00:00You guys have done a lot of transactions around the United States.
00:02Stuff in Florida, do you have projects going on?
00:04Tell us about the environment, and I'm curious if you've got anything in Cape Coral or nearby.
00:09I don't have anything right now in Florida.
00:11We've been in Florida in the past.
00:13Something that Florida has to struggle with is rising insurance costs,
00:16and that has made it really hard for property owners
00:20and for new investors to come into that market because of insurance.
00:24Is that why you guys are staying out?
00:25Well, we've been staying out of coastal for a little while.
00:27We started looking back at it again because insurance started to level out,
00:32but insurance rates are incredibly high.
00:34That's not just a Florida story.
00:35It's a California story, too.
00:37It's all coastal right now and fires, right?
00:39We get that in California.
00:40And we see that start to hit parts of California, like Malibu and the Malibu area,
00:45but for the most part, California real estate prices are still really, really high,
00:48even though it's challenging and expensive to insure those properties.
00:52When does that chicken come to roost?
00:55California real estate market has always been very unique in the sense that it's an appreciation market
00:59and not a cash flow market, so it's always been a little bit tight there.
01:04But when does that stop?
01:06I don't – it's a market that seems to not follow economics.
01:10And you don't have anything in California right now, right?
01:12We used to.
01:13We started in California.
01:14That's where we were for 10 years, and we do not now.
01:18So we are very cash flow oriented.
01:20So talk to us about the environment, what you are seeing today versus what it was six months ago,
01:2412 months ago.
01:25I think it's been a few months since we last talked.
01:26Yeah, absolutely.
01:27We're still seeing a very bifurcated economy, both in the macro economy and then also within
01:33submarkets.
01:34So what we're seeing is a bit of mean reversion right now where markets had overgrowth are
01:42starting to cool down a little bit and starting to try to absorb all that overgrowth.
01:45And some of the markets that were more depressed that didn't overbuild are starting to rise.
01:50You see something like that in like Chicago or San Francisco where now all of a sudden
01:54you see 3%, 4% annual increases, which is really high compared to some of the rents
01:58in the country that are starting to drop.
02:00So we are seeing a tale of two cities.
02:03Since we last spoke to you, the Trump administration has come out with some different – I wouldn't
02:09call them policy – policies, I'd say policy proposals to try to get housing within control
02:17for many Americans.
02:19Some of them target single-family homes and institutional investors.
02:23Is anything that you've heard from Washington, D.C. helping to alleviate the problem?
02:29You know, we're hearing a little bit about it in that single-family buy-to-rent or rent-to-own
02:35model, and we're not seeing it so – we don't hear proposals coming out as how are you going
02:41to help workforce housing or market-rate housing, right?
02:44So there are ways to help as far as subsidized housing, like Section 8 or something like that.
02:49But ultimately what it comes down to is cost of living is rising so much, and it's more
02:54so than the cost of actual housing.
02:57That workforce housing or free market housing stays pretty stable.
03:01It grows slowly, but it stays a little bit independent from macroeconomics because you
03:06get a lot of friction in mobility.
03:08People aren't moving a lot out of their units, but then again, you know, we talk about this
03:13lack of affordable housing.
03:14Right.
03:15We have to dig into what is that?
03:17What does that mean?
03:18Well, we constantly, I think, pep our people with questions to try to understand.
03:21And before we got going, we said, well, you know, one of the things that we've kind of
03:24pushed on is building housing, affordable housing where the jobs are, whether it's a major
03:30city rather than having someone who's got to, you know, take a train or a bus or however,
03:34two hours or an hour and a half or something, you know, outside that major city in order
03:39to live, you know, affordably.
03:41Sure.
03:41Sure.
03:42I mean, you see something like New York right now, and you've got units here that are vacant,
03:48but it's hard for landlords to bring them back online.
03:51How do they do that?
03:52Especially when you've got threats of a rent freeze here in New York.
03:56How do you offset that for the landlord?
03:59So it's cheaper for them to leave them open than to rent them at a below market rate.
04:03That's true in some of the places in New York.
04:05New York is very specific.
04:07Okay.
04:07But not in other cities?
04:09In other cities, you're not seeing that as much, but you don't have those freezes like
04:13that.
04:14Even in places where you do have rent control, we are seeing some relief on other sides.
04:19I think that we do see that cities are starting to recognize that keeping landlords from raising
04:25their rents ends up hurting affordability overall.
04:29Where are you bullish right now?
04:30Where do you want to do new projects?
04:32We're really bullish in the Midwest right now.
04:35We like areas that are very stable.
04:38We don't like to see that overgrowth.
04:40We like to see places that have a lot of economic growth as far as workforce.
04:48So where in the Midwest?
04:49We love Ohio right now.
04:51We're buying a lot there.
04:52It's a great time to invest right now if you're very discerning and specific with what
04:56you buy.
04:57So we're looking for upside down capital stacks.
04:59So Southern Ohio, Central Ohio, Northern Ohio.
05:02I mean, these are all very different parts.
05:04Sure.
05:04Right now we're heavy in Columbus, we're looking in Cleveland, we're looking in Cincinnati.
05:10Okay, so that's everywhere.
05:12That's pretty much.
05:13It's a little bit.
05:14We're all over the Midwest.
05:15We like other cities too.
05:16It really depends.
05:17We're more deal oriented.
05:18We're looking for where is that upside down capital stack that really needs us to come
05:22in to infuse capital because that's what really happens.
05:25So much money has gone down south, certainly the southeast.
05:28Has that gotten overheated at this point?
05:31I mean, I've heard some signs or some stories about things like prices starting to come down,
05:36at least in kind of residential homes.
05:38But what are you seeing there?
05:40Right.
05:40So that's that Sunbelt area or some of those overheated areas that are now coming back down.
05:45So I think that what happened is there was this oversupply of building, right?
05:50We hit this peak of building in like 2022, those units started coming online.
05:56If you take a look at where we're at today, new development is 70% in 2025 below where it
06:04was at its peak in 2022.
06:06So now we're seeing that absorption.
06:08And so that drops prices for a little bit, but they'll even out and start to come back.
06:12So Amy, in terms of affordability, bottom line, in your view, it's more about like thinking
06:18about why is it that people can't afford to buy homes?
06:23And is it wages or like, is that what we need to be focusing on in your view from what
06:27you
06:27see?
06:28Right.
06:29So in what I deal with, we are not really competing against the home market.
06:32We are providing housing for renters by necessity as opposed to lifestyle renters or people who
06:38choose.
06:38But what we're seeing is really it's cost of living is high and cost of mobility is
06:44high.
06:44And so that just getting out and packing up and moving and getting a new security deposit
06:49down somewhere and that the costs of that is what is expensive.
06:53So we're seeing a lot more concessions on the front end as opposed to rent reductions.
06:58All right.
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