All Forum Posts by: Matthew Drouin

I’m sorry some data made you feel sick to your stomach.  I’m also basing my opinion based a lot on the anecdotal evidence in talking to commercial and residential bankers, our investment partners who own companies that span across many verticals.

And all of that is pointing to “no soft landing”.  So get liquid and get to know people who are liquid because the debt markets are going to punish valuations in a big way starting in Q2 2025 

@Karl Denton leveraged to the hilt with no cash or flexible credit facilities are the people that are going to get boxed in and hurt methinks. 

@Ian Ippolito what’s even more concerning to me is that the fed would have probably cut more than a half point but with it being so close to the election wanted to preserve its impartiality.  But you are totally right, both of us will be wrong, but wrong by how much?

I’m just positioning myself off of what I’m hearing, feeling and seeing out there

@Jaron Walling good thoughts.  I think commercial is and will be getting hit harder than residential.  Not sure about a soft landing.  Whenever economic indicators lead to a confidence in a soft landing, it just prolongs the economic expansion but at the same time builds more systemic risk into the system.  In regard to the remote work thing, when there are significant layoffs, I don’t think remote work option will be as ubiquitous.  When people don’t have the optionality of another remote work job, they are going to have no choice

@Stephanie Jacobson I hadn’t heard of them until you mentioned it!  I’ll check them out!!!

Take off the party hat 🥳😔

The recent decision by the Federal Reserve has sparked widespread enthusiasm across markets. Realtors and brokers nationwide are celebrating what they perceive as a new dawn for increased activity and a robust economy. However, my perspective is more cautious, driven not just by statistical analysis but by firsthand observations in the field and insights from investors and developers across the country.

**Why A Half-Point Rate Cut May Signal Bad News**

While many view the Federal Reserve's half-point rate reduction as a positive sign, I see potential red flags. In my opinion, a more moderate quarter-point cut would have signaled confidence in the economy's underlying health. The half-point cut suggests deeper concerns, particularly regarding unemployment. Despite current unemployment rates maintaining below 5%, the recent rise from 3.8% to 4.2%(recently revised to 4.1%) is significant, especially when considering wage growth adjusted for inflation.

Over the last few years, the median household income has dropped by 7.2% when adjusted for inflation (and this isn't even considering volatile food and energy prices), a troubling trend given that inflation has outstripped income growth. Conversations with investors reveal that even those earning six-figure salaries face substantial pay cuts when changing jobs, often by 25-50%. These changes aren’t immediately reflected in official statistics but affect household incomes and consumer confidence.

**The Housing Market Conundrum**

In discussions on commercial real estate, understanding the housing market is crucial due to its influence on consumer sentiment. Currently, the housing market for owner-occupants appears unstable. Competitive multiple offers occur only on select properties, while others languish on the market. Home sales have reached their lowest point since 2010, driven not solely by high interest rates and low inventory but by shifts in household incomes and confidence.

As fewer people search for homes, this altered sentiment trickles up, impacting business and investor confidence. Furthermore, recent anecdotes of individuals earning significant wages yet lacking savings highlight the fragility of personal finances amidst rising living costs. National savings rates have plummeted, increasingly reliant on credit cards to fill financial gaps. This shift warns of potential hardships if a recession leads to widespread unemployment.  (A substantial drop in national savings rates from 4.4% to 0.9% raises alarms about future consumer spending capacity, especially as recession looms and job losses become prevalent.)

**Navigating the Economic Landscape: Recommendations**

With these factors in mind, I offer some strategies for navigating potential economic disruptions:

1. **Stay Active in Real Estate:** Despite the uncertainty, continue exploring real estate opportunities. Many investors hesitate, perceiving a recession signal as a reason to pause. However, remain engaged, make aggressive offers, and be ready to act when those offers align with market reality. A long-term perspective is crucial, enabling you to weather market fluctuations over the next five years.

2. **Hoard Cash and Build Relationships:** With substantial equity in properties, consider cashing out now. Waiting until market downturns might limit access to capital. Refinancing during economic turmoil could lead to stricter loan-to-value ratios. Cash reserves bolster your position and facilitate opportunities. Moreover, engage with potential investors, laying groundwork for future ventures and fostering trust.

**Preparing for Future Opportunities**

We’ve experienced a period of free-market dynamics with easy access to capital since 2001, but economic cycles inevitably shift. Preparing now by securing capital and building investor networks positions you to seize forthcoming opportunities as market conditions change.

Your active participation and readiness to take action, supported by solid financial foundations and relationships, will be vital to capitalizing on attractive real estate deals.

The question remains: will the Federal Reserve’s moves lead to a soft landing, or are we bracing for a more turbulent economic period?

Any REGULAR monthly meetups you know of happening in Rochester, Buffalo, or Syracuse?

We have our own in Rochester, but a lot of others that we knew of kind of fizzled out.

Trying to direct people to the right places!

🏡 Build Your Team, Build Your Empire; Join Us At FFREIA's 2024 Annual Trade Show🚀

Are you ready to level up your real estate game? Join us on November 14th at the Eagle Vale Banquet Center in Fairport, NY, for the most exciting real estate event of the year!

🌟 Freedom First Real Estate Investors Association presents the largest gathering of active real estate investors in Western New York! 🌟

Discover insider secrets, build your dream team, and network with like-minded investors, whether you're into fix and flips, wholesales, rentals, or commercial properties. All experience levels are welcome!

🎉 Best of all, it's FREE! 🎉

But here's the catch: this exclusive event is just around the corner! Don't miss your chance to supercharge your real estate business and be in the running to win a $500 Home Depot gift card.

Secure your spot today - click the link below! Your real estate empire awaits, but act fast – time is running out!

@Evan Polaski yes the cash that I’ve allocated is going into low volatility liquid securities that also generate some yield.  This will keep the money working better than in cash!