Are you considering investing in office spaces or residential houses in the real estate market?
Now might just be the perfect time to do so.
In this video, we’ll discuss the current state of the market and why now could be a great time to invest in office spaces.
We’ll also provide you with some bonus tips on investing in residential houses to help you make informed decisions.
Whether you’re a seasoned investor or new to the game, this video will give you the information you need to make informed decisions about your real estate investments.
Watch now to learn more!
Transcript:
Chris Bounds 04:48
Yeah, you’re the first person that have heard them mention office and that doesn’t maybe that doesn’t mean anything because I just don’t hang around a lot of office investors. What are you seeing in the office space because I’m The office was disproportionately hit hard with COVID. Shawn, and we’ve got recession clouds kind of looming, which may cause folks to pull back in that. But what are your thoughts? What are you seeing?
Tom Berry 05:17
We’re seeing prices depressed in office. I can buy a real strong cap rate pretty much anywhere in the country right now, on a on a nice office building. I’m talking about office buildings of a size of say, 50,000 to 150,000 square foot. In that size, you’re seeing, things that are 30% occupied to 80% occupied and most of them closer to the 30 to 50 range. There is a lot of issues in the office space. Now, we’ve got a 74,000 square foot building in the energy corridor of Houston. That is a really hard hit sub market for office, that sub market is sitting somewhere in the low 70’s for occupancy rate, but our building is somewhere in the high 80s.
I think by the end of the year, with all of the conversations we have going with various tenants, I think we’ll be back to 100. Again, which is where we’ve been for the last year and a half. So like your last speaker talked about, things cycled differently, depending on asset class. And geography. As far as you know, Houston and San Francisco aren’t going to do the same thing.
At the same time, we could also take that down to the micro level of sub market as well, in, let’s say, a Houston or San Francisco, and then we can take it down even further to building to building they’re not going to do the same thing, the way they are managed, the way they are handled the way or they’re maintained, the way they are leased, advertised, all of those things have an effect. So I think that that lends itself to why you can see a particular building in a hard hit sub market still excel and do real well.
Chris Bounds 07:12
Yeah, I mean, ultimately, as long as you’re knowing how to underwrite, you’ve got your stress tests performed and good upside wins ahead, and you’re planning long term is definitely very smart. Say like, maybe switching the residential side, because from a lending perspective, you’ve got a good pulse on that market. Let’s focus on the single family. Where are you seeing that over? Said the next three years. This is macro, next three years, you work with a lot of house flippers. Also landlords, I’m sure a lot more landlords these days and house flippers. were you seeing that market?
Tom Berry 08:00
First of all, let me say I don’t have a crystal ball. I can’t see three years out. I don’t think anybody can. If I were to just guess. I think at that point, that’s what anybody’s doing. I would say that single family is still going to be a real strong market. In the places that people are moving to. Again, I hate to keep going back to Sarah, but dang she was spot on with everything she said, because you want to be where people are moving too.
Chris Bounds 08:32
A way of progress.
Tom Berry 08:33
Yeah, you want to get in the path of progress. I think a Houston or Dallas pretty much anywhere in Texas, Florida, except for some of the places that have really, really just grown exponentially, like Miami and some of the other larger cities over there. Those places were going to be good, we’re going to be good over the next three years, there is still a lack of housing in this country. Now, I would argue a lot of people say, well, housing prices can’t come down because of the supply and demand.
I would argue against that. I think I’d have a good argument against that philosophy. I think the people that are thinking that way are not going to be hedging enough. They may get crushed in this looming recession, because the media drives demand. When you have the media with every single article talking about how real estate is crumbling, real estate is falling, real estate is crashing, that will drive demand that fast.
You’ll start seeing people combine households again, just like we did in 2008 and 2009. All of a sudden, all that demand that we thought we had disappears, it doesn’t go away. It just disappears for a while. it’ll disappear until the crisis is over until the recession is over. Then those people want to move away from Mom and Dad again or mom and dad want to get away from the kids and grandkids. And all of a sudden we’ll have new housing. Again.
Chris Bounds 10:08
Love it. Love it. Well, thank you so much. These are quick and I think we need to have you we ever had you on long form part of the podcast as well. Definitely need to make sure that happens. Otherwise, I look forward to seeing you at one of these local events soon. All right. Take care, Chris. Take your time. Thanks.