A Real Estate Investor’s Guide To The Housing Market

If you read financial news, you will read a lot about the “housing market.” Most of it will seem to circle around homeownership — not real estate investing. Very little breaking financial news directly addresses the concerns of real estate investors … even turnkey single-family real estate investors like the clients of MartelTurnkey.


It becomes necessary, then, to learn to “read between the lines” of the financial news — to pick around the details that speak directly to homeowners or aspiring homeowners, and discover the hidden messages that real estate investors can use to select a market, pick a property, and exit with the highest-possible ROI. 


Let’s explore the main economic drivers affecting the housing market and discuss strategies for investors to thrive in this environment.

Demand and Supply Dynamics

One of the most fundamental economic forces in the housing market is the balance between supply and demand. This is Econ 101 — when demand for single-family homes outpaces the available supply, prices tend to rise. If you already own real estate in such a market, you may reap the benefit through increased property values … but the market will become more expensive to enter and possibly have less headroom for appreciation. 


However, when there is an oversupply of homes, prices can stagnate or even decline. This is bad news for current property owners. The low prices may be tempting, but if there are more available rental homes than there are renters, the new landlord in the market may face long periods of vacancy and disappointing rental rates.  


To stay ahead of the game, investors should closely monitor local market conditions, including population growth, employment trends, and new housing development projects. This information can help to gauge the potential for future demand and identify undersupplied areas with strong investment potential.


One of the most important metrics to look for is the Th. This measures how fast new homes on the market are getting taken. You should be able to find absorption rates for both purchases as well as rentals. If the current supply of homes is taking an average of only 30 days to get absorbed, demand is red-hot and you might expect to enjoy steep appreciation, high rental revenue, and little vacancy. 


If, on the other hand, the housing supply is taking twelve months to absorb, you know houses are sitting on the market and/or vacant, depressing purchase and rent values and possibly portending large vacancy losses for your rental property.  

Interest Rates and Financing

Interest rates play a significant role in the housing market, affecting both property prices and the cost of financing for investors. As interest rates rise, borrowing becomes more expensive, leading to reduced demand for homes and potentially lower property values. On the other hand, low-interest rates can spur demand, driving up prices and rental rates.


When rates are low, it may be an opportune time to acquire properties or refinance existing loans to lock in a lower interest rate. During periods of rising rates, home prices can actually go down as mortgages become more expensive. These low home prices can be tempting, but investors should be cautious about over-leveraging and carefully assess the potential impact on their cash flow. 


Read more about the impact of changing interest rates on real estate investors here.


Inflation is another important economic factor to consider in the housing market. Higher inflation can lead to rising construction costs, which can put upward pressure on home prices. Moreover, as inflation erodes the purchasing power of money, investors may seek tangible assets, such as real estate, as a hedge against inflation. This increases the demand for new homes, which can also put upward pressure on home prices.


For investors who already own rental property, inflation is good news — their property values and rental rates are likely to increase, while the value of their outstanding mortgage debt remains the same and effectively becomes less valuable. Buying investment property into a period of high inflation may be a good idea if you want to protect your cash against inflation — but be careful of overpaying. If inflation slows down, you will enjoy fewer benefits. 


Read more about the impact of inflation on real estate investors here.

Government Policy and Legislation

Government policies and legislation can have a significant impact on the housing market, affecting everything from property taxes and zoning regulations to rental laws and mortgage lending practices. As a single-family real estate investor, it’s crucial to stay informed about local, state, and federal policies that could influence property values, rental demand, and the overall investment landscape.


Some examples of government policies that could impact investors include tax incentives for homeownership or rental properties, changes to rent control laws, and new regulations on short-term rental platforms like Airbnb.


If you need help parsing what you read about the housing market, and wondering what it means for you as an investor or aspiring investor … MartelTurnkey is here to help! We have decades of collective experience monitoring the housing market and using that data to make successful real estate investments. 


Please reach out to us any time — we’d be happy to tell you how the local housing market informs the cities and property types we choose for our inventory of turnkey real estate investments available to investors like you.

Is Your Money Safe?
Reflections on the SVB Collapse, and What to Do About It

Most of us were taught as children that a bank is the safest place to put our money. The interest rates may be pitiful, there’s no protection from inflation … but by golly, you can sleep soundly knowing that the money you put in your bank account yesterday will still be there in the morning. With recent financial news it is worth asking “Is Your Money Safe?”.


But what if we woke up one morning to discover that this was no longer the case?


The recent collapse of Silicon Valley Bank (SVB) has raised concerns about the stability of the entire banking system. Founded in 1982, SVB became the go-to bank for entrepreneurs and startups. Why not? “Silicon Valley” is right there in the name! It’s the cradle of digital-age innovation. Who wouldn’t want the good luck charm of an SVB bank account? 


Then 2020 happened. Among other things, interest rates were reduced to zero and stimulus money flooded the economy. Banks and individuals had a problem that you would never in a million years think of as a problem — too much money. 

How Does A Bank Fail Because Of “Too Much Money?”

What does that even mean? How does “too much money” add up to disaster?


US banks operate on a principle called “fractional reserve banking.” Under this principle, a bank is required to keep cash in reserve … but not every dollar on their deposit books. They only have to keep a fraction of the grand total of customer deposits on hand. 


The Federal Reserve sets what that reserve fraction will be. Let’s say they set it at 10%. If bank customers have a total of $100 million on deposit with that bank, the bank is only required to keep $10 million in cash on hand at any given time. 


That’s why a “run on a bank” is so dangerous. If every customer somehow showed up on the same day and demanded their money back, the bank simply would not have it.


Well, buckle up … in March 2020, the Federal Reserve reduced the reserve requirement to 0%. Banks no longer had to keep any percentage of their deposits as cash-on-hand … leaving them free to lend it out and invest it as they saw fit. 


How did SVB use that freedom? It invested heavily in government-backed bonds with a significant portion locked away for three to four years at an interest rate of just 1.79%. 


See the problem? When high interest rates and inflation hit, those investments immediately revealed themselves to be losers. Who wants to be holding 1.79% bonds in a 7% interest rate environment and an inflation environment of nearly 8%?


At the same time, SVB’s biggest customers — the tech companies — saw their revenues take a hit due to the exact same economic forces. At a key moment, SVB found itself unable to raise capital, and Federal regulators stepped in and shut the bank down. 

Will SVB Customers Get Their Money Back?

So what happens to all the money on deposit at SVB, with little or no fractional reserve requirement to cover it? It’s FDIC-insured, right? The government will pay. Right?


Actually, wrong. FDIC only insures balances up to $250,000. Only 2.7% of SVB’s deposits are less than $250,000, meaning 97.3% of their money is not FDIC insured, leaving the fate of that money uncertain. 


Now, the Federal government has stepped in to guarantee 100% of depositors’ funds in the SVB debacle … but if they hadn’t, customers with more than $250k on deposit would be stuck waiting to recover their money in a bankruptcy court, a process that could take years and result in only partial restitution.

Is This an SVB Problem, or an Everyone Problem?

Everyone, potentially. The SVB failure could ripple through other banks and companies, as it was a major bank for venture-backed companies in the US. With over $342 billion worth of customer funds held by SVB, the collapse could cripple many businesses that relied on these funds for growth. 


And if more banks fail, who knows if the Federal government will be able to guarantee all the affected deposits. There’s only so much money in the US Treasury, and our national credit card is already overtaxed. 

So if banks aren’t safe … what now?

If you’re scared, I don’t blame you. What do you do with your money if you can’t trust a bank of all places?


Here’s what to consider:


Don’t keep more than $250,000 in any single bank. As long as your deposits in each bank are under $250,000, you still have FDIC insurance (for what it’s worth).

Choose larger, more diversified banks. Will FDIC insurance always save you? Better question — wouldn’t it be nice not to have to find out? Give yourself that peace of mind by choosing a bank that is less likely to fail due to more sound reserve and investment policies. 

Diversify your own assets! In this era of high inflation, consider shifting from cash to real assets — like cash-flowing real estate. The US has a strong history of defending property rights, and with a real asset like rental property, you have the security of owning a scarce, in-demand resource that will rise with inflation, rather than lag behind it like cash.


If you’re ready to take some of your money out of the wobbly banking system and put it into cash-flowing, inflation-resistant property, it doesn’t have to be difficult — MartelTurnkey has you covered. We constantly replenish our inventory of cash-flowing rental real estate available for our turkey investors. 


Click here to see what properties we currently have available.


Click here to watch Eric Martel’s YouTube video on this topic.



Want to take some cash out of the struggling system and quickly transition it into something real? Reach out to us today!

The 1031 Exchange — How It Saves You Taxes, and How to Do It Correctly

Whether you’re a seasoned real estate investor or new to the game, you may have heard about the 1031 Exchange – a powerful tax-deferral strategy that allows you to defer capital gains taxes on investment property sales. One of the biggest problems we solve at MartelTurnkey is to help our investor clients execute successful 1031 exchanges.


Let’s take a look at what a 1031 exchange is, how it works, its benefits and drawbacks, and how we help investors take advantage of this valuable tool.


What is a 1031 Exchange?

A 1031 exchange, also known as a like-kind exchange or a Starker exchange, is a provision in the U.S. tax code (Section 1031) that allows real estate investors to defer paying capital gains taxes on the sale of an investment property by reinvesting the proceeds into a new, qualifying property. The primary goal of a 1031 exchange is to enable investors to reinvest their profits and defer taxes, allowing them to grow their investment portfolios more efficiently.


How Does a 1031 Exchange Work?


Sell the Relinquished Property. The investor sells the original investment property, referred to as the “relinquished property.”


Identify Replacement Property. Within 45 days of the sale, the investor must identify up to three potential replacement properties. These properties must be of like-kind, meaning they must be of the same nature or character, regardless of their quality or grade.


Purchase Replacement Property. Within 180 days of the sale of the relinquished property, the investor must complete the purchase of the replacement property.


Use a Qualified Intermediary. To ensure compliance with IRS rules, a qualified intermediary (QI) must hold the proceeds from the sale of the relinquished property during the exchange process. The QI will transfer the funds to the seller of the replacement property when the transaction is finalized.


Benefits of 1031 Exchange


Tax Deferral. The primary benefit of a 1031 exchange is the ability to defer capital gains taxes, which can be as high as 20% for federal taxes, plus any applicable state taxes. This allows investors to use the full amount of their profits to acquire new properties, increasing their overall investment potential.


Portfolio Growth. By deferring taxes, investors can more rapidly grow their real estate portfolios, taking advantage of the power of compounding and leveraging their investments for greater returns.


Flexibility. A 1031 exchange allows investors to adjust their investment strategy, diversify their portfolio, or change property types without incurring immediate tax liability.


Drawbacks of a 1031 Exchange


Strict Deadlines. The 45-day identification window and the 180-day purchase deadline are inflexible, and failure to meet these deadlines may result in the disqualification of the exchange, resulting in immediate tax liability.


Complexity. The process of completing a 1031 exchange can be complicated, and investors must follow specific rules and regulations to ensure compliance with the IRS.


Dependence on a Qualified Intermediary. The use of a QI is crucial for a successful 1031 exchange, but finding a trustworthy and experienced QI is essential, as they will hold the proceeds from the sale during the exchange process.


How MartelTurnkey Can Help With Your 1031 Exchange

MartelTurnkey can help you execute a successful 1031 exchange in a number of ways. Here’s how:


Property Identification. No need to sweat that 45-day property identification deadline. MartelTurnkey always has a selection of cash-flowing turnkey rentals ready to go. Click here to browse our current offerings.


Meet The Deadlines. In addition to sourcing properties, we also pair our investors with professionals who know how to get the job done quickly. You don’t have to worry about that 180-day closing deadline either — our teams can get it done.


Get It Done Right. In addition to pairing you with professionals who can meet the closing deadline, we can also refer you to reputable QIs who will make sure that the complex paperwork is done correctly. 



Considering a 1031 exchange? Or considering acquiring your first investment property so you can take advantage of a 1031 exchange in the future? Reach out to us today!

Exploring Euclid, Ohio:
Insights on Real Estate, Demographics, and Safety

Euclid, Ohio is popular with investors seeking appreciating turnkey rental properties.  Having renovated and sold over 50 houses in this city, we have watched it appreciate and improve over time.  House values continue to increase and rents remain strong. Join us as we explore 12 criteria that make this city so popular with investors.


Affordability: Euclid offers a more affordable cost of living than many other cities in the Cleveland area, making it an attractive option for those looking for a more budget-friendly location.  For investors, this means cash flowing houses can be purchased for under $150,000.


Proximity to Cleveland and airports: Euclid is just a short drive from Cleveland, providing easy access to all the amenities and attractions of a larger city. At the same time, the large yards and recreation amenities attract young families from the city. Euclid is also located just a short drive from Cleveland Hopkins International Airport, providing easy access to domestic and international travel.


Growing economy: Euclid has a diverse economy, with a mix of industries including manufacturing, healthcare, and education, which helps to provide stability and growth opportunities. Cleveland Clinic and Amazon are two very big employers in Euclid.


Strong housing market: Euclid’s housing market has remained relatively stable, with a healthy mix of both new and established homes.


Community events: Euclid offers a variety of community events throughout the year, from festivals to outdoor concerts, providing opportunities to get to know your neighbors. A strong sense of community makes for long term residents.


Access to Lake Erie: Located on the shores of Lake Erie providing access to beaches, boating, and other water activities. The new Euclid Lakefront Trail is a popular destination for walkers, runners, and cyclists, offering scenic views of Lake Erie and nearby parks and green spaces. It also serves as an important link in the larger network of trails and paths in the Cleveland area. It is part of the Lakefront Bikeway, a system of bike paths that spans the entire length of the Cleveland lakefront, and connects to other trails and paths throughout the region….which leads us to….


Parks and recreation: Euclid has a number of parks and outdoor recreational areas, including Euclid Creek Reservation and Sims Park, which offer hiking trails, playgrounds, and picnic areas. Briardale Golf course is here, C.E. Orr Arena and don’t miss the Polka Hall of Fame!


Schools: Euclid has a number of highly-rated public and private schools, providing families with access to quality education options.


Access to healthcare: Euclid has a number of healthcare providers, including Euclid Hospital and Cleveland Clinic Euclid Hospital, ensuring that residents have access to quality medical care. Cleveland Clinic is one of the top rated hospitals in the country, in fact it’s been named The Number One Hospital in the country for cardiology and heart surgery for more than 20 years.


Historic architecture: Euclid has a number of beautiful historic homes and buildings, providing a unique and charming aesthetic to the city.


Diversity: Euclid is a diverse community with a mix of different cultures, backgrounds, and ethnicities.


Safety: Euclid is generally considered a safe community with a relatively low violent crime rate compared to other cities in Ohio. The Euclid Police Department works hard to maintain public safety and provides resources and programs to help prevent crime and increase community engagement.


Overall, Euclid offers a variety of benefits, from affordability and a strong sense of community to access to outdoor recreation, job opportunities, and quality healthcare. These factors make Euclid an attractive option for those looking to buy property in Ohio. We currently have several houses available in Euclid. Click here to see our inventory and add a Euclid house to your portfolio.