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Own the Outcome with Tyler Deveraux
Own the Outcome dives deep into the real stories of resilience and triumph that arise from the depths of failure. Join Tyler Deveraux on a journey of inspiration, growth, and authentic conversation. Within every stumble lies a valuable lesson, a chance for transformation, and a path towards success. Each episode features compelling stories from a diverse range of guests, from entrepreneurs and artists to everyday heroes—all sharing one thing in common: their ability to turn adversity into an opportunity for growth. Because in the end, it's not about avoiding failure; it's about owning the outcome.
Own the Outcome with Tyler Deveraux
How the Multifamily Market is Shifting in 2025
The multifamily game is shifting big time as we roll into 2025, and if you're serious about playing at a high level, you’ve got to stay ahead of these changes.
In this episode, I’m breaking down the key market shifts and what they mean for investors looking to win in this new landscape. We’re talking about massive insurance hikes (some properties jumping from $800 to $2,200 per door!), skyrocketing property taxes, and the real impact of interest rates—beyond just what the Fed is doing.
But here’s the deal: there’s always opportunity if you know where to look. Some markets are set to outperform in a big way. We’ll talk about the markets that are heating up, why household formations matter more than raw population numbers, and how to spot the best landlord-friendly states for your investments.
The investors who position themselves right NOW—who build the right teams in the right markets—will be the ones who win big by the end of 2025. This episode will help you see the trends that matter, take action, and set yourself up for massive success in the months ahead. Let’s go!
Thank you for listening to today's episode. If this podcast has brought a smile to your face or sparked some new ideas, I'd love to hear from you! Leaving a review would mean the world to me. Appreciate you!
Connect with Tyler on Instagram: @tyler_deveraux
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All right, aloha and welcome back to the Own the Outcome podcast Once again. My name is Tyler Devereaux and today we're going to dive into what 2025 looks like for multifamily investing and how the market's shifting. Man, we have a new president, President Trump. So underneath that new administration, what's going on? But, most importantly, what that means for you as an investor.
Speaker 1:2024 was a roller coaster. There was some interest rates, inflation, supply-demand constraints, but now we're stepping into a new year with new administration. That's a big deal because, first off, there'll be some policy changes, Some things will stay the same, but we need to understand how we position ourselves to win. And, compared to 2024, 2024, an election year is always a challenging year because people almost stay stuck, they don't want to move too quick, they want to know who's going to be in office, and so, all of a sudden, you just kind of start to see things slow down. But, once again, the key is how do we position ourselves to win? So the goal of today's episode is going to be to understand some macro trends that affect real estate, the economy as a whole. Also, I'm going to go through some top performing markets and then certainly some actionable steps on how you can get ahead and once again position yourselves to win in 2025. So, you know, the macro level trends are very important to understand. Now we're going to drill down to micro level trends, definitely, but the macro level trends are important to understand.
Speaker 1:You know, for example, 2024 was challenging for a lot of people for a number of different reasons. You know, people will immediately default to rate hikes, and rate hikes, you know, certainly can be, you know, an impact. But, man, our biggest impact, I will tell you personally on my portfolio came down to insurance and taxes. You know, insurance was a beast. You know, on some of our properties in Houston, insurance rates rose from 800 per door to over $2,200 per door. I mean, that's unprecedented, you know. And trying to, you know, geez, prepare for that is a very challenging thing to prepare for, right. So then also, taxes taxes damn near tripled as well. So, once again, same location. So, yes, rate hikes are important. I'll explain. Actually, that's the first thing we'll do. We'll talk about rate hikes and how they impact things. But there's a number of different variables and things to understand, and so the key is to understand how the moving parts work together.
Speaker 1:So let's go through some macro trends. So, macro trends. When I say macro, I mean nationwide, okay, and job growth is a key indicator. So at a macro level, we expect you know from the different reports and things that I've looked at we expect job creation to slow a little bit in comparison to 2024. It's projected that 1.8 million jobs will be created in 2025. Now that may be a surprise to some, because you think Trump's coming into office.
Speaker 1:There's this new energy in the US. People are going to want to create jobs and we certainly expect that to happen. But I'll show you what impacts jobs and just the general labor market as a whole. But I want you to understand why job growth is so important. Job growth is so important because jobs bring people to markets like to certain markets, and they also pay people money and listen so they can afford rent at our properties. See, people are demand for these multifamily properties and so we need people within the market. But we also need them to be able to have the wages to support the rent growth or the rent on those properties. But the reason that we expect job growth to slow is because of interest rates.
Speaker 1:One of the major influences affecting job growth is interest rates. Now the Fed started to reduce the rates last September from 5.4 to I think it got down to even 5.25 or 5.5% range, and that's the short-term interest rate. They call it the overnight rate. But current expectations call for 2% or sorry, not 2% call for two rate cuts in 2025, which is projected to take the rates down to 3.75. And that might sound good and that is good, but it's a lot less than the initial expectations that people had in September and also maybe even the initial expectations about Trump being in office. But, in short, the Fed is super, super cautious about inflation risk. They're looking at that all the time.
Speaker 1:I think it's important to understand the difference, too, between overnight and long-term rates. So you have two basic rates that we track, okay, the overnight rate and then the long-term treasury rate. So the overnight rate, that's the short-term interest rate, and this is the interest rate that banks charge each other for very short-term loans, literally like overnight loans, which is why it's called the overnight rate. So it's certainly influenced by the central bank you know the Federal Reserve in the US but it directly affects things like credit cards. So credit card rates, home equity lines of credit, short-term business loans, those kind of things. So this rate, this overnight rate. It's used to control inflation and keep the economy stable. So if inflation is too high which it has been the central bank will then raise the rate to slow the borrowing and then, if the economy is weak, they will lower it to encourage lending.
Speaker 1:Now the long-term treasury rate in comparison, this is the interest rate that the government pays when it borrows money for a long period, so typically 10 years or more. 10 to 30 years is typically the span and it's determined by market forces, and I'll explain how these two work together. But it's determined by market forces and investors buying and selling government bonds is what I mean by market forces. So this rate, the long-term treasury rate, reflects expectations of future inflation and economic growth. So if investors think that inflation is going to be high, they demand higher yields. If they think that inflation will be low or the economy is uncertain, then they'll accept lower yields. Yields is return okay, so they'll accept lower returns if they think that. But it influences things like the mortgage rates and corporate borrowing. So mortgage rates on your single family home that you may be buying, or these interest rates on these apartment buildings that we buy.
Speaker 1:So give you an example of this. Let's say that the Imagine know. Imagine that the economy is starting to slow down and people aren't spending as much money. So to help, what's going to happen is the federal reserve lowers the overnight rate Remember that's the literally overnight rate that they lend to each other which makes it cheaper for banks to borrow money from each other. Okay Now, because banks can now borrow money at lower rates, cheaply, they pass the savings on to consumers by lowering mortgage rates. So this happens because the long-term treasury rate, which again which influences those mortgage rates, also goes down when investors expect inflation and slower growth, and because of that, with lower mortgage rates, monthly payments become more affordable, so more people decide to buy homes.
Speaker 1:So think about this in 2020, what happened? They were nervous that people wouldn't spend money. They lowered these rates to historical lows. Now people can afford mortgages because their rate goes down. And then what happens? More people buy homes. If you have lower mortgage rates, lower monthly payments, they become more affordable, so more people decide to buy homes. This boosts demand, which helps the housing market and the construction industry start to grow. And then what happens is the economy starts to speed up. So, as more people buy homes, builders hire more workers, furniture stores sell more furniture, the economy starts to pick back up, which is, once again, exactly what we started to see.
Speaker 1:Now here's what happens, though In 2022, in comparison the Fed started to raise the overnight rate. So okay? So let's look at this. Inflation was pretty high, so now imagine that inflation's getting too high and everything is becoming too expensive, which is what was happening, right? So what happens is the Fed is going to raise the overnight rate Once again, making it more costly for banks to borrow money, and then, in response to that, mortgage rates go up because the long-term treasury rate is also going to rise. Fewer people buy homes, since their monthly payments are going to be higher, and then the economy starts to slow, which is once again helping to control inflation.
Speaker 1:So, if you've been paying attention at all the past few years, this should sound very familiar, because this is exactly what's happening, or what has happened. So this takeaway okay, the lower the to understand the overnight rates. Okay, the lower the overnight rates, the lower the mortgage rates, more homebuyers' economy speeds up. The higher the overnight rate, the higher the mortgage rates, the fewer homebuyers and the economy starts to slow down. So, once again, it's important to look at the whole structure and understanding how the economy works and what's going on. So why do I drill into those rates? Because rates are very important. It drives job growth, it drives buyer sentiment and it really drives the economy as a whole, if you really think about it. So the Fed can really play those cards.
Speaker 1:But listen, you have to look at micro level trends as well because, all that being said, every area is affected differently, which is why, as investors, we have to look at micro level trends tongue twister super closely. So, for example, the markets that are, despite everything that I just talked about, once again, the Fed has raised rates. We were expecting it to drop. It's now not expected to drop as much as it was in 2025. It's supposed to only have two rate cuts, Once again, a little bit lower than we've seen, but not where we would really like it. But still, there are markets that are adding a whole bunch of jobs regardless, and so this is our micro level trends that we would look at. So the market's projected to add the most amount of jobs this year.
Speaker 1:Total jobs Dallas, Houston, Texas. So, Dallas, Texas, Houston, Texas, New York, Washington DC and Atlanta. Okay, Now those are five of the biggest job markets in the entire country. So that makes a lot of sense as to why they may be the ones adding the most number of total jobs, which is why, once again, we look like and if you don't look at this kind of stuff, you need to look at this it's not just total deliveries, total jobs in the market, it's which you know, it is the total number sorry more about the percent increase in deliveries. So the percent increase, not just total deliveries. We focus more on the increase, the total increase meaning year over year increase.
Speaker 1:So, Marks and Millichap, my favorite reports to look at, so some tools for you to go look at. And then they just came out. Okay, Once again, I'm recording this. What is it? The first week or something of February, February, and both of these reports just barely came out, so you can go take a look. But, Marcus and Millichap once again one of my favorite reports they have their top year-over-year projections for 2025. So so these markets, metro areas that are projecting the highest amount of year-over-year job growth in 2025.
Speaker 1:So number five is Houston Texas. They project Houston Texas to bring in 68,000 jobs in 2025, which is a 2% increase. And just so you know our biggest targets that we look at once again. Job growth is one of them. When I'm choosing a metro area, Job growth is 2% year-over-year growth. So Houston, Texas would fit that mold 2% year-over-year job growth. Austin Texas is another one. They project Austin Texas to have 29,000 jobs brought in. That's 2.1% growth. So that's number four. The thing with Austin, though Austin has been one of the top job producing metros pretty much since I've been in the space Because of that, anytime that that's the case, there's lots of development. That goes on. So, even though there's lots of job growth, there is lots of development. So the supply is very high in Austin, which has kind of balanced that out, which has made that market a little bit more challenging for commercial real estate.
Speaker 1:Number three is Fort Lauderdale, Florida. There's 20,000 jobs that are supposed to be brought into Fort Lauderdale Florida, which would be a 2.1% growth. Now number two is Jackson Florida. Jackson Florida 18,000 jobs are projected to be delivered. And Jacksonville is one of the smaller markets on this list here, but great market, it's growing at a great rate 18,000 jobs projected for 2025, which is a 2.2% growth. And then the number one market on Marcus and Mila Chaps year-over-year projections for 2025 is Raleigh, North Carolina. They're projected to add 29,000 jobs, for a 2.6% year-over-year job growth. All of those are phenomenal.
Speaker 1:Now what we look at, though, is I look to look at different reports to see which markets are mentioned multiple times. So most reports will come out with their annual report or quarterly reports, and my advice to you is don't just look at one, look at multiple. You're going to look at multiple, see which multiple. Okay, you're gonna look at multiple, see which ones are mentioned multiple times, and then go do your research within those markets. So, for example, Marcus and Mill or, sorry, the Milken Institute Milken Institute's also one of my favorite reports to look at, by the way and they came out with their top performing markets.
Speaker 1:Now, some of these are gonna sound familiar. Number one is Raleigh, North Carolina. Once again, that was Marcus and Millichap's number one as well. Number two is Ogden, Utah. Ogden, Utah wasn't even on Marcus and Millichap's report. Number three in fact, the rest of these aren't on Marcus and Millichap's report. Yeah, none of these are on Marcus and Millichap's report. Number three is Salt Lake City, Utah, and then number four is Huntsville, Alabama. Now, Huntsville, man. Huntsville would have been a market that I would absolutely look into. You know, I remember when I very first started the market, Huntsville had just kind of started to peak out, and now it's back on the rise again. It was fun to see this one creep up in the report. And then number five is Colorado Springs, Colorado fun to see this one creep up in the report. And then number five is Colorado Springs, Colorado Springs. That's the Milken Institute report that came out. So you'll see, the only one that really crosses over there within those top five is that Raleigh, North Carolina one.
Speaker 1:Now what I'm looking for because I'm going to give you some notable markets, because when I look at the Milken Institute report, I'm definitely looking at the job growth, I'm definitely looking at their rankings. By the way, the Milken Institute ranks the top 200 markets year over year, so from one year to the next. They also rank it from small cities and large cities. Now what I'm looking at when I go into there, I don't just go look at the top 10 or the top five, like I just gave you. I'm looking for markets who made the biggest jump in the rankings, so they jumped the most amount of spots. I'm also looking for markets that, so markets that made the biggest jump in the rankings and then also ones that you know are maybe cracking the top 100 for the first time, and then, once again, anything that's mentioned on other ones.
Speaker 1:But I pulled some of my top ones for notable markets. So these are my notable markets from the research that I've done, my top five, if you will, from the different reports that I've looked at. So one of those and these are in no real particular order except this one is probably my number one, which is Charleston, North Carolina. Charleston, North Carolina, has a great forecasted job growth, meaning it is projected to add a great number of percentage of jobs this year, in 2025. I like Charleston as a whole anyway, a great population and household information growth there as well. Number two is Palm Bay, or Titusville, which is in Florida. Okay, they jumped from 25th to 9th. So the reason I like that number one it's a big jump in the rankings and it's cracking the top 10 for the first time in a while. So that's one that I'll put on my list to look and dive deeper into.
Speaker 1:Number three is Fayetteville, North Carolina. Now, I love this one as well. This one jumped from 180th to 98th. So once again cracking the top 100 for the first time and a huge jump in the rankings. Okay, and that's done, because a big jump like that comes from the major drivers, which is job growth, household formation, which is population growth, people moving there, trends like companies moving in or transportation routes moving through. So Fayetteville, North Carolina, is a big jump.
Speaker 1:Now the market in the US was the largest it's called the largest gainer amongst biggest cities. Remember, they rank small cities and big cities. So the market that is the largest gainer in the US on this report from the Milken Institute is Tulsa, Oklahoma. Tulsa, Oklahoma jumped from 185th to 86th. That is a massive jump 99 spots, man. I don't even know if I've seen a market jump 99 spots before on that report. So Tulsa Oklahoma. Luckily, I own a couple of properties in Tulsa, Oklahoma, which makes me happy to see the market jumping and moving. But that's a big jump, man.
Speaker 1:And then number five is Fayetteville, Arkansas. Remember, I have Fayetteville, North Carolina. This is Fayetteville, Arkansas. They're forecast to have 3% forecasted year-over-year job growth, which, once again, our target that we look for is 2% year-over-year. So 3% is a fantastic number. So those are your, once again, top markets that you should be looking at, but it's key that you understand what to look for, Okay, so number one thing so here's your actionable things as you go out to do your market research and what you should be looking for.
Speaker 1:Number one is job growth. You need to be looking at job growth. We're looking at 2% year over year job growth. That's what we're targeting. Okay, so markets have 2-over-year projected job growth.
Speaker 1:Number two, though, is household formations. Now we track population, and I do look at population. I want to have a market like my targets. I want to have a market that has had five years I look back five years, five-year historical it's been growing, positive growth, but it's also projected to have positive population growth over the next five years.
Speaker 1:The household formation these are households that are forming, meaning it could be two people that live together and now make enough to move out on their own. That's a household that's formed. Usually, the most amount of households are formed by young adults who are coming out of college. So they're coming out of college now to take a new job somewhere, that they move from their parents' home or whatever, to form a household within that market. That's a household that is forming. That is in direct correlation with demand for our products. So household formations is a big one, but we also look at supply demand. We need to look at supply demand.
Speaker 1:So, for example, Austin, like I mentioned, there is a lot of supply, there's a lot of demand but there's a lot of supply. They're very much overbuilt in the market and because of that your vacancy rates have started to increase. Same thing with like an Orlando Florida. Orlando Florida job growth is actually very good. The fundamentals of the market are very good because there's been so many new builds coming in on the market that your supply has increased, which, anytime you get a market that is even flirting at all with double-digit vacancy rates, it's going to be a market that is more challenging to raise rents and truly force appreciation in any realm because you look at demand also. That will help with your vacancy rates in your properties and increasing occupancy. Man, if there's supply demand 101, if they have more supply to go to, chances of you grabbing them become less and less. So we're looking at markets that don't have those big supply constraints and that haven't been overbuilt. I was just in Denver and I've seen Denver's vacancy rate go. My goodness, their vacancy rate a few years ago was in like the 6% range and right now it's over 11% vacancy. That's because of all the new builds that have been happening within the Denver market. So if you get, and then last thing that I look at, I look at a lot of things, Okay, but last thing that I'll mention here is your landlord versus tenant friendly States. You know, like a Denver as an example, Denver is very tenant friendly and we need landlord friendly States, Metro areas that can you know. Go, go that direction where we can actually control the business the way that we want to control our business.
Speaker 1:So your job is to go do some research, look at some of these reports, see which ones are mentioned multiple times, and then, once again, look at the bigger picture. Certainly, look at macro trends. Yes, where interest rates are, where job growth is, what's happening with the new election, new policies that will come into play, what you know Trump will do. But, man, where you buy is very important. You're definitely going to buy in the US. You already know that. I would imagine you're going to buy this year already. You already know that.
Speaker 1:But you need to know where to buy and why you're buying in those areas, and those things that I bullet pointed, those things that I mentioned, will help you take it from this macro level that seems pretty daunting to look at and bring it down more to a micro level. That helps you understand things that you can control what you should be focusing on and areas that you should be targeting. So, if you don't have those reports that I mentioned Marcus and Mila Chaps Forecasted Report for 2025 and or Milken Institute you need to go download those. Look at those. Those are phenomenal reports that will give you some insights into these markets that you can now go do market research on.
Speaker 1:With anything, though, you need to own your outcome. You need to own your outcome, Meaning you own your outcome by. You can't control the outcome, but you can own the outcome of your investments by looking at the bigger picture, drilling down into the smaller ones and then pulling the trigger and doing everything you can to work within the parameters that you have. You know, the people who lose are the people who stay on the sidelines. The other people who lose are the people who don't look at these trends and just dive into a market because they find a property there. Once again, you need to know where you're investing and why you're investing there, and then you can execute on your business plans within those markets.
Speaker 1:My friends, I hope that helped Understand what's going on in the market a little bit at a macro and micro level, but, more importantly, what you can control in researching your markets and diving into the market, that you're going to build teams up in, that you're going to grow in and that you're going to ride this wave over the next four plus years to completely change your wealth portfolio. I will tell you that right now is the time to start building your teams. I mentioned at the beginning of the podcast that the long-term rate I think I mentioned this but the long-term rate has increased a little bit. Okay, which is interesting, right, Because I mentioned that the short-term rate, when the short-term rate goes down, usually the long-term rate does as well, but the long-term rate has increased a little bit, and that's mainly because there's some trepidation with what these new policies that Trump will put into place are. So, over this next little bit this first quarter, second quarter of 2025, you're going to be seeing people pull back and seeing what's happening.
Speaker 1:Listen, you should be seeing what's happening as well with the Trump administration, but what you should really be doing is building your teams within these markets so you can control, but what you should really be doing is building your teams within these markets so you can control Once again. You can't control, but you can. It is more controllable from a micro level, looking at the market fundamentals, so that you can benefit when the flood comes back in Once again. Now is the time to build your teams. Where are you going to invest? What are you going to buy? You need to be very clear on all these kind of things so you can actually benefit from the amazing wave that will happen come the tail end of 2025 and beyond. Once again, own your outcome by doing your research and not staying on the sidelines. Sidelines are for pussies. Live always in Aloha Peace.