2023 – Page 63

climbing the ladder of success

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When immigrants get to the United States of America, they are made to believe that money grows in trees. Unfortunately, money doesn’t grow on trees. People do whatever it takes to ensure they get the money. On this episode, I have the pleasure of hosting Krzysztof Warchol. He is the owner of Estate Solution. When he first came to America in 1996, Krzysztof took odd jobs to make ends meet. He has worked as a salesman, janitor, limo driver, and real estate investor. Krzysztof’s story is enough evidence that we can achieve anything if we have the right mindset. In this episode, Krzysztof shares how he transitioned from one role to another until he got to where he is today. Listen and get motivated. Quotes from the Episode: “Never give up. When you set the goal, when you set the target, go for it.” “When you decide to do something, you need to be consistent.” “I’m trying to teach my children how to make their money work for them.” “Never give up guys. It cannot be worse than it already is.” Connect: LinkedIn: https://www.linkedin.com/in/krzysztof-warchol-b85007170/

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Proactive pricing key to optimal distressed disposition outcomes as housing market slows; Auction bidder behavior predicting retail home price declines in 4 of 10 largest U.S. markets; Some high-level takeaways from the report: Auction.com, the nation’s leading distressed real estate marketplace, released its 2023 Distressed Market Outlook report, which shows that foreclosure volume is poised to continue its gradual post-moratorium rise in 2023 after plateauing in late 2022. A regression model with inputs of unemployment rates, home equity rates, mortgage rates, seriously delinquent (SDQ) mortgage rates and average days delinquent forecasts 104,000 completed foreclosure auctions nationwide in 2023. That would represent an increase of 24 percent from the projected 2022 total of 84,000 but would still be about half of the pre-pandemic level of 206,000 in 2019. “As pandemic-era foreclosure protections gradually phased out in 2022, we saw a slowly rising tide of completed foreclosure auctions, not a massive tsunami that some might have feared,” said Daren Blomquist, vice president of market economics at Auction.com. “Even with the forecasted increase of 24 percent in 2023, completed foreclosure auctions would still be at about half of their 2019 levels.” Bidder behavior predicting slowdown The report also shows demand for distressed properties shifting lower in the last three quarters of 2022 as buyers at foreclosure auction and REO auction anticipated the downshift in the retail housing market and began bidding more conservatively. “I’ve seen a lot of my competitors just stop buying … expecting prices to go lower and so they are wait and see,” said Francois Delille, a foreclosure auction buyer in the Houston area. Bidding behavior at auction acts as a reliable predictor of future price appreciation in the retail market, and this bidding behavior points to falling home prices in early 2023 in four of the 10 largest U.S. metro areas. “You have to be careful about fixing and flipping that you’re not catching a falling knife,” said Florida-based REO auction buyer Paul Lizell. “Just be a little more conservative. … For us we are shifting, too, where we’re buying. Some of your more cyclical markets may take a 20 percent hit.” Proactive pricing at auction produces lift The report includes results from an analysis of lender pricing strategies at foreclosure auction in Q4 2022 in response to the shifting distressed property demand and slowing retail housing market. Lenders who adopted a more proactive pricing strategy saw a net gain of 40 points in sales rate when compared to lenders who stayed with a more status quo pricing strategy. The proactive pricing strategy came with a net loss of 2 points in price execution when compared to the status quo pricing strategy. “With home prices now down more than 9 percent from their May 2022 peak and forecast to fall further in many markets, lenders who price proactively will minimize the risk of taking on properties that are losing value every day,” said Ali Haralson, president of Auction.com. Other report takeaways: “The distressed market was infused with some of the same exuberance that dominated the retail housing market in 2021 and early 2022, but distressed property buyers quickly returned to more sustainable bidding strategies as the market slowed in response to spiking mortgage rates,” said Jason Allnutt, CEO of Auction.com. “Sellers most nimble in this volatile market will produce the best and most responsible distressed disposition outcomes in 2023.” About Auction.com Auction.com is the world’s leading distressed real estate marketplace that engages buyers with a real-time bidding process, providing more transparency than a traditional real estate transaction. With more than 700 employees in offices across the United States, Auction.com uses world-class technology and data science to bring buyers and sellers closer together, bridging the gap between both sides and unleashing the power of the marketplace with its unrivaled transaction platform. For more information, visit: https://www.auction.com Contact Daren BlomquistAuction.com Tel.949.355.3371 Email: dblomquist@auction.com

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The Allied Magnet States Report tracks migration patterns in the US. Data shows fewer people moved in 2022 compared to 2021. In fact, moves plummeted in every state, resulting in a 20 percent decrease over last year. Rising rents and interest rates, along with inflation and falling wages, meant people moved less in 2022 than they did during the coronavirus pandemic. Those who could afford to relocate, moved south and settled along the Sunbelt, which offered stronger economic opportunities and a lower cost of living than the West Coast or Northeast. Key Takeaways From the Allied Magnet States Report Where People Moved To in 2022 The most moved to states in 2022 were both affordable and offered better financial security, which explains why states like California lost residents to Texas and Arizona. Even though California’s GDP rose eight percent (making it one of the fastest growing economies in the nation, behind only Hawaii and Nevada), its cost of living was extremely high (third behind only Hawaii and Alaska) and its average weekly wages fell by 0.6 percent over the course of the year. At the same time, while Texas saw only 6.4 percent growth, its wages rose 6.4 percent and its cost-of-living is one of the lowest in the country. The same can’t be said for Arizona. Its prices rose in 2022, mostly due to increased demand for housing. Nonetheless, Arizona’s cost-of-living is still nowhere near as high as California’s cost-of-living and its wages grew 5.8 percent over the same period. The pattern repeats with unemployment figures. Michigan, Pennsylvania, and Illinois are not expensive states, but have experienced slow job growth compared to North Carolina, South Carolina, and Florida. New Jersey has seen large job growth, but is significantly more expensive than states further south, explaining why it continues to lose population. Housing Prices Rose in Destination Cities Rising interest rates and a stagnant uncertain economy has put homeownership nearly out of reach in major cities. As a result, smaller, low-priced markets saw significant growth last year, while large, high-priced markets saw a corresponding decline. The average home price in New York City is 119% above the national average. It’s 140% in Anaheim and 166% in San Diego. Riverside is more affordable, with homes 73% above average. Chicago is an outlier among outbound cities this year, the only one with a housing market below the national average, a sign other factors (e.g. crime, economy) play a more significant role in its migration patterns. Austin is an outlier among inbound cities. Before the pandemic, its home prices were 48% above the national average, while the other four cities on the list had prices below or close to it. Unfortunately, the recent rush of new residents has pushed up prices in every city on the list except Tucson, whose prices are still below average, which is no doubt one of the reasons why it surpassed Phoenix to become the top inbound city in the state this year. Suburbs Were More Popular Than Cities Large cities struggled to attract new residents in 2022. Besides the five listed above, Detroit, Los Angeles, Philadelphia, San Francisco, and Washington D.C. also saw major losses. Even Phoenix, the most popular inbound city in 2021, fell to number six this year. While housing prices obviously played a role, so did the coronavirus pandemic, which led to more Americans working from home. (Many of the current migration patterns in the US can be traced back to the pandemic.) Now that they no longer need to come into the office, people are free to live where they prefer. Whereas previously they had to stay in the city, now workers can choose to live further out, in communities with cheaper housing and better access to nature. Before the pandemic, most Americans bought houses 15 miles from their old homes. Today, they’re buying houses 50 miles and greater from their old homes, outside major metro areas. Suburbs are cheaper, greener, and offer more living space than cities, hence it’s not surprising consumers are taking advantage of the opportunity and moving out.

MCS Broadens Commercial Property Service Offerings with Acquisition of Chain Store Maintenance

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Firms Join Forces to Strengthen Interior and Exterior Facility Services Available to Retail, Restaurant, Office, Lodging and Other Commercial Customers MCS, the national property services Company founded in 1986, announced it has acquired industry-leading commercial facilities services firm Chain Store Maintenance (“CSM”). MCS’s interior commercial facility services platform will be marketed as Chain Store Maintenance – an MCS Company, offering the core interior maintenance services that CSM is known for. Exterior facility services will continue to be marketed under MCS. In addition to expanding the Company’s overall commercial services offerings, the acquisition enhances MCS’s ability to serve its residential clients in the mortgage servicing and single-family rental industries with an expanded network of service providers and its growing network of self-performing service centers. “We strive to be a true ‘go-to’ facilities services provider and fostered this partnership with Chain Store Maintenance to enhance our ability to provide customers with best-in-class interior and exterior services at all levels across the commercial and residential property services industries by leveraging MCS’s self-performing service centers and our combined, extensive vendor network,” said Craig Torrance, Chief Executive Officer of MCS. “Our expertise in exterior maintenance combined with CSM’s impeccable reputation for interior maintenance services adds value to the existing customer base across both firms. John Catanese and Steve Hopkins have spent over 30 years building the CSM brand and take great pride in their hands-on, client-focused approach to doing business. MCS is thrilled to merge our commercial services platform as we further our mission to be the nation’s premier property care company.” Founded in 1991, CSM began developing a service provider network and customer base across its native New England and quickly grew to include coverage down the East Coast and later into the Midwest and Western U.S. Today, CSM has agreements to provide facilities services to more than 130,000 client locations across the country and in Canada, Puerto Rico and Guam with an expansive network of qualified contractors that now totals over 30,000. The core CSM H.E.L.P. interior offerings – Handyman, Electrical, Locksmith and Plumbing – represent the bulk of company’s service requests, augmented with pest control, backflow services and fire extinguisher programs. From order entry to invoice generation, CSM systems accommodate a wide variety of emergency and standard facilities needs and will integrate seamlessly with MCS’s established systems, provider network and regional service centers. Catanese and Hopkins will remain with the company with Catanese serving as Senior Vice President of Business Development and Hopkins as Senior Vice President of Operations. “We started this business over 30 years ago and have always been committed to providing our customers with responsive service, consistent communication, competitive pricing and the highest quality work,” said Catanese. “This next chapter in our evolution promises to deliver an expanded commercial service offering bolstered by the latest technology and the ability to self-perform in key markets, setting a new standard throughout the lifecycle of every job.” MCS’s hybrid service model combines an expansive network of local service partners with the company’s own network of self-performing service centers and the use of innovative technologies to ensure transparency, enhance quality control and code compliance, and maximize efficiencies. The vendor network in place at CSM will complement the already vast MCS network to provide an even more robust suite of offerings for commercial and residential properties including handyman, electrical, locksmith and plumbing, as well as landscaping, snow removal and parking lot maintenance. The established processes, existing technology platforms, and accessibility to local trade professionals and MCS’s own team of service technicians give commercial owners/operators a one-stop-shop for an efficient, tech-forward services program. “With Chain Store Maintenance becoming our platform for interior commercial property services, we will elevate our position in the market while adding value for our customers,” said Andrew Nolan, President, Commercial and Residential Rental Services for MCS. “From pricing, sourcing and contracting through project management, work order completion and quality control, this partnership will result in enhanced capabilities across the commercial property services spectrum that we believe will exceed client and vendor expectations.” About MCS MCS is a leading property services provider working across Commercial Properties, Single-Family Rentals, and the Property Preservation industry. For over 35 years, MCS has been committed to responsive care, industry-leading service standards, leveraging technology, and end-to-end transparency to protect, preserve and serve communities across the country. Some of the largest and most respected mortgage servicers, real estate owners and operators, and corporations trust MCS to perform property inspections, preservation, maintenance, renovations, and other property-related services. Learn how MCS is Making Communities Shine at mcs360.com. About Chain Store Maintenance – an MCS Company Since 1991, Chain Store Maintenance (CSM) has been a proven and trusted leader in facilities services to the retail, restaurant, financial, health care and hospitality industries throughout the U.S., Canada, Puerto Rico and Guam, working with them directly and through middleware providers. In February 2023, CSM was acquired by MCS to serve as the primary commercial property services platform for interior trades. Learn more at ChainStore.com.

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Company Recognizes Noteworthy Origination Milestone Despite Industry Turbulence RCN Capital, a leading nationwide private lender specializing in financing for real estate investors, announced a major origination milestone of over 20,000 loans funded since its inception in 2010. RCN Capital, which offers financing for short-term fix & flip projects, long-term rentals, & ground-up construction, takes pride in its commitment to providing the investor community with funding options despite ongoing turbulence in the real estate industry. “Since the inception of RCN Capital back in 2010, our core mission has been to provide financing to investors who are renovating distressed housing to put back into the marketplace for families to call home,” said Jeffrey Tesch, RCN Capital’s CEO. “This is truly a tremendous moment in the company’s history as we reflect on what we have been able to accomplish over the years and what we have been able to give back.” Even with market challenges, 2023 is expected to be another strong year for RCN Capital, with the company projecting $1.7B in new originations. “RCN’s continued success is a testament to the hard work and dedication of our employees, the trust and support of our clients, and the strong partnerships we have formed over the years. We are so grateful and we look forward to continuing to make an impact in the private lending industry in 2023 and beyond,” Tesch added. About RCN Capital RCN Capital is a South Windsor, CT-based national, direct, private lender. Established in 2010, RCN provides commercial loans for the purchase or refinance of non-owner occupied residential properties. The company specializes in new construction financing, short-term fix & flip and bridge financing, and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.

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Pandemic boomtowns Las Vegas and Phoenix saw investor purchases fall over 60%—more than all of the other metros Redfin analyzed Investor purchases of U.S. homes fell a record 45.8% year over year in the fourth quarter as the high cost of borrowing money and the prospect of substantial home-price declines made real estate investing less attractive. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The second biggest decline occurred in 2008, when investor purchases slumped 45.1% during the subprime mortgage crisis. Overall U.S. home purchases fell 40.8% from a year earlier in the fourth quarter. Investor purchases slumped 27% on a quarter-over-quarter basis, the largest quarterly decline on record aside from the beginning of the pandemic. That’s comparable with the 28.1% quarterly drop in overall home purchases. While many investors have pumped the brakes on homebuying, investor market share has remained fairly steady. That’s because individual homebuyers have also pulled back. Investors purchased 17.8% of all homes that were bought in the metros tracked by Redfin in the fourth quarter. That’s comparable with 17.6% in the prior quarter and down from 19.4% a year earlier. In dollar terms, investors bought $31 billion worth of homes in the fourth quarter, down 42.7% from $54.1 billion one year earlier and down 27.5% from $42.8 billion one quarter earlier. The typical home investors purchased cost $425,926, little changed from one year earlier but down 5.8% from one quarter earlier. Prospect of Home-Price Declines Prompts Investors to Back Off Investors piled into the housing market in 2021 due to rock-bottom mortgage rates and surging housing demand and are now retreating amid projections that home prices have room to fall. U.S. home prices are up less than 1% year over year—compared with 15% growth one year ago—and have fallen 11% from their spring 2022 peak. In many metros, prices are already declining on a year-over-year basis. That’s because the jump in mortgage rates last year dampened homebuyer demand. Higher rates also mean it’s more expensive to borrow money, which eats into profits. Many investors are moving their money into other asset classes that offer better returns. For investors who are landlords, slowing rent growth is also making it more challenging to reap large returns. “It’s possible that investors will start to wade back into the market this year given that mortgage rates have ticked down from their 2022 high—especially if home prices show signs of bottoming,” said Redfin Senior Economist Sheharyar Bokhari. “But it’s unlikely that investors will return with the same vigor they had in 2021. That’s good news for individual buyers, who are still grappling with high housing costs but no longer losing bidding war after bidding war to investors.” Investor home purchases in the fourth quarter of 2021 were near their record high, which is another reason the year-over-year decline in 2022 was so dramatic. Investors bought 48,445 homes in the metros tracked by Redfin in the fourth quarter of 2022, down from 89,396 a year earlier and 60,447 in the fourth quarter of 2019—before the pandemic. Pandemic Boomtowns See Biggest Drops in Investor Purchases In Las Vegas, investor home purchases fell 67% year over year in the fourth quarter, the largest decline among the 40 metros Redfin analyzed. Next came Phoenix (-66.7%), Nassau County, NY (-63%), Atlanta (-62.8%) and Charlotte, NC (-61.9%). Rounding out the top 10 are Jacksonville, FL, Nashville, TN, Sacramento, CA, Riverside, CA and Orlando, FL. “A lot of investors are on hold because they still see home prices declining,” said Elena Fleck, a Redfin real estate agent in Palm Beach, FL. “The investors who are in the market are selective and aggressive. Many of them are only offering around 60% of the asking price since it’s so difficult to make a profit when flipping homes right now.” Many of the metros where investor purchases declined significantly are places that soared in popularity during the pandemic. Las Vegas, Phoenix and Sacramento consistently rank on Redfin’s list of top migration destinations, which is based on net inflow, or how many more Redfin.com users are looking to move into a metro than out. Investors expanded in these areas during the pandemic to capitalize on surging rents and home values and are now pulling back as these markets slow relatively quickly because many homebuyers have been priced out. Phoenix and Sacramento are both among the five metros seeing the largest year-over-year price declines. Prices are also falling from a year ago in Las Vegas and Riverside. Investor purchases may also be declining in Atlanta, Charlotte, Las Vegas and Phoenix because those markets were popular among iBuyer investors, many of whom have ceased or slowed operations in recent months. Metros With Largest Declines in Investor Home Purchases: Q4 2022 Metro area Investor purchases, YoY change Las Vegas, NV -67.0% Phoenix, AZ -66.7% Nassau County, NY -63.0% Atlanta, GA -62.8% Charlotte, NC -61.9% Jacksonville, FL -57.1% Nashville, TN -54.8% Sacramento, CA -53.5% Riverside, CA -53.0% Orlando, FL -51.8% Baltimore was the only metro Redfin analyzed that saw an increase in investor purchases, which rose 1.4% year over year in the fourth quarter. The smallest declines were in Milwaukee (-7.6%), New York (-7.9%), Providence, RI (-8.6%) and New Brunswick, NJ (-10.3%). Investors Lose the Most Market Share in Atlanta, Charlotte and Phoenix Investors lost market share in 15 of the 40 markets Redfin analyzed. Many of those markets are places where investor purchases dropped significantly. In Atlanta, investors bought one-quarter (24.6%) of homes purchased in the fourth quarter, down from more than one-third (36.2%) a year earlier. That’s the largest percentage-point drop among the metros in this analysis. Next came Charlotte (-11.1 pts), Phoenix (-9.3 pts), Las Vegas (-7.9 pts) and Jacksonville (-7.3 pts). Investors gained the most market share in Baltimore, where they bought 19.4% of homes purchased, up from 13% a year earlier (6.4 pts). Next came Philadelphia (4.3 pts), New York (4.3 pts), Nassau County, NY (4.1 pts) and Milwaukee (4 pts). Overall, investors had the