Passive Impact: Real Estate Investing & Special Needs Housing
Welcome to "Passive Impact: Real Estate Investing & Special Needs Housing," where we explore how real estate investment can generate passive income while making a positive difference. Join host Robert Flowers as he shares strategies, success stories, and opportunities for investors looking to create financial stability and meaningful community impact.
Passive Impact: Real Estate Investing & Special Needs Housing
Tariffs and Real Estate
Tariffs might sound like distant economic policy, but they're hitting your real estate investments in ways you may not realize. We peel back the layers on how these import taxes create chain reactions that can derail budgets and timelines for property investors and developers.
When construction materials like lumber, steel, and aluminum face tariffs, costs don't just increase—they ripple through your entire project. But savvy investors have options. We explore strategies from locally sourced materials that bypass international volatility to pre-buying in bulk before prices climb further. Could prefabricated construction be your answer? These "giant Legos" often sidestep traditional tariff-impacted materials while delivering predictable pricing structures.
Your contracts matter more than ever in this environment. We discuss why fixed-price arrangements provide crucial protection against those dreaded "surprise bills" that can sink profitability. Geographic diversification emerges as another vital strategy—some regions feel tariff impacts far more than others. Meanwhile, smart financing approaches like securing long-term loans before inflation takes hold can effectively lock in favorable terms.
Even after construction wraps up, operational costs continue facing tariff pressure. Learn how property managers use escalation clauses, strategic rent adjustments, and cost-efficient technologies to maintain profitability. We highlight why healthcare real estate deserves special attention as a sector less vulnerable to these economic shifts, potentially offering a haven for concerned investors.
Whether you're breaking ground on new construction or managing existing properties, understanding tariff impacts equips you to move beyond reaction into strategic opportunity. Give us a listen, then check out our sponsors—Graceful Journeys for compassionate transportation services and Flowers and Associates for accessible housing solutions. Your real estate portfolio will thank you.
Okay, so we're diving into tariffs today and, you know, it's something that I think a lot of people kind of scratch their heads about, Like what exactly are they and what do they mean for me?
Speaker 2:Especially in real estate.
Speaker 1:Especially in real estate. Yeah, you're interested in real estate, it sounds like, maybe even with an eye on the home health care side of things.
Speaker 2:Okay.
Speaker 1:But you're like okay, so how do tariffs? Play into this whole equation.
Speaker 2:Yeah, these import taxes can really throw a wrench in your plans if you don't see them coming, and they can hit you in some really unexpected ways.
Speaker 1:Yeah, Like. It's not just about like OK, this thing costs more now.
Speaker 2:Exactly.
Speaker 1:It kind of has these ripple effects.
Speaker 2:It's a chain reaction. You know, the price of one thing goes up and suddenly your whole budget's out of whack.
Speaker 1:Right and we're going to talk about some of those ways that that happens.
Speaker 2:Absolutely.
Speaker 1:So let's start with, just like, the very basic.
Speaker 2:Okay.
Speaker 1:Construction costs? Sure, so you know. Lumber, steel, aluminum, these are like the building blocks, the building blocks of any project, and when you slap tariffs on those materials, that can get pricey.
Speaker 2:It gets expensive fast.
Speaker 1:Yeah, so you know that new construction project.
Speaker 2:Right.
Speaker 1:Or even just like a renovation you've been dreaming about.
Speaker 2:Right.
Speaker 1:Suddenly is costing you way more than you thought it would.
Speaker 2:Yeah, and you mentioned you're looking at properties and listeners location right Right, looking at properties and listeners location right Right. Have you thought about maybe using locally sourced material instead of relying on tariff impacted material?
Speaker 1:Oh, that's a good point.
Speaker 2:Yeah, it could really save you some money.
Speaker 1:And I feel like that plays into this whole idea of like local sourcing and like supporting the economy where you are.
Speaker 2:Right, it's a win-win you get better prices and you're boosting your local community.
Speaker 1:And you're less reliant on these global markets that are so volatile.
Speaker 2:Exactly, and on that note, another thing to consider is pre-buying in bulk.
Speaker 1:Oh, interesting.
Speaker 2:Yeah, especially if you've already got your plan set.
Speaker 1:Right.
Speaker 2:You can lock in those prices before they go up even more.
Speaker 1:So it's like you're kind of creating your own little stockpile.
Speaker 2:Exactly A strategic reserve of materials.
Speaker 1:Okay, but that's a big upfront cost, right, that's true. Like, how do you navigate that as an investor?
Speaker 2:Well, it's all about balancing risk and reward right. You have to weigh the potential savings against the cost of holding that inventory. But for those key materials, the ones that are likely to see price hikes, Right. It can be a really smart move in the long run.
Speaker 1:I see. So you're basically betting on the fact that it's going to be even more expensive later.
Speaker 2:Exactly.
Speaker 1:Okay.
Speaker 2:And you know something else I've been seeing more of.
Speaker 1:Yeah.
Speaker 2:Is prefabricated and modular construction.
Speaker 1:Oh yeah, it's like building with giant Legos it and modular construction.
Speaker 2:Oh yeah, it's like building with giant Legos. It is a bit like that or houses. And because they often rely less on those tariff impacted materials.
Speaker 1:Right, they can be a really cost effective option, interesting, ok, so you've got your materials.
Speaker 2:Right.
Speaker 1:You figure that all out. Uh-huh, you've got your property.
Speaker 2:Yeah.
Speaker 1:What about contracts?
Speaker 2:Contracts are crucial, especially when you're dealing with new construction.
Speaker 1:Okay.
Speaker 2:You need to protect yourself from those fluctuating costs.
Speaker 1:So fixed price contracts.
Speaker 2:Fixed price contracts are your best friend in this situation.
Speaker 1:Okay.
Speaker 2:It's like a safety net. You know, exactly what your project's going to cost, no matter what happens with tariffs or labor costs. So you're not going to get hit with like surprise bill like halfway through, no surprises, okay, good, yeah, it gives you that peace of mind.
Speaker 1:Okay, so we talked about materials. We've talked about contracts. What about location?
Speaker 2:Location, location, location right.
Speaker 1:Always.
Speaker 2:But seriously, some regions are just way more vulnerable to tariff impacts than others.
Speaker 1:Oh, that's interesting.
Speaker 2:Yeah, think about areas that are heavily reliant on international trade.
Speaker 1:Right.
Speaker 2:They're going to feel those tariff tremors a lot more.
Speaker 1:It's like if you're putting all your eggs in one basket.
Speaker 2:Sacked.
Speaker 1:And that basket is in a very tariff heavy zone.
Speaker 2:You're setting yourself up for potential problems.
Speaker 1:Okay, so diversify.
Speaker 2:Diversify, diversify.
Speaker 1:Spread it out.
Speaker 2:Spread it out geographically.
Speaker 1:Okay, it's like a buffer against those economic hiccups. That makes sense, yeah, okay. So we've got the location, we've got all this stuff sort of figured out.
Speaker 2:Right.
Speaker 1:Now what about financing?
Speaker 2:Financing is where things get really interesting. Okay, imagine this you secure a long-term low interest loan before inflation really kicks in. You're essentially locking in favorable terms and mitigating the impact of rising costs.
Speaker 1:So you're kind of outsmarting the system.
Speaker 2:You're playing the long game. I like it. And don't underestimate the power of local partnerships, both with suppliers and investors. Building those relationships can really help you weather those global market fluctuations.
Speaker 1:So, like you're creating this little ecosystem that can kind of support itself Exactly Less reliance on imports, more stability all around.
Speaker 2:I like it OK. So we've talked about all of the like sort of getting the project off the ground, part of it. What about the day to day, like the operations?
Speaker 1:Right, because even if you've bent your property and you're ready to go, yeah. Tariffs can still hit you through rising operational costs. Oh interesting, mainly due to inflation.
Speaker 2:OK, so what can a property manager do?
Speaker 1:Well, one thing is to adjust those lease structures.
Speaker 2:Okay.
Speaker 1:You know, maybe include some escalation clauses.
Speaker 2:Can you break down what an escalation clause is?
Speaker 1:Yeah. So let's say your operating costs go up 5% because of inflation.
Speaker 2:Okay.
Speaker 1:With an escalation clause, you can pass a portion of that increase onto your tenants Right, so you're not absorbing the whole hit yourself.
Speaker 2:That makes sense.
Speaker 1:Yeah, it helps protect your bottom line and ensure your investment stays profitable.
Speaker 2:Are there other strategies that property managers can use?
Speaker 1:Absolutely yeah. You can strategically increase rents if the market allows.
Speaker 2:And investing in cost-efficient technology can also make a big difference.
Speaker 1:Like what kind of technology?
Speaker 2:Things like smart HVAC systems.
Speaker 1:Okay.
Speaker 2:Solar panels, anything that helps reduce those long-term operational expenses.
Speaker 1:So it's about being proactive.
Speaker 2:Exactly.
Speaker 1:Okay, cool. So bringing it back to kind of your interest in this home healthcare side of real estate, Right. That's an interesting sector because it tends to be a little bit less sensitive to these tariffs.
Speaker 2:It's kind of a haven in that regard.
Speaker 1:Interesting.
Speaker 2:Yeah, instead of pouring money into new construction, which we've already talked about can be really vulnerable to tariff impacts, why not look into existing properties that you could convert into health care facilities?
Speaker 1:Oh, that's a good point.
Speaker 2:Yeah, it could be a way to enter the market while minimizing your exposure to those fluctuating costs.
Speaker 1:So it's about being strategic and finding the opportunity within the chaos, exactly OK. So just to kind of sum up everything we've talked about, yeah. Tariffs have a huge impact.
Speaker 2:They do.
Speaker 1:On real estate.
Speaker 2:On everything.
Speaker 1:They really do affect every single aspect of it.
Speaker 2:From construction costs to operational expenses.
Speaker 1:Yeah, but there are things that you can do Right, absolutely. To mitigate those risks.
Speaker 2:With a little foresight and strategy, you can navigate this landscape successfully.
Speaker 1:Whether you're interested in new construction property management.
Speaker 2:Right.
Speaker 1:Or even this home healthcare world.
Speaker 2:The key is to stay informed, stay adaptable and your real estate endeavors will be just fine.
Speaker 1:Solid ground, solid ground. And speaking of solid ground, I want to thank our sponsors for their support.
Speaker 2:Yes, definitely.
Speaker 1:If you are looking for reliable, compassionate transportation for yourself or a loved one, definitely check out Graceful Journeys.
Speaker 2:Great company.
Speaker 1:They specialize in transportation for the elderly and the disabled, yeah, and their founder, angela Craft, is really committed to providing that top-notch care.
Speaker 2:Absolutely.
Speaker 1:And then for accessible housing options. Check out Flowers and Associates.
Speaker 2:Yeah, they're great. They specialize in special needs housing and they really understand the needs of that community.
Speaker 1:get it, yeah you can give them a call at nine oh one, four, four, five, eight, one four eight, easy to remember or visit them online at flowers and associates bookingcom perfect awesome. Well, thanks for joining us for this deep dive it's been a pleasure we'll see you next time.
