REI INK

Leveraging the Power of Comprehensive Real Estate

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ServiceLink’s Full Suite of Services Optimizes Investor Opportunity By: Carole VanSickle Ellis Success in real estate investing has long been summed up in the simple mantra, “Buy low and sell high”. For high-volume investors, however, things can get complicated, especially when it comes to managing multiple properties and deals in various stages of the investment life cycle. Returns are made, grown, and lost in the intricate layers of efficiency and continuity that make up portfolio management, and no one knows that better than investors in the single-family rental space. ServiceLink, a leader in services and technology for all phases of the mortgage lending and management life cycle, has made it a company mission to provide the integration of primary and ancillary services to real estate investors who need it most. “Our strength is that we provide a number of integrated services that single-threaded providers cannot match,” said Miriam Moore, ServiceLink’s division president of default services. With eight in ten of the nation’s largest lenders relying on ServiceLink to navigate the home lending lifecycle from originations through default, Moore’s team specializes in providing comprehensive solutions tailored to meet the needs of its clients. “Single-family rental lenders and investors are not typically looking for a one-size-fits-all solution, and we make it a point to sit down and talk about pain points and expectations with every client and follow up on these conversations regularly,” she said. Despite ServiceLink’s massive scale and the large-scale operations of many of its clients, the company has a surprisingly personal feel to it. This is due in large part to a company-wide dedication to innovation, something Eva Tapia, ServiceLink’s senior vice president of its auction division, sums up when she describes the company’s history. “For more than 50 years, ServiceLink has invested significantly in default innovation—bringing solutions that span the entire default lifecycle,” Tapia said. “Thanks to our nationwide real estate marketplace that provides a variety of properties in various stages of default ready for disposition, we have a unique opportunity to provide services to end consumers and mortgage servicers alike.” Tapia cited marketing and educational materials as key tools in the ServiceLink process that enable clients to access opportunities in all phases of the real estate transaction. A Many-Layered Provider with Ambitious Goals ServiceLink describes itself simply: a provider of services and solutions that enable virtually every aspect of the home-lending lifecycle—from originations to default. Within that deceptively simple description, however, lie nearly a dozen different facets of a company dedicated to investor and client success. Many of those facets have to do with valuations, title and origination services, the company’s founding sector. However, as ServiceLink added relevant, ancillary services over the years, it became a leader in default services, including loan modifications, foreclosure services, auctions, and property preservation, and in technology platforms. The company’s EXOS Technology provides a transparent platform that enables clients to monitor and manage everything from appraisal management to independent vendors in the ServiceLink network to title decisions and even asset viability throughout a property’s life cycle. “Our goal is always to help our servicers and clients preserve, protect and execute on repair strategies to market their assets,” said Tim Guertin, senior vice president of ServiceLink’s field services division. Guertin heads up one of the most individualized sectors at ServiceLink. His division heads up the process of monitoring, maintaining, evaluating, and reevaluating properties to obtain the best outcomes possible for clients’ property preservation goals. “We do hundreds of thousands of inspections a month, and we help clients ensure that those properties are disposed of in a strategic, productive way,” Guertin added. “Our nationwide network of contractors and inspectors are constantly monitoring assets to ascertain whether they are occupied and, if they are vacant, to make sure they are maintained within client expectations and/or investor requirements.” This dedication to preserving value in client properties did not diminish in 2020. In fact, the company got even more creative as COVID-19 drove competition in real estate through the roof. Tapia recalled an instance in which ServiceLink was able to leverage its negotiating experience to the mutual benefit of two real estate investors. When an auction buyer purchased an asset and, shortly thereafter, discovered a competing banking client was also interested in the asset and had a personal connection to the property, Tapia’s team swiftly realized they could help create a mutually beneficial conclusion. “Since the auction buyer was a real estate investor with plans to flip the asset anyway, the team worked to connect the two parties and settle on a price for the banking client to purchase the asset with a concurrent closing,” she explained. “Once the concurrent closings were finalized, the auction buyer had made a profit; the banking client was able to get the asset to which they had a connection; and, the servicer was able to satisfy the needs of their banking client.” Kristy Folino, managing director of valuations, chimed in. “I love that we are able to sit down and talk with clients until we have carved out a new process or found a new product that works well for the problem they are trying to solve.” Folino, like her colleagues, emphasized the scalability of ServiceLink as a linchpin in the company’s ability to solve problems and keep clients competitive and profitable in volatile times. “We are a national solution provider with a real passion for solving problems for our clients—and we understand and accommodate the urgency that comes with so many transactions,” she said. In a year when getting a traditional appraisal product can take longer than what is typical, many SFR lenders have turned to hybrid valuation products like ServiceLink’s Desktop Valuation with Inspection (DVI). The speed of the product is invaluable. Folino recalled several incidents in the latter half of 2020 when single-family rental (SFR) customers needed quick turn times on appraisals in order to save closings. “Because we have staff appraisers that complete our DVI product, we can turn these hybrid appraisal products very quickly—sometimes in

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Investor Profile – Trent McMurtrey

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Trent McMurtrey’s journey to becoming an independently owned and operated HomeVestors® Business Owner in 2017 has been uniquely interesting. Trent is a military veteran having spent twelve years in the military. He initially spent six years in the Marine Corps as an enlisted soldier. After his stint in the Corps, Trent did several things, but like a lot of veterans, he began to miss the uniform and the camaraderie which the military offers. After getting his bachelor’s degree in Human Relations/Psychology he attended the Army’s Officer Candidate School and was commissioned as a Second Lieutenant in the US Army Infantry branch. However, he thought he could better utilize his degree in Human Relations/Psychology and transferred to the Chaplains Corps. In addition to his military background, Trent has always had an entrepreneurial spirit. He has owned various businesses since the age of 25. One of these businesses was Academic Opportunities in America, which is an international education company. He owned and operated that company from 2012 until 2020 and even operated it in Shanghai, China for two years. The only reason he closed the doors on the business was because of the “Virus.” Due to the decreasing number of international students, the business model was no longer sustainable. Prior to the virus, Trent had forecasted another five-to-ten years of positive revenue, but the virus had other plans for Trent. The Beginnings Fortunately for Trent, he had a good friend who was a HomeVestors franchisee. After being convinced about the potential and opportunities, Trent bought his franchise in 2017 and received his initial training (SST) in 2018. Having obtained his Master of Business Administration (MBA) degree in 2017 from the Michael J. Coles College of Business at Kennesaw State University, Trent and his wife, Faith, were ready to hit the ground running…and that they did. Faith McMurtrey was instrumental in the early successes of the real estate business due to her experience as a real estate agent. An entrepreneur at heart, she is also the Co-Owner of Elite Total Wellness. Faith helps people, families, employees, companies, dreamers, or anyone else who feels “stuck”. She can guide people using their own strengths and weaknesses and by honing in on their individual skills and ambitions to help get them through their hurdles or obstacles. Faith has even coached top companies like Coke by working with their employees to achieve their goals and quotas. In the first year of business, the McMurtrey franchise, Southern Willow Properties, LLC, bought and sold sixty homes. Trent recalls he made a nice profit on his very first deal as a HomeVestors Business Owner. That very first deal eliminated any skepticism he may have had. As Trent describes it, “I had absolutely zero experience in buying homes “as-is”, quickly for an all cash deal.” Now that he has owned his franchise for a while, Trent is no longer in denial about buying homes “as-is”, quickly for cash in accordance with their current condition. There are many reasons that people get into the real estate business and just as many reasons for buying a HomeVestors franchise. Trent and Faith had two reasons; build a passive income stream and build a personal real estate portfolio. Since starting in 2018, they have acquired twenty single-family rental properties in the Atlanta area. Trent saw a clear pathway to success from day one and gives a lot of credit to the military credo of mission accomplishment and the leadership skills he acquired while serving his country. Additionally, he credits his degree in Human Relations/Psychology when working with people and his finance knowledge acquired while working toward his MBA. But he mostly attributes his success to John Holman, the HomeVestors Development Agent in Atlanta, and many other HomeVestors franchisees in his network.    Success and Regrets Hard work and success have many rewards! Trent and Faith can retire right now with the money they have made and the portfolio they have accumulated. That revenue can supplement social security, retirement funds, or pension payments. However, their immediate goal is simple…building their personal portfolio to forty single-family rental properties. As Trent puts it, “If my family has a medical emergency or I want to send one of my children to college, all I have to do is sell one of my houses.”        HomeVestors formed the Atlanta Advertising Council of which Trent is the President in Atlanta. There are about 170 markets nationwide, and HomeVestors welcomes feedback from “the field”. This feedback allows HomeVestors to adjust their training and marketing programs. Owning a real estate business is life changing and naturally comes with regrets. Trent’s regret is he wished he would have gotten involved with HomeVestors before the iBuyers entered the market. During the COVID crisis, Southern Willow Properties continued to grow and prosper while the iBuyers left the game…now they are coming back. Trent’s advice to anybody is to get involved with HomeVestors now! “There are enough deals to go around for everybody and the passive income generated by our portfolio is fantastic!” Trent also pointed out that he is immensely proud that the Military Times named HomeVestors a “Best for Vets” franchise. What exactly does it mean to be a HomeVestors® business owner? When you become a HomeVestors business owner, you can get immediate access to motivated seller leads, funding for your purchases, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own independent venture. Compare this system to a 2-day real estate guru workshop! Trent, Faith, and their three children (Travis, 10; Micah, 6; Maci, 2) currently reside in Cartersville, GA. If you wish to contact Trent, he can be reached at Trent.Mcmurtrey@homevestors.com.  

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The REI Referral Network

Forming Relationships to Enhance Investment Strategies By: Monica Mansfield Now that the real estate investment industry is returning to normal following the COVID-19 pandemic, it is prudent for investors to begin establishing new relationships for acquisition and disposition strategies by enhancing their networks with real estate agents and brokers who have advanced access to the REO and foreclosure assets that are coming to market following mortgage forbearance. Suzanne Andresen, the Chief Revenue Officer at REI INK Magazine and one of the founders of the REI Referral Network, stated six months ago that the pandemic would create more opportunities for investors once we got back to business, and that investors need to be ready. She advised both investors and real estate agents to build their networks and relationships during the down time. By doing so, agents would already be familiar with what their investor clients were looking for and could make sure they got first glance at properties that match their portfolio strategies.  The Impact of Mortgage Forbearance Mortgage forbearance programs caused complications and uncertainty for real estate investors, property management companies, traditional and non-traditional lenders, service providers and renters. And these programs had a “trickle-up” effect on Wall Street. Some private money lenders quit lending temporarily and investors were having an increasingly difficult time sourcing new investments. Some investors have pivoted to Build to Rent initiatives. While this may provide a long-term higher ROI, it requires an extended timeframe to complete the developments. Adding complementary assets to the peripheral will help get the project producing revenues in the short term.  Regardless, for the most part, renters were still paying their rent on time. However, according to Federal Reserve research, as of August 2020, the monthly supply of houses dipped to 4.0. This means it would only take four months to sell all the homes currently listed for sale. This demand for more inventory alerted investors that they needed a paradigm shift. The Referral Network REI INK developed an online network to connect real estate investors, real estate agents/brokers and service providers. Although Andresen did not foresee the pandemic at the time, she did see a hole in the market that needed to be filled. Since its inception, the Referral Network has developed affiliations with national real estate companies, investment companies, asset management companies, lenders, and multiple service providers. Through these affiliations, the Referral Network was made available to thousands of real estate professionals seeking to create new relationships and a new way of doing business…a paradigm shift. And they took advantage of the oppor-tunity. Andresen shared that understanding an investors acquisition appetite will help cultivate the portfolio regardless of the buy & hold or fix & flip strategies. Advance intel of these assets will provide a first look – first purchase opportunity. As a Realtor herself, Andresen saw the value in an affordable online platform that could connect agents and investors. The modest fee, with no contract, is more than paid for in just one deal. Currently, the REI Referral Network is waiving its fee until March 2021 so real estate professionals and investors can recover from 2020 and set a strong foundation for 2021.  Not only does the REI Referral Network help you build your relationships, but it also gives you a premier access at investment opportunities, many of which are not yet listed publicly. This “first look” includes advanced access to the REO and foreclosure assets that have started to come to market following mortgage forbearance. Broadcast Opportunities Each week, the Referral Network sends out a newsletter to over 60,000 people nationwide featuring one of their member’s listings. Not only do investors see the listing, but they also have access to a real-time comparative market analysis for the property, along with information on the market it is located in. Investors can access market metrics directly from the newsletter and then connect with real estate agents/brokers who have expertise in that specific area. The featured asset has a direct link to the listing agent.  Andresen states “We are now taking real estate, a traditionally local business engagement to a national platform. We provide local market intel to the entire national audience.” The REI Referral Network’s mission is to connect agents and brokers with investors and not to take a referral fee. “You may not realize you have a California investor that wants to buy in Albany, NY, and we take that asset and share market metrics. Now your listing is marketed to more than 60,000 people with no marketing fee,” says Andresen. “Real estate is a relationship business, and this is an opportunity to expand your relationships well beyond your current markets. By developing relationships with agents, investors put themselves in a position to get a first look at opportunities that hit the market, oftentimes before they are made public to other real estate professionals.” Agents and brokers can list up to three states and up to 20 counties as areas of expertise on their REI Referral Network profile. This allows agents working in tri-state areas, such as New York, New Jersey, and Pennsylvania, to attract clients interested in their entire market.  REI INK launched the REI Referral Network late last year without any idea of what was on the horizon. Now that COVID-19 has created new opportunities for both agents and investors, the timing could not be better for real estate professionals to engage in this network, especially since the fees are waived until March 2021. REI INK is in a unique position, having relationships with both investors and national real estate brands. “We want to bring everyone together,” Andresen says, “because we have the platform that can do that.” 

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How A Biden Administration May Affect Real Estate Investors

A Perspective on Possible New Rules and Regulations By: Rick Sharga, EVP, RealtyTrac In spite of—and in some ways perhaps because of—a global pandemic, one of the most contentious presidential elections in the nation’s history, and even the invasion of killer hornets into the Pacific Northwest, 2020 has turned out to be a banner year for the U.S. residential real estate market. Existing home sales, which suffered due to government shelter-in-place orders during the Spring, rebounded strongly through the Summer and well into the Fall, driven in no small part by historically low mortgage interest rates which improved affordability even as home prices continued to climb. COVID-19, ironically, accelerated a trend that the market had already begun to see, as Millennial renters began exiting urban areas and becoming suburban homeowners in large numbers. With working from home now a viable and probably long-term option for employees across the country, the demand grew for homes large enough to accommodate a home office and with enough space between neighbors to foster a sense of a healthier, safer environment. All of this resulted in a 3% increase in existing home sales, and about a 20% increase in new home sales in 2020 – both well above most analysts’ forecasts at the outset of the year, and a far cry from the disaster many market observers predicted when the pandemic struck in March. It’s possible that the market would have performed even better had it not been for an historical lack of inventory—by October, there was less than 3 months’ supply of existing homes available for sale, compared to the normal level of 6 months. But a market this strong typically provides a very healthy environment for real estate investors. Fix-and-flip investors find a ready market for properties they rehabilitate, and buy-and-hold investors provide rental properties for households unable to find or afford homes to purchase. As the U.S. economy continues to recover from the pandemic-induced recession, most economists believe that the housing market will carry its momentum into 2021. But for investors there’s another variable to factor into the equation for next year: the Biden Administration. What should investors expect as the White House welcomes a new First Family? Will Campaign Promises Become Policy? One of the concerns voiced by investors is that President Biden might actually implement some of the ideas discussed during the campaign by Candidate Biden. Two of these are particularly worrisome for investors: the elimination of 1031 Exchanges, and a tax on flippers. “Biden has talked about removing the 1031 Exchange program, which would discourage real estate investments,” according to Eric Paulsen, CEO of Topside Real Estate in Newport Beach, CA. Section 1031 of the Internal Revenue Code allows investors to defer paying capital gains taxes on investment property sales if they reinvest the proceeds into a similar investment property within a specified time frame. Typically, an investor has 45 days to identify the replacement property and 180 days to complete the transaction. The Biden Plan for Mobilizing American Talent and Heart to Create a 21st Century Caregiving and Educational Workforce calls for spending $775 billion over the next 10 years, paid for in large part “by rolling back unproductive and unequal tax breaks for real estate investors with incomes over $400,000.” A senior Biden campaign official more specifically spelled out that a Biden Administration would “take aim at so-called like-kind exchanges,” and would “prevent investors from using real-estate losses to lower their income tax bills” according to Bloomberg.  Paulsen believes that these sorts of actions would “disincentivize” real estate investing in general by taking away many of the benefits of real estate investing, and making it less attractive compared to other “investment classes” such as stocks and bonds. Long-time fix-and-flip investor Tim Herriage, CEO of DFWInvestors.com, believes that market conditions will continue to be positive for investors, but is concerned about a “worst-case scenario,” pointing out that “there has been a lot of talk from Democratic members of Congress about legislating against flippers, including a flipper tax in Bernie Sanders’ campaign platform.” The Sanders Campaign did, in fact, recommend  placing “a 25% House Flipping tax on speculators who sell a non-owner-occupied property, if sold for more than it was purchased within 5 years of purchase.” Besides the questionable grammar, this policy—which would be intended to create more affordable housing—would make flipping much less profitable and probably lead to fewer fix-and-flip investors in the market. That would actually remove a viable sales option for financially distressed homeowners, and inevitably reduce the inventory of homes coming to market, thereby raising the cost of the remaining inventory, making homes even less affordable than they are today. While there’s been no word from the Biden Campaign on implementing such a tax, it’s certainly worth paying attention to as the Federal Government’s deficit continues to balloon, and politicians will search for new sources of revenue. What About the Rental Market? The Biden Campaign has earmarked $640 billion over the next 10 years to address the country’s affordable housing problems. Much of the money, and many of the programs, are geared towards helping renters find and be able to afford safe, adequate housing for their families. The Biden Plan for Investing in Our Communities Through Housing includes a wide variety of programs ranging from rolling back discriminatory zoning laws to enhancing consumer protections from evictions and foreclosures; but it also includes an increased amount of government rent subsidies and investments in new affordable housing units. While details of the programs proposed in the Biden housing outline are still being developed, the focus on providing funding to create more rental inventory and also providing funding to help tenants make their monthly payments both sound like potential opportunities for real estate investors. Ed Renwick, CEO of Raineth Housing, which offers affordable single family rental homes in Ohio, Missouri, and Kansas, believes that a Biden Administration will ultimately be good for landlords. “A Biden Administration will help third-quartile earners—my tenant base—survive the COVID-driven economic downturn,” Renwick

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2020: A Year to Forget For Most, But Not For SFR

The SFR Industry Resiliency By: Adam Stern, CEO, Strata SFR There are some industries that tend to do better than average or even flourish during times of economic downturn. If we look back to past recessions in the US, those tended to be segments of the economy where demand does not much fluctuate based on changing prices; sectors such as basic household staples, healthcare, and consumer goods. The reason these sectors tend to outperform the rest of the economy during times of economic contraction is simple! People’s basic needs and their desire and ability to fill them, regardless of the economy, stay consistent. Other sectors do well for other reasons. Segments such as discount retailers and fast food do well because when times are tight, eating and buying cheaper is more appealing. Since the inception of the Single-Family Rental Industry in early 2008, back when the trend was still referred to as Foreclosure-To-Rental, it was speculated that SFR was going to be a “recession-proof” industry. The rationale made sense too. It was widely proposed that SFR would do well during economic expansion as higher home values would push many to rent as homes became less affordable to many, including cash-strapped millennials with high college debt, and at the same time create good returns for SFR portfolio owners as equity in homes increased creating the opportunity to leverage that equity to foster expansion. The flip side of that coin was if the economy tanked, it would mean higher unemployment and stagnant wages, driving many to rent, and in a shrinking economy, SFR investors would reap the benefits of lower home prices and higher returns.  All of this was speculation until this year. With the proliferation of COVID-19 and its resulting effects on the world economy, I don’t think anyone can argue that SFR has been a beneficiary of some stark economic, demographic and lifestyle shifts that have seen the trending toward people living in Single Family Rental Homes and especially those investing in SFR, to take a swing to the positive. Reasons for the Win How the SFR industry won in 2020 reflected a somewhat atypical recession cycle. The current situation, triggered by a worldwide pandemic, has changed the way many people live and work. It also coincided with one of the most divisive and hotly contested elections in recent memory. From top to bottom, there were many winners along the value chain in the SFR industry and few losers which I will outline briefly below. Let’s start with the incumbent SFR industry players, those that have amassed huge portfolios by steadily buying SFR throughout the mid-2010s. Firms such as Tricon, American Homes 4 Rent, Invitation Homes and others have seen strong appreciation in stock prices as the industry has matured. These firms have proven to Wallstreet that scale and efficiency equate to predictable returns. The steadily increasing Net Operating margins of these various platforms, combined with strong earnings from streamlined operations, have attracted new and cheaper capital. This has allowed publicly traded SFR companies to be competitive in a tightening market. As 2020 unfolded, amid uncertainty caused by the pandemic, many firms pulled back on acquisitions which allowed them to focus on operations. This shift in buying habit did not seem to have hurt them though. If anything, it proved that these firms, through their sheer size and organizational prowess, are relatively safe bets for capital to ride out uncertain times. Mid-Cap and Small Cap SFR firms have also seemed to fare well based on the strategies they chose in the years before the pandemic arrived. These firms, like the larger SFR REITs, focused on reinforcing operations and have chosen asset types and geographies that have held up well during the pandemic. They have seen strong income with little change to delinquency and vacancy rates. As such, many have remained well positioned to attract follow-on and newly raised capital from investors hungry for cashflow and yield. This in turn put them in a good position to expand upon their build acquisition infrastructure to deploy capital. Some segments of this category have struggled however during the pandemic. Firms that chose markets and targeted tenant bases that were exceedingly susceptible to the ravages of the pandemic, such as areas where tenants are in lower rent bands or where wages and jobs were adversely affected by the pandemic, have seen higher delinquencies, evictions (in areas where they remained legal), and stagnant or decreasing rent levels. THE NEW WINNER—B4R A huge winner in 2020 has been the new-construction rental sector or as many know it, Build-For-Rent. As overall inventory levels have reached historic lows in many markets around the country, combined with the seemingly insatiable appetite of renters for newly built, more modern rental housing, Build-For-Rent has seen an influx of investment capital through various avenues. These avenues include incumbent SFR firms and not too surprisingly, new entrants such as multi-family investment firms. Other types of real estate investment companies have come into the space as well. For example, those who have been able to leverage their current operations in other real estate food groups as a way to entice institutional capital to back their play in this asset class that is now competing with the other core commercial verticals. To clarify, Build-For-Rent is the practice of buying land (raw or developed) and engaging with lot developers and builders to construct single family detached homes and townhomes for the purposes of holding as rental properties. There are several strategies players are implementing in this space. Building scatter site new construction homes for example is not a new phenomenon, as many investors bought distressed lots in broken subdivisions that resulted from the downturn and have been buying and building homes for rent on individual lots over the last decade. But the new strategy being employed by many SFR REITS, multifamily investment firms, and newly formed Build-For-Rent operators is the single site SFR subdivision. This new “thing” that many are figuring out has become the

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Data Analytics in Multifamily Investment

Major Factors Currently Impacting Multifamily Investing By: Dean Kelker, SVP & Chief Risk Officer, SingleSource Property Solutions The statement ‘real estate investing is not for the faint of heart’ rings ever true in today’s climate. Real estate investing has always been an objective practice, leaning directly on ROI and managing risk. The current political and economic environment presents a series of new and unforeseen opportunities and risks. As a result, investors have been increasingly cautious. Despite the climbing concern, investors can rest assured that they can assess every situation using data analytics to match the existing risk vs. their investment goals. The effects of the pandemic and these new factors must be examined to both mitigate new risks and capitalize on unanticipated prospects that did not exist prior to this event. In order to calm the uncertainty of what the future holds and ensure investors make the right investment decisions, we turn to some of the readily available data, to narrow the investment target to those opportunities that possess the greatest yield potential. Let us identify some of those major environmental factors currently impacting multifamily investing. HOUSING AFFORDABILITY Looking at these factors in the context of commonly available data can bring a more definitive focus to an investment decision in the context of moderating risk and enhancing returns. Markets where housing afford-ability is challenging certainly provide increased opportunity for rental properties as there is typically a larger pool of potential renters. RATE OF INCOME GROWTH VS. HOUSING APPRECIATION Housing affordability also directly ties into the relationship between the rate of income growth as compared to housing appreciation. In those markets where there is a significant imbalance between the rate of housing appreciation and income growth (i.e. income growing at a significantly slower rate than the rate of appreciation in housing prices), housing affordability suffers and conversely creates increased rental opportunities. As a related issue, that imbalance also substantially increases the foreclosure risk in the market which will subsequently increase the potential availability of single-family homes obtainable at attractive acquisition prices to be redeployed by an investor as single-family rentals. UNEMPLOYMENT RATE The market unemployment rate becomes a factor both from the perspective of risk of the investment as well as determining the likely rate of return. The current economic environment presents a good window into how the data must be properly analyzed to reveal the fundamental risk/reward in a particular market. In today’s circumstances, many markets have two unemployment rates; the current spot rate which in most cases is higher than normal, and what I will call a persistent unemployment rate. When the economy was shut down in March there was a national upward spike in the unemployment rate that gradually began to moderate. However, that moderation has been uneven across the country as the economic impact of COVID-19 has been uneven from both a business segment and geographic perspective. Let us look at a market such as Las Vegas—a city largely dependent on travel and hospitality for its economic base. Even as the economy began to reopen, Las Vegas has continued to suffer high unemployment as people have not indicated a desire to return to their previous travel behaviors for reasons of personal health and safety. This has driven the unemployment rate in Las Vegas to what has become a persistently high rate that has resulted in lowered personal aggregate incomes for the residents. High persistent unemployment results in pressure on rents due to declining personal incomes. However, for the investor looking for a longer term holding period coupled with having sufficient financial capacity to sustain a period of suppressed income, high persistent unemployment likely presents opportunities to acquire properties at lower than average prices, yielding higher returns in the longer investment horizon when the property is sold. Therefore, the investor needs to decide whether the reduced short-term income is worth longer-term asset appreciation. FINANCING AVAILABILITY A key element of the investment decision is associated with the availability and sourcing of investment funds. The investor must decide if the funds should come from an internal source or one of the various types of external financing, with the external funds coming from conventional market rate sources or subsidized public sources. Certainly, internally generated investment funds for multifamily housing necessarily compete with other investment opportunities, both real estate and non-real estate. Public sources of financing such as FHA or participation in various government housing programs such as Section 8 or LIHTC programs, establish limitations and requirements on the investor regarding the use and income opportunities with any particular property. The investment analysis of such an opportunity needs to account for many of the previously outlined factors, such as: is there a market for subsidized housing and are the attendant returns within the established parameters of the investor. IMPACT OF COVID-19 RELIEF PROGRAMS The current pandemic has created several unforeseen factors around residential investment such as moratoriums on rent collection, moratoriums on foreclosure, and pass-through of financing moratoriums on to tenants of affected buildings. All these issues have degraded the investment value of residential income property. While most of these policy changes were designed to be temporary, they have been extended as the effects of the pandemic have not abated, resulting in a material level of uncertainty as to when they will end and whether the pre-pandemic investment conditions will return. While the intent of the rent moratoriums was to provide a short term deferral in payments and restore the payments streams in the future, the reality is that for many residential tenants, the ability to pay deferred rents in the future timeframe is likely to be doubtful in the context of the general economic slowdown and widespread unemployment. The investor’s analytics now must reflect both the loss in income, which may impair the ability to make financing payments, coupled with the loss in the value of the asset caused by the diminished income that it is generating. Additionally, in the multi-family rental space, the investor must account for increased costs

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