to invest for every investor out there. It's part of the reason we sit down and we build a plan with all of our prospective clients coming in and all of our current clients. So I won't say one size fits all, but I'll just give you the generalities here. Okay. Most JWB clients have fixed rate loans because of how this is built, right? This is built to be passive. This is built to be consistent. This is built, this is built to just work for you in the background. Think about how you invest in stocks and bonds. You just expect that to work for you in the background. Well, this real estate portfolio can largely be the same thing. So we're not trying to, you know, maximize return on investment at every angle. That's typically not the biggest driver. For our clientele, it's make sure it works. Make sure it's easy. Make sure it doesn't interrupt their day job or their daily lives. Right? Just make sure this thing works. So set it and forget it is kind of the mentality and so fixed long term interest rates are typically where we go. You could make an argument that you could have a higher rate of return if you you know, looked at some variable interest rates that doesn't really play in today's interest rate environment. As well given that rates are higher today and expected to go down at some point in the future. But the big thing is we need to build a plan for you. So I would expect largely your plan will be built on long term fixed interest rates. That's the overwhelming majority of our clients, is what's right for them. But we'll always, always be willing to see what's right for you when we build your plan up.
Pablo Gonzalez:Got it. And another one of our new friends here, Leo, you commit has a question. What about other markets like the West coast? Do you still think it's a good time to buy there?
Gregg Cohen:Well, it depends. So I chose the Jacksonville market and the Jacksonville market is uniquely positioned, you know, when you're thinking about buying investments in real estate or a buy and hold investment you should be looking for two things right off the bat. You should be looking for low prices and you should be looking for high growth. And so Jacksonville has median home sales prices that are below the national median. And if I compare that to, you know, the West Coast, if I compare it to California, that's not the case out there. So the reason why low prices are important is because it's going to limit your out of pocket. It's going to be more accessible for you. Right. You don't have to put as much down. And even more important than that, it's going to allow it to pay for itself with positive cashflow. And you typically don't get that. Out on the West Coast. Now the second thing to pay attention to is high growth. And Jacksonville is one of only a small handful of markets out there where you have prices that are lower than the national median, but the appreciation rates historically are above what the national average is for home price appreciation. So, you know, just generalizing here, if I'm talking about the California market or any high price market out there, you're probably only getting one of those two. Criteria, you got to have both, right? You got to have low prices below the national median and higher growth. And so, that's one of the reasons why we love Jacksonville.
Pablo Gonzalez:Leo. What I would tell you as somebody that was a complete rookie to rental property investing four years old, when we started this show and I've learned thanks to this community that we have here, thanks to my proximity to Greg and all the people that we've talked to what's very clear to me is that the order of operations for folks that buy properties. Is generally wrong. And I think it's really interesting that you started with market because most people generally think of market secondary and they're just kind of like looking for like, where can I get a house and where can I get into a house? Right. But, but asking market is a really, really good question. That being said, there's an even more important question. You're only buying a house one time. You're owning a house for the, for the life of that property, for the life of the investment and in rental properties, the longer you hold, the better you do. It's like a fine wine,
Gregg Cohen:right?
Pablo Gonzalez:So. What I find that most people misunderstand is the idea that no matter what market you're going to be in, the 1st thing that you want to look at is, does the market have a property management provider, a turnkey rental property service provider, ideally how we call it a vertically integrated Rental property provider that has a team that operates like a fortune 500 company, meaning that they're driving these specific metrics by team. They have a certain amount of footprint. So they have these strategic advantages and they really, really know the market and they're the same person that's selling you the house so that. If there's ever an issue, you're not talking to your general contractor and the general contractor is not blaming it on the painter and the painter is not blaming it on the drywall or kind of thing. Right? So the 1st thing that I would encourage you to ask is whatever market you're looking at, because obviously you've gotten some good feedback in the chat of the West Coast is a lot. Right? It's like, what market are you actually talking about? Is what city are you speaking about specifically and who is going to manage your property in that city, right? Like, do some interviews of what's available there in that city. And that'll tell you how much you can actually really count on whether or not you're going to get these returns, whether or not you're going to stick around with it. Because the experience as a rental property owner is always a variable one. There's always going to be people living there. And the number one thing is that you have a team that's able to like manage that stuff so that it minimizes the pain. So you're not sitting at your dinner table and your wife's not saying, why did we buy this thing again? Why did you talk me into this thing again? Right? Because that is, that will invariably happen at certain points. And you've got to be able to look her in the eye and say, You know what this happens in this thing, but we're here for the long run and we have the right partner here That's going to manage it for the long run So that this is only just a blip on the radar that's going to happen every once in a while But we're going to be able to count on all that stuff Once you have that figured out now, you're looking at everything greg is saying you're looking at the market And you're looking at, do I want high growth? Do I want cashflow? Can I go negative in cashflow? Because I have other passive income. That's paying this thing off and it's time because I have a certain amount of growth. And even in that market, some things that I would look at is like, you know, are you, are you in the tailwinds of opportunity? Are you like, are you looking at the tailwinds of opportunity? Right? Like are you living in a market? Are you investing in a market that's growing? Are you investing in a market that is. balanced in the sense of like it has a balance of jobs. I come from Miami where the economy goes up and down based on like tourism and, and, and real estate and construction. And it's started to like round out and, and become like a little bit more balanced. Or is it a city like Jacksonville where you have Logistics, military, healthcare, and healthcare sciences and finance. That is a very, very balanced economy, right? Like those things are going to really affect your experience. And are people moving there? Is it one of these states that has a low tax base, that has good weather, where people from the north and people from higher price markets are moving to, right? Like all those things are going to determine that stuff. So, number one, make sure that wherever you're looking, you have that team. And number two, just ask yourself the questions of, is this place growing? Okay. Is this place like somewhere that people that want jobs in AI are moving to, you know, like, is this something where if there is a downturn in the recession, is it really beholden to only tech and there's going to be like a massive amount of layoffs like we've seen recently in the tech sector kind of thing? Or is it something that has a balanced economy? With regular jobs and is stable would be the way I answer that. I love it. I'd like that would happen All right. Here we go. Kevin. O'brien has a question Can you comment on real estate investor cash flow investing specifically positive cash flow even with a mortgage rate paydown of two points is getting tough Investor costs like insurance is moving more than typical for real estate investors making cash flow even harder I agree the other four buying centers are solid and just put my money where my mouth is closed on my fifth JWB property this month. Kevin O'Brien, just looking for your thoughts on cashflow.
Gregg Cohen:Yeah. You know, I think you're, you're spot on cash flows have been going down for years. All things held constant, right? The, the cap rates that. You know, provide the, the cash flow have have been going up, meaning that your cash flows are going down in future years. Excuse me, other way around ca cap rates are going down, cash flows are going down. So what I'm talking about here is as whole values go up, your rents are not going to keep pace with that. And ultimately your cash flows, you know, are going to, and they've come down over the future year and. They've come down in previous years. Trying to get to my next point here. All right. So here's the thing. We knew that this was going to happen. And this is why understanding why all profit centers, all five profit centers, is really critical. And it's because there is such a focus on cash flows, But that is the least valuable profit center over a full market cycle. And so when we understand that it is okay for cash flows to come down and still make this a great investment, but what you don't want to do is you don't want to be cashflow negative. So when we get asked the question of like, are cash flows harder and harder to come by, well, yes, they are, but it's also an easy problem to solve the way to solve and to provide more cash flow is simply to put more money down in the investment. And when you do that. You have this beautiful thing called rental income that comes in. If you just put a little bit more money down, you can still build an investment here that has positive cashflow. So that's part of the thing that we do when we sit down with all of our clients. We build out that plan for you. It's because the cashflow problem, while holding things, constant cash flows have come down year over year. It's one of the easiest problems to solve as well. We just need to map out, need to put a little bit more money down to make sure that This is positive cashflow for you. So, yeah, so if anybody is concerned about negative cashflow, just sit down and build out a plan. It's the easiest problem to solve.
Pablo Gonzalez:And again, you build up that plan by going to chat with JWB. com or shooting an email to info at JWB companies. com and we've got planners in the house that'll help you make that happen. Surge every Bolton also asked a similar question about appreciation play is good for building that worth. How about operating margin? Our rents keeping pace to support long term buy and hold strategy, margin of clash flow being key to keep you in the game. Can you talk about that metric? So I think everything you said and. Are rents keeping pace to support long term buy and hold, I think is the nuance here.
Gregg Cohen:Well, yes, absolutely. If you look over the last three, four years, your rents have gone up substantially. Now other costs have gone up as well, but your rents have gone up substantially, right? Rents have gone up 30, 40 percent over the last, call it four or five, six years here. So rents have gone up and absolutely have been able to maintain your high margins. Now, if you're just looking over the past year, rents have slowed down, right? Rents are still up in Jacksonville, but some of those other costs have, have gone up as well. So it depends on your perspective, but the beautiful thing about buying and holding real estate over the long haul, you have that, you know, Fifth profit center called inflation hedging and what that generally leads to is home prices and rents going up with inflation rate. And that protects you to make sure that your increases in your rents can outpace the costs. and protect your margins on your cash flows while you're owning the investment.
Pablo Gonzalez:Got it. All right. So Bill Caporusso has a question that I think is going to take us into the Jacksonville statistics right now. Uh, but he's been waiting patiently. So I want to just answer it ahead of time here. He says, by the way, great name, Phil Caporusso. Please address how the total amount of buildable land in Jacks will affect the number of new builds and increase in supply Will affect prices.
Gregg Cohen:Yeah so we have a lot of buildable land in Jacksonville. It's one of the reasons why People love to invest in Jacksonville, you know, we're largely like a blank canvas We've talked about this in downtown Jacksonville But if you think about just the amount of land that we have on the outskirts of Jacksonville It's one of the reasons why home builders come here in droves Institutions have Wanted to invest in Jacksonville. And that's a part of the reason I think Phil's question is, can this go to the other side? Right? If I'm, if we're sharing about how important months of inventory is and builders start to build up a tremendous amount, could that swing months of inventory in the wrong direction? And if all you had was a ton of buildable land and builders building stuff, you didn't have demand to offset it, then that could happen. So. Yes, we do have a lot of buildable land. Yes, builders are actively building a lot here. But we are undersupplied at the moment, and it takes a long time to fix that problem, even if you didn't have this growth of population and demand for housing. You know, 3. 8 months of inventory, which is what we're at. Right now is really low by historical standards, right? The typical month of inventory is between six to seven for a normal market. So we're call it, we're at basically half the supply that we need to be able to support the demand. So you're already starting way behind the eight ball when it comes to necessary supply. And again, We have significant population growth, which is driving more demand. So what I would expect to happen in the future quarters, when we're doing this call, you're going to see the supply of housing go up, and you're also going to see the amount of home sales going up as well. And so that's why I'm not concerned about the supply. Problem in Jacksonville or across the country, to be quite honest, it's because of how little we have in relation to demand
Pablo Gonzalez:and Phil, we haven't really dug into it so much in this call, but like there's asset classes and then there's asset classes inside of asset classes, right? Like housing is like one big asset class. But even if you look at multifamily versus single family, and even, and when you look at single family luxury homes versus middle income homes versus workforce housing, you're, you're seeing very different things. Like we recently saw a bunch of multifamily get built. So multifamily, I think is rents recently went down, right? So like that gets affected one way. The asset class that we're all playing in here that invest with JWB, which is single family homes is a lot harder to bring to market. And it's a lot harder to bring to market. Even we just discussed this recently, the idea of, like, infill lots inside of us inside of the city fabric, where the demand is extra high, as opposed to, like, out in the boonies where you're going to have to drive an hour into work. And you can just build 300 homes, right? So, like, the stuff that JWB is building is very in demand housing that is workforce housing within 15 minute drive of the city center where the majority of jobs are cut are there are there are coming and all these other, all these other kind of like. Positive things. So, you know, I think to what you're saying, it's going to take a long time just to catch up to the actual like dearth and supply. But one of the things that I found really, really attractive is just this, like, the fact that we hear that are investing with JWB are in the most in demand. Asset class with the lowest supply that happens to work at all times in all growing markets, if you've ever lived in one workforce housing, single family homes is like the number one thing that always there's like a lack of supply for because people haven't figured out how to build infill lots at the scale that you guys have figured out
Gregg Cohen:true if you want to see what what is lacking in terms of housing. Follow which programs are incentivized by the federal government and local municipalities, right? Affordable housing is getting incentivized right now. It's because that's what we need and that's where we focus. That's where we play.
Pablo Gonzalez:Cool. Let's hop in on some, uh, Jacksonville statistics here, GC. Sweet.
Gregg Cohen:And we've gone through a little bit of this already in the, in the previous slides here. So I'm just, Keeping you guys up to, up to date here. This is the historical home pricing chart for Jacksonville. I show this every quarter so that you guys have a baseline and the blue line, jagged lines are actual home pricing the median home price month over month and that red smooth line is the historical average of what our home prices are expected to do. That historical home price line is at 4. 9 percent growth. That is because for the last 40 plus years, the average historical home price appreciation year over year in Jacksonville is 4. 9%. And so what we're seeing here is largely what we at JWB have been predicting for years and years and years now is that you're going to see pricings, pricing really start to oscillate around what that red line does. And so you can see it here touching the line, it goes up. You can see it touching the line again, it's gone up, right? I would expect that to continue to happen over and over and over again. And one of the main points to Share with all of you is that people get scared when it goes below the line. Below the line does not mean depreciation. It does not mean decline in values. It just means that it is trending at that moment, less than normal home price appreciation. So,
Pablo Gonzalez:if it's at 4. 9 percent is the average, in these moments, these blips to the line, maybe it's at 3. 9%.
Gregg Cohen:Yeah, that moment in time. But don't get too caught up on what it does next to the, to the, to the line. This is a macro sense here. And so that's, this is one of the reasons we expect the market to perform normally. Um, uh, over the, over the next market cycle and really in the coming, years as well.
Pablo Gonzalez:Quick MOI
Gregg Cohen:explanation.
Pablo Gonzalez:Yeah. I think we hit on this, right? MOI is properties that are available in the market. How long it would take for all properties to like sell out if no new properties are built,
Gregg Cohen:right? Absolutely.
Pablo Gonzalez:At the end of the day, Historical home price appreciation is correlated in Jacksonville to between six and seven. Below six means that there's going to be higher than higher than average home price appreciation. Above seven is lower than average home price appreciation. Not negative, but lower than average home price appreciation. Let's see it.
Gregg Cohen:Yeah, and I compared to pre COVID times. I think that's a healthy way to compare. And so, You know, in April of 2019, we had about 8, 000 houses on the market and we had about 2, 600 sales for a month of inventory of 3. 1. What's interesting here is comparing it to last year as well though. And looking at days on market. So in April of 2019, we had 38 days on market. People all said that that was a great time to invest in April, 2023. We had lower months of inventory as you see here. It was only 2. 4. We had 41 days on market and, you know, people were still saying because people don't necessarily know how to analyze the real estate market that some were saying it was a great time to buy. Some weren't, but all we know is that home prices appreciated another 6. 4 percent since April of last year. April 2024, the thing that jumped out to me other than the low months of inventory we do have, we're over the 10, 000 houses on the inventory houses on the market at the moment. So that's something to take note of, but we have 2, 600 sales supporting it. So low months of inventory at 3. 8, but only 31 days on market. So things are absolutely moving in the marketplace and the ability to sell, You know, homes on the open market is a lot of them all
Pablo Gonzalez:feels like there's a ton of demand for housing, man. Like, it's it's not like people might be saying that it's not a good time to buy. But like, the data shows that houses go on sale and they get bought. Right? So it's just like the supply demand graphic to me is very clearly on the side of, you know, They who own the supply.
Gregg Cohen:Mm hmm. All
Pablo Gonzalez:right hundred percent. Oh, so so that's the that's the Jacksonville market update Yeah, we got through that Bill has a has a follow up to his prayer questions as thanks for answering. I he totally understands single family versus multi He guess it also comes down to cost to build And that continues to rise, which leads to higher prices. What do you think about that?
Gregg Cohen:Yeah the cost of bill hasn't come down like we have hoped and, uh, thought that it might by this time. I was just listening to the call for some of the institutions that have released some of their numbers and they're actually starting to see that their home costs and their bill costs have started to see some relief, which is nice. Hasn't happened here at JWB. We, we clearly don't play at the institutional level but we are certainly, you know, we build 400 houses a year. So, and we haven't seen those costs go down, but I think your point is, do costs increases lead to higher home prices in the future? And the answer is yes. That's one of the things that makes housing both. Less affordable when that happens, but as an investor, that's all, that's, that's what we're talking about with a hedge against inflation. It's because as home prices, well, as the cost to build a home go up, if you're, if you're a builder and you still expect builders to make a profit, ultimately for them to bring new inventory to the market. The price of what they sell has to go up. And so that's why this is such a built in hedge against inflation. And I wish home prices were I wish construction costs were coming down, maybe they will in the short run. I've been saying that for years now, so I won't hold my breath, but. That would be nice. Got it.
Pablo Gonzalez:Finally, let's do the JWB statistics real quick, and then we can answer the rest of these questions, GC. I
Gregg Cohen:love it.
Pablo Gonzalez:All right. This is a interesting kind of stats that you've pulled up for this one.
Gregg Cohen:I'm really excited to share this with you. So, you know, our theme for 2024 here in JWB is making an impact. And it's those 3 words have really helped. To bring to light, I think the activities that happen on a day to day basis here and really zoned in on the things that we are doing here with all of your investments and how we're improving lives, changing people's lives. And we have some new client reporting that's just been released. Some of you have already taken a world of the new client reporting will be. Launching that more and more in the coming weeks and months here. So if you have the opportunity to log into your reporting and you haven't done yet, done that yet, go ahead and do
Pablo Gonzalez:that.
Gregg Cohen:But now we have with this new improved reporting, you get to see all profit centers that make up your investment. And for the first time, we're able to see and capture just how much. Wealth and profits have been created for our clients beyond just net rental income and beyond just tax savings. And some of the stats I think are just really fun to share. So that's what I'm going to do. I'm going to include this on our quarterly calls going forward. But here's what we have. We have just about 1, 100 turnkey clients. Those that own turnkey properties with us, we've sold just over 3, 000 properties. So the average JWB client owns just under three turnkey properties. And our average annualized rate of return across our entire portfolio is 22%. So the number of times I should point out that we have put 22 percent on an expected return on investment for our portfolio,
Pablo Gonzalez:how many times do you see zero, zero, right?
Gregg Cohen:You will see right now that it's nine to 10%. It's largely been around nine to 10 percent for our entire history. But this is that under promise and over deliver coming to fruition there seeing that our clients on average are earning 22%.
Pablo Gonzalez:For those of you that are new here, under, under promise over deliver is a core value here at JWB. It's something that Greg has beaten into my head as I build my own business. And I think about just like every moment it's, it's kind of built into every part of the experience. So
Gregg Cohen:success, what keeps people coming back? Yeah. So this is, I think, the most fun data for me to share. So we're able to see through all profit centers, What we've been able to do as far as wealth accumulation for our clients here. So, really happy to report that we have three clients that have made over 2 million with their JWB investments. We have 36 millionaire clients, those that have made over a million dollars with their JWB turnkey investment properties. We have 158. 500, 000 clients who have made again 500, 000 or more in their in their turnkey investments. And I think what's even more tangible here is all of, all of us, I think can relate to the 100, 000 number even more.
Pablo Gonzalez:Oh yeah.
Gregg Cohen:You know, so. Especially
Pablo Gonzalez:since you can get there having only been in for three years and only three properties, right? You are one of those 100, 000 clients. One of those 100, 000aires. There you go. 100,
Gregg Cohen:000aires. Is that better than a. Gigillionaire? I'm not sure. It's better than whatever
Pablo Gonzalez:I was doing with my money before. I bet I ran out.
Gregg Cohen:So we have 763 clients that have earned at least 100, 000. And this takes into account all of your profit centers without including inflation hedging. That one's hard to calculate. I keep that one off. But all of the costs that come in with your maintenance costs, your vacancy costs, any property management, tenant placement fees that are charged, you name it, all of these costs are included there. All right. When you look at it, we've created over$301 million in profits for those roughly 1100 clients, and really proud of the impact that we're able to make on our clientele and that you make on the 130 people here that are serving you.
Pablo Gonzalez:That's pretty awesome, man. I like this new element, like, I think it's gonna be like a leaderboard kind of thing that we're gonna be able to continue to do. I'm excited on our, on our run today. I was like, you should have this like as a electronic leaderboard in the middle of your office, right? Like very cool. Yep. All right. Let's talk about more,
Gregg Cohen:Yeah, this is a benchmarking thing. I do the same thing every single quarter to show you how we're benchmarking about some of the most important KPIs within the JWB landscape here. So we'll kind of run through here and you know, start with properties purchased, right? We've only purchased 17 properties here. The reason for that is that we have thousands of lots that are in production here in JWB. So this was a planned strategic approach to our, Our acquisitions over many, many years. And so we're picking and choosing when it comes to purchasing properties. Now puts us in a position of strength, knowing that we have your runway of cash flowing properties available for you raised over 9. 7 million in private lending for those who aren't aware of private lending is one of the financial engines that churns this entire operation. Our clients not only invest in turnkey properties, they can also invest in JWB private lending, and that is where you lend your funds to JWB so that we can build 400 homes and to do these developments that we are able to do. So thank you to all of you who are private lenders as well, and private lending is something that is, is, it's kind of like the debt product. To our overall platform, the equity product would be owning the asset, but the private lending is a debt product and it really pairs well. For our portfolio. These
Pablo Gonzalez:are through April 2024. So this is this year so far.
Gregg Cohen:Yes. Okay. Yes. We'll raise about 30 million bucks of new capital. On the private lending side, we have paid back, including principal and interest over 500 million. Since inception in 2006. Okay. Never once miss a payment. That's not counted
Pablo Gonzalez:on the 300 million that you've.
Gregg Cohen:That is not counted.
Pablo Gonzalez:All right.
Gregg Cohen:We have built or renovated over 500 properties so far through April. So continuing to come along there. And we sold 83 properties through April.
Pablo Gonzalez:And again, these numbers are essentially scale. The scale of properties that you're building and renovating, the sales that you're doing, the money that you have access to allows you to control costs and control experience for us. Investors in our own properties because you have this whole engine churning and that allows you to get preferential treatment from vendors, allows you to get speed to market with things well oiled machine.
Gregg Cohen:It's the whole vertical integration.
Pablo Gonzalez:Ah, the whole vertical integration.
Gregg Cohen:You may be familiar. So other property management KPA, KPI stats that I'm just, I, I just love sharing. My, our property management team, does such a great job and allows me to get up each and every quarter, you guys see it, and to be able to gush over what these stats are and what they mean as far as consistency and you know, just unbelievable performance for our clients. So, rent collection 98. 6 percent through April of 2024. in and out every single month, extremely high rent collection numbers. At the end of the day, that's what supports the financials of this investment for our clients. So, super proud of that. Our average rent per property continues to go up as we do this and, uh, I think the, average rent per property was 1450. I was looking at the stats last time. So, continuing to go up quarter over quarter, which is always a good thing and current properties under management, just a shade under 5800 will be over there. Pretty soon, so getting close to 6, 000.
Pablo Gonzalez:Nice, dude. Very cool.
Gregg Cohen:We've rented 458 houses this year. And again, for those who are new, we don't just rent out homes on a one year lease. We sign two and three year leases. And so that next line there, the average duration of initial lease is just about 27 months. That's the property management team working hard for you so that we can ensure long term resident stays. And long term residence stays decreased maintenance costs and vacancy costs for you. It's one of the key pillars of why this is successful for our JWB clients. In addition to that, we care tremendously about the client experience and making sure that this is great value and a great experience for our residents, those who rent from us. And because when it comes time to resign or renew that lease, we want that decision to be an easy one for those residents to renew. And so, we've re signed or renewed 775 leases through April. We are going to absolutely crush our world records when it comes to homes rented and homes re signed this year. And then lastly, our eviction percentage, right in line with our historical norms 0. 35%. is right where we are typically.
Pablo Gonzalez:Awesome. And back to kind of like the, the advice we had given Leo earlier. This is, this is the power of the team, right? Like this idea that you are keeping occupancy high because you're signing on term leases, that you have this ability to re sign the fact that you have like virtually non existent evictions. That's not by accident, right? Like, and that is what really, really drives return. Leo was actually asking when you sign two to three year leases, do you have built an increase in the contract?
Gregg Cohen:Absolutely. We do. Okay. There you go.
Pablo Gonzalez:That answers that.
Gregg Cohen:So yeah, so yeah, this is just many times you all want to see what's happening and what the inventory looks like. I'm happy to just kind of share just an overview with you. So minimum out of pocket for an investment of one JWB turnkey property, somewhere around 75 to a hundred thousand dollars out of pocket, your estimated returns on investment will be between nine to 10 percent when we put that portfolio together for you. The interest rates you can expect is about 6%. and that's for JWB clients only. We're able to get preferred rates because of our lender base, which you all get to enjoy. And of course we have those multiple JWB incentive packages available. As well. And if you haven't talked with a member of the sales team yet we have some really cool tools now to be able to put portfolios together for you that are perfect for. Your goals give you visibility into the properties that we're putting into the portfolio, like we truthfully never had before and so if you haven't talked to the sales team, if you're a current client or a potential new client, you're going to really enjoy that call and the, the portfolio planning and the portfolio creation process is something that You're going to love to help you reach out to them.
Pablo Gonzalez:So if you want that, loving that experience and you are a current client, just reach out to your service teammate. If you are new here, again, go to chatwithjwbb. com or shoot an email to info at jwbbcompanies. com. Um, and get that thing going. Just, just plan it out. See what it looks like. See what it looks like for you to acquire these properties, right? Like I, I find that nothing happens without you visualizing it first, right? So like, if you don't, if you don't hop on that first call and you see what it is, your brain will solve for it on the backend, right? It'll find the money. It'll find the path to do it. That's how my story has been just kind of like. Jump in and figure out how to continue to add chips to the, to, to, to my portfolio. I'm up to five now. Um, I never thought I would say that when I bought my first one three years ago. Uh, but it all comes down to this idea of like really believing in it, really like seeing it as a North star, going to chat with JWB. com, getting that thing started. And my pitch is that we do this every Tuesday, Tuesdays, hang out with us on the not traveling investor show. We're almost an hour and a half in. Should we answer some questions? Finish this out? You feeling good? You feeling strong? All right, here we go. So Darren Seaman wraps this up nicely when he says, not a question, but one of my favorite quotes by Warren Buffett is that's wise for investors is to feel fearful when others are greedy and be greedy when others are fearful. I feel like we Go to that quote a lot these days when everybody's so scared of homes and so scared of doing it, but we're seeing these fundamentals really working for folks. So Smashburn says, what kind of demographic do you think makes up the 21 percent of people who think now's the right time to buy?
Gregg Cohen:Type of demographic hopefully it's the people that are watching the show right now. Um,
Pablo Gonzalez:you know, I
Gregg Cohen:don't have, I don't have a demographic answer there, Sam, but I don't know if it's an age demographic or whatnot. I think it's those who aren't afraid to think differently, to be quite honest. I was
Pablo Gonzalez:going to say it's a psychographic, right? It's the folks that have realized that retirement as is, isn't really working for people when you look at the numbers and you look at the fundamentals of the retirement industry. It's not really working. So folks are taking matters into their own hands. They're joining communities like these. They're getting educated online and they're going against the grain because they realize that what used to work for everybody isn't really working anymore and they got to do things differently. The shaman says, what percentage of people are renters in Jacksonville as opposed to owning a home? So that's something we're going
Gregg Cohen:to get back to him on. Yeah. I know, I know the data. I know the source. Let me get back to the
Pablo Gonzalez:next show and I'll have that actual answer for you. Cool. It says 6. 3. Thousand to 10, 000 houses in a year is a significant jump. May I ask what the reason behind it is? A little context to that is this slide right here, where we were talking about the amount of houses on market. Just, do you want to answer that?
Gregg Cohen:Yeah. And you know, when you're looking at only 2. 4 months of inventory, Or even if you go years back, if we went to 2021 and we saw one month of inventory, every builder, especially in a growth market like Jacksonville, every builder is looking at that and saying, Oh my gosh, I need to start building there. And so you're seeing that over the last one year, two years, you're starting to see, especially to the other gentleman's question about land in Jacksonville, builders love Jacksonville as well because largely you can acquire cheap land here still. And so, what's going on with that rise from six to 10, 000 is absolutely expected. It's not something to fear. It's, it needs to happen for the overall economy and kind of our overall communities to not have way high home price appreciation forever. So it's expected, it's welcomed. It's largely being driven by. New homes that are being built both in the for sale space and in the, in the for rent space as well. So it's certainly something to monitor there, you know, that we'll be monitoring this especially in our quarterly calls and anytime that we need to. But what we should expect to see in future quarters here in Jacksonville is that you will likely see listings going up, you will likely see sales going up, now part of that is seasonal, if we do it towards the end of the year just know that seasonally sales are a little bit slower at certain times, but just generally speaking what you're going to see both of those numbers increase in future years I think your months of inventory will go up because it should go up, it shouldn't be below six. Thanks. For 15 years, like it's been. So just get comfortable with this fact that it will go up and you'll see that this will perform like a normal market. Especially when you start to see months of inventory, you get closer to what a normal forms like.
Pablo Gonzalez:There you go. All right. HSTN has a question that we've been asked before. I just bought my very first property with JWB. It was a wonderful experience and looking forward to building a portfolio here. I hear the opportunity that lies in Jack's, but just wondering if JWB is or will consider going to other states in the future.
Gregg Cohen:I really appreciate the question. Congratulations on your first property with JWB. Thank you for putting your trust in us. Super, super excited to have you as a client. The question of do we go to other markets is one that we get every so often. And the answer is no. And the reason is because we like to measure what we're doing, not just on the returns that we can create for you as a client, or not just on the experience that we can create for renters that we have and that we serve, we want to make an impact. And we believe that we can make a bigger impact by focusing on Jacksonville, which is our hometown. And going a mile wide, rather than, excuse me, going a mile deep, rather than going a mile wide. And, you know, that's very different than other turnkey providers, but if you look over the course of our history. Every stakeholder that we serve gets that much better because we're focused on one market. Our turnkey clients are able to buy properties in neighborhoods that we have hand selected that are positioned for both cash flow and And growth and all five profit centers. And we're able to reduce risk because everywhere you tell me to go some other place, it's hard to replicate success, right? Our residents are able to experience more success because we're here. We're able to perfect our systems and our talent here at JWB to serve our residents. Well, we're also able to have a dynamic impact on the communities that we serve here and our overall community is impacted. You're able to see that by us being able to have the resources and Stomach to go and be a pioneer in downtown Jacksonville. And we acquired 20 city blocks put in 68 million of our own money into downtown Jacksonville, because we see the benefits of raising median incomes and improving quality of life. For all of the neighborhoods that are surrounding Jacksonville, which happened to be that neighborhoods that you invest in as a client and that our residents live in as members of our community here. So, we couldn't do that if we went anywhere, everywhere, you know, to try to find the next cash flow market. So, our approach is very different. We are here, we're committed to Jacksonville, we've been saying the same thing for 18 years, we'll say it for another 18 years. Longer than that. And 18 years ago, people thought we were crazy for saying that. People are starting to believe us now. But, Takes
Pablo Gonzalez:a generation of saying the same thing.
Gregg Cohen:Yeah. So, but yes, absolutely. We are committed here to Jacksonville and we're not going to
Pablo Gonzalez:other places. Last but not least, finishing out here with a question from the MVP, Lee Bishop. You may have heard of him.
Gregg Cohen:He
Pablo Gonzalez:says, Greg, do you have the number of residents currently in the city now? I know it's growing, but where are we now?
Gregg Cohen:Sure. I'll get that information for you. It's right along with the percentage of renters. So I'll get that for you for the next show.
Pablo Gonzalez:Man, hour and a half, buddy. You went deep into the data this time around. I think you made a pretty compelling case for a little bit of cognitive dissonance out there for people that largely believe that home prices are going up and yet don't fail to make the leap that it is a good time to If that is what you are in the market for, instead of waiting around for it, whether it is to live in, whether it is to invest in, to grow wealth and Jacksonville being a place where all those economics are working really, really well, my friends, so you did a really good job of explaining that, breaking it down, proud of you, proud of our community that showed up today. Ask great questions. Got a bunch of new folks today. I hope you hope you keep coming back here. We got a special show on Tuesday. Some news just broke. About the stadium deal here for the Jaguars, which we've talked about in the past is a big deal. What's happening in downtown. What's happening with the billionaire owner of the Jaguars and his investments in downtown are things that are going to affect real estate investors here locally. We've got a new milestone that's reached. We're going to break it down to a little deal analysis, a little update, maybe some insider secrets.
Gregg Cohen:You know, baby.
Pablo Gonzalez:Secrets. And um, secrets. Hope to see you all there from now till then, you see. Any little bit of advice for the community?
Gregg Cohen:Don't be average. See ya.