WHAT TO DO NOW
FOR INVESTORS
FOR DEVELOPERS
FOR HOMEBUYERS
Underwriting discipline is your alpha. Assume cap-rate stability with modest net operating income growth; model exit values with flat prices and a slower refi path. Tariff-inflated replacement costs make “buy- below-rebuild” even more attractive; focus on quality in place. Lease trade-outs should modestly outpace CPI in tight submarkets but plan for normalization as unemployment edges up. Keep debt flexible (shorter prepay, rate-cap budgets) and widen credit boxes for assumable loans when sellers carry sub-6% paper.
Front-load contingency for materials and tariff volatility and lock key packages early where possible. Embrace smaller, more energy-efficient plans that hit monthly-payment targets at today’s rates. Given the Housing Market Index’s cautious improvement and the likelihood of only gradual rate relief, phase projects to avoid bulk deliveries into soft seasons. Where policy allows, pair down-payment assistance with buydowns to expand your buyer pool. For build-to-rent, underwrite longer lease-up and normalize concessions.
Patience pays. With rates in the low 6% range and inventory still lean, shop payment first and price second. Consider assumable loans and seller buydowns that deliver more savings than a small price cut. If rates dip into the high-5%s, be ready since competition will flicker back. speculative and could cost more over time even if they lower the sticker payment. Keep an eye on local exposure in markets with high federal employment. The shutdown overhang can create brief windows of relative value. Don’t count on 50-year mortgages; they remain
THE WINNERS WILL BE THOSE WHO UNDERWRITE TO TODAY’S REALITIES.
BOTTOM LINE The next 12 months look like a “grind higher” rather than a breakout with slightly lower rates, flat-to-low price gains, and persistent supply constraints shaped by tariffs and policy cross-winds. Owners with sub- 6% loans remain sticky; supply will improve only gradually via new construction and financial distress at the margin. The winners will be those who underwrite to today’s realities, such as costs, timelines, and payments while keeping dry powder for the moments when policy noise creates opportunity.
LARRY PENDLETON, CPA Founder and Tax Strategist PC Financial Services
Larry Pendleton has been a real estate investor for over a decade and a CPA and tax strategist for about 20 years with a focus on tax strategies for investors. His company, PC Financial Services, has helped thousands of investors across the US with tax planning to save them hundreds of thousands of dollars in taxes. Along with tax consulting, they add value with cost segregation studies, fractional CFO services, accredited investor validation, and tax preparation.
PAGE 74
Powered by FlippingBook