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Real Estate Investing: Opportunities in 2023 in Top Pandemic Markets – Business Insider

  • Kenny Simpson and Krystle Moore have amassed a $19 million, 47-unit real estate portfolio.
  • They shared why there’s “significant opportunities” for investors in the one- to four-unit space.
  • The couple also broke down how to find the top housing markets to buy in for 2023.

With a recession on the horizon, inflation remaining at decades-high levels, and rapidly climbing interest rates, the future of the real estate market heading into 2023 seems bleak.

But it’s not all doom and gloom for investors, said married real estate experts Kenny Simpson and Krystle Moore, who collectively have 35 years of industry experience between them. “I think the general theme of 2023 is going to be significant opportunities for people in real estate,” Moore told Insider in a recent interview.

Today, the 42-year-old Simpson and 38-year-old Moore reside with their two daughters in San Diego, where they’ve amassed a real estate portfolio that spans 47 units and is worth a combined total of almost $19 million, according to documents verified by Insider. Simpson and Moore estimated that these investments net them over $360,000 in annual cash flow. Combined with the couple’s partial ownership in a few other properties, their total cash flow amounts to nearly $400,000 annually.

Outside of their personal investments, Moore focuses on commercial real estate financing at her firm, Pacific Shore Capital, while Simpson heads his own firm, The Simpson Team, dedicated to residential financing. Each firm has funded over $1 billion in loans, according to their websites.

While Simpson and Moore acknowledged that 2023 will certainly be plagued by its own set of issues, they urged investors to look past these discouraging macroeconomic trends to the more optimistic details brewing beneath the surface. “It’s more like the back half of 2023 we’re going to see more opportunity,” Moore explained. “It’s going to be painful the first half of the year.”

Opportunities abound in one- to four-unit residential properties

Inflation will still be the biggest issue facing investors in the new year, Simpson told Insider, even though he expects it to somewhat abate. But once it does start coming down, he predicts the second most-important theme will be a Federal Reserve pivot towards a dovish stance sometime in the latter half of the year.

Simpson and Moore also expect the labor market to bring more bad news, predicting more layoffs and fewer new job postings, especially within the technology industry. Going hand-in-hand with this theme, they also believe that retail sales will fall as consumers begin feeling more and more squeezed. “Consumer spending could fall off a cliff,” Simpson added.

But while it may seem counterintuitive, Simpson and Moore say that these themes are actually setting the real estate market up for better deals and opportunities in 2023, although they won’t come close to the “home runs” you could find after 2008.

As rates begin to trend down, so too will real estate prices, especially in the second half of 2023 as consumers feeling the recessionary squeeze begin selling their properties to realize their home equity. A Fed pivot will also help stimulate the real estate market since the industry is highly sensitive to rates, boosting jobs in construction and lending.

“In 2023, you’re going to see builders and flippers probably have to get rid of inventory through fire sales,” Simpson said, adding that he’s already seen buyers get offered discounts.

The most opportunities ahead lie in one- to four-unit residential properties, especially as the couple foresees rents staying strong because would-be buyers were priced out of the market. Simpson also believes opportunities exist in the office space and for multifamily properties with more units, although both of these have a higher barrier to entry, and lenders have recently become more strict on borrowing requirements for multifamily properties.

But ultimately, Moore believes that multifamily properties remain the best buy due to the economies of scale, which she called a “huge benefit” in residential real estate.

“It’s a great opportunity to buy one- to four-unit properties when the market is down and have a plan that this is not a super long-term hold,” Moore said. “Because let’s say a lot of people want to start with apartments, but it’s not realistic. So this could be a time for you to buy a one- to four-unit, build some equity, and then trade into bigger properties and eventually apartments.”

But it’s a race against time for interested investors, especially since the couple anticipates that Wall Street institutions will seize the opportunity in 2023 to sweep up more inventory as well. “The time is now — in the next three or four months — because it’s going to get super competitive. It always does,” Moore said.

Top markets to buy in

Strategically, the couple believes that investors could be well-served by entering traditional boom-and-bust markets like Las Vegas and others in Arizona and Texas during the lows. Another strategy could be to find the markets that were overwhelmingly popular during the pandemic like Boise, Idaho, where transplants overpaid tremendously for properties.

“Look at the markets that really were never hot and people went to because we were in lockdown and they plowed money in and now they’re like, ‘Hmm, do I want to live here anymore?'” Simpson explained, citing other regions such as Utah and certain parts of Florida that will be “fed forever” by a healthy influx of out-of-towners moving from New York and New Jersey.

But Moore’s biggest tip in terms of finding emerging markets, which she defined as areas on the upswing that haven’t necessarily been solidified already, is to follow where big-box retailers such as Walmart and Target are putting down new locations. Finding emerging markets can be a goldmine for real estate investors, since these areas are oftentimes cheaper than their more established counterparts.

“If you want to look for a new market, you look where big-box companies are moving. Then you buy around all of those areas and where they’re building an airport,” Moore explained. “That’s what people should focus on going into this if you want to be on the next upswing — where you have a ton of equity building just through appreciation and increasing income.”



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