Macro Economic Indicators to Inform Investment and Lending Business

Lender · Asheville - Charlotte · Member since 2018 · 16 posts · 4 votes

I'm curious what real estate investors and private money lenders like myself use to inform their businesses strategy and predict future market conditions. I just got done making a YT video on the subject, so it's fresh on my mind. I consider inventory rates, price trends, unemployment data, population growth, job growth all to be relevant to where a market is at and where a market is heading. What trends and indicators do you look at to keep your thumb on the pulse of market health and trajectory?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Quote from @Benjamin Finney:

Chris, interesting niche on non-performing mortgages/ rtl's. I guess every problem has it's price. And probably not a lot of competition. I've always found inventory rates (and how they've moved over time ie previous 1-2 years) to be the starting point for where a market's health is at. Thanks for the insight!

I personally dont do any of that.. every market / or most will have an active fix and flip sector or buy and hold sector the important thing to me is the operator full stop.. great operator will do well in any market and all the national data simply is noise at least at my level. ( loaning our own money and JV deals with our own money) we dont broker or anything like that.
I do drill down when I am building new homes.. And that data will come from MLS Avaliable lots etc etc.. So like I am not going to run out and buy a bunch of lots in Lehigh acres or coral gables FLA which is saturated with new builds and un finished new builds were the FOMO got going big time and builders have failed to execute and left investors high and dry.
I chose Charleston SC still robust and then my own backyard here in Portland metro.. NOT Portland proper that sucks but the metro is quite hot.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Benjamin Finney:

I'm curious what real estate investors and private money lenders like myself use to inform their businesses strategy and predict future market conditions. I just got done making a YT video on the subject, so it's fresh on my mind. I consider inventory rates, price trends, unemployment data, population growth, job growth all to be relevant to where a market is at and where a market is heading. What trends and indicators do you look at to keep your thumb on the pulse of market health and trajectory?

we invest in non performing mortgages (and do some short term RTL's), and the indicators we look at are our inventory supply and where is the inventory. Where are we seeing the greater sense of defaults (specific state, county). We use this along with NY fed report on delinquencies and track bankruptcies as well. I do not trust unemployment numbers and a lot of the data from the government so we use what we see in front of us.
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Benjamin FinneyPro Member
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Lender · Asheville - Charlotte · Member since 2018 · 16 posts · 4 votes
1y

Chris, interesting niche on non-performing mortgages/ rtl's. I guess every problem has it's price. And probably not a lot of competition. I've always found inventory rates (and how they've moved over time ie previous 1-2 years) to be the starting point for where a market's health is at. Thanks for the insight!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1y
Quote from @Benjamin Finney:

Chris, interesting niche on non-performing mortgages/ rtl's. I guess every problem has it's price. And probably not a lot of competition. I've always found inventory rates (and how they've moved over time ie previous 1-2 years) to be the starting point for where a market's health is at. Thanks for the insight!

I personally dont do any of that.. every market / or most will have an active fix and flip sector or buy and hold sector the important thing to me is the operator full stop.. great operator will do well in any market and all the national data simply is noise at least at my level. ( loaning our own money and JV deals with our own money) we dont broker or anything like that.
I do drill down when I am building new homes.. And that data will come from MLS Avaliable lots etc etc.. So like I am not going to run out and buy a bunch of lots in Lehigh acres or coral gables FLA which is saturated with new builds and un finished new builds were the FOMO got going big time and builders have failed to execute and left investors high and dry.
I chose Charleston SC still robust and then my own backyard here in Portland metro.. NOT Portland proper that sucks but the metro is quite hot.
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JLH Capital Partners51 Review
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Benjamin FinneyPro Member
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Lender · Asheville - Charlotte · Member since 2018 · 16 posts · 4 votes
1y
Quote from @Jay Hinrichs:

Quote from @Benjamin Finney:

Chris, interesting niche on non-performing mortgages/ rtl's. I guess every problem has it's price. And probably not a lot of competition. I've always found inventory rates (and how they've moved over time ie previous 1-2 years) to be the starting point for where a market's health is at. Thanks for the insight!

I personally dont do any of that.. every market / or most will have an active fix and flip sector or buy and hold sector the important thing to me is the operator full stop.. great operator will do well in any market and all the national data simply is noise at least at my level. ( loaning our own money and JV deals with our own money) we dont broker or anything like that.
I do drill down when I am building new homes.. And that data will come from MLS Avaliable lots etc etc.. So like I am not going to run out and buy a bunch of lots in Lehigh acres or coral gables FLA which is saturated with new builds and un finished new builds were the FOMO got going big time and builders have failed to execute and left investors high and dry.
I chose Charleston SC still robust and then my own backyard here in Portland metro.. NOT Portland proper that sucks but the metro is quite hot.

Agree there'll always be flippers finding and doing deals in any market. The nat'l trends are definitely not relevant, local is all that matters. Nice to know which way the markets heading even if just intuituvely through dealing in the market. Inventory rate, DOM, price trends, new build permits/ builds in the pipeline (future inventory). If things are softening, being a bit more cautious around long term reno's/ having too many deals out at once. Make sure it'll cashflow as a rental if need be. The reality is no one knows what's going to happen until 6 months later. But we can stay educated on trends. I enjoy the quantitative side of it all. Nice on SC. I recently moved into NC market. Seem like solid markets for the years ahead. Thanks for the insight Jay! Happy Holidays
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
1y
Quote from @Benjamin Finney:

I'm curious what real estate investors and private money lenders like myself use to inform their businesses strategy and predict future market conditions. I just got done making a YT video on the subject, so it's fresh on my mind. I consider inventory rates, price trends, unemployment data, population growth, job growth all to be relevant to where a market is at and where a market is heading. What trends and indicators do you look at to keep your thumb on the pulse of market health and trajectory?

Inventory
DOM
10 year treasury
Market import/export cities
ARM vs FRM spreads
Population growth
Industry growth
Politics
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