In this episode, real estate data expert and multifamily investor Neal Bawa returns for the annual 2026 housing market forecast. Neal breaks down the performance of single-family and multifamily asset classes over the past several years, explaining why rents were essentially flat in 2025 and how the ICE workforce crackdown pushed a wave of unfinished inventory into 2026. He outlines why multifamily prices have hit a bottom — down 20–30% from their 2022 peak — and why that represents a buying opportunity, while single-family prices have remained surprisingly resilient due to the mortgage lock-in effect.
Neal also shares his prediction of a rental supply shortage in 2027–2028 that should drive rent growth and occupancy higher, offers frank advice to syndication investors on holding through the downturn, and explains why small interest rate cuts can have an outsized impact on equity. He also introduces AI as a major wildcard that could reshape housing demand beyond 2030. Tune in for data-driven insights and practical takeaways for investors at every level.

Highlights/Topics:

• 0:00 Intro + welcome Neal Bawa (2026 real estate predictions)
• 0:34 Single-family vs multifamily explained (Class A/B/C framework)
• 1:32 Real-world rent drop example: Fresno & Madera inventory surge
• 2:30 2025 rent growth recap: flat year, concessions, inflation effect
• 4:36 2026 forecast: supply rolling over, Q1 weak then accelerating rent growth
• 6:26 Investor question: should you buy now or sit on the sidelines?
• 7:11 Multifamily vs single-family since 2022: prices, resilience, lock-in effect
• 10:11 Why single-family cash flow is hardest right now (rates, taxes, insurance)
• 11:08 Why multifamily is near the bottom + “great time to buy” thesis
• 13:39 2027–2028 outlook: coming rental supply shortage + rent/occupancy boost
• 19:50 The AI wildcard: demand, jobs, and what changes after 2030
• 22:00 Advice for syndication investors: hold, cash calls, protect equity
• 24:16 Interest rates + equity math: why small rate cuts matter a lot
• 27:24 The “emotion” factor: sentiment shift and opportunity in 2026
• 32:00 Wrap-up + Neal’s free webinars at multifamilyu.com/club
• Share this with real estate investors you know

Resources:

Multifamily University Investor Club — Free webinars (8/year), no upsell, no subscription https://multifamilyu.com/lp/multifamily-university-investor-club-lp/

Grocapitus — Neal Bawa’s investment company https://www.grocapitus.com

Location Magic eBook — Neal Bawa’s data-driven market selection resource https://multifamilyu.com/lp/location-magic-ebook/

Toby Mathis YouTube

Toby Mathis TikTok

Clint Coons YouTube

Full Episode Transcript:

[00:00:00] This is the Anderson Business Advisors podcast. The show for real estate investors, stock traders, and business owners. We help you keep more of what you earn and protect what you’ve built. Let’s get started.

[00:00:11] Toby: Hey guys Toby here, and I just want to welcome Neal Bawa in we’re going to go over predictions in 2026. What’s going to go on in the real estate market? So welcome Neal?

[00:00:20] Neal: Well, thanks for having me back. I think we’re used to doing this once a year now. This is probably the fourth or the fifth time. 

[00:00:27] Toby: Yep, and I think you were spot-on this last year. I think that they accurately predicted what was going to happen, which was a lot of inventory coming on the marketplace. I know your world is multi-family. My world tends to be single-family, but I think you nailed it.

[00:00:43] Neal: Well, I want to point this out. The way I think of single-family is single-family is like multi-family, but it’s one step above. In my world, multi-family, we have three different kinds of apartments. Class C, you’re talking about product that’s 30, 40 years old. Then class B product which is probably 20 years old and then you’ve got Class A product which is basically stuff that’s being built now.

[00:01:10] The way I think of single-family Toby, it’s one level above that. The truth is this almost everyone that I know that has a family wants to live in a single-family home. Either want to buy it and live in it or they want to rent it, right? The people that can’t afford to do that are the ones that go into Class A apartments and the people that can’t afford to do that going to B’s and then sees and so on and so forth. 

[00:01:34] So what I’ve always found is, if Class A rents are falling right the most expensive apartments, single-family rents fall. I happen to own a dozen properties in Madera and Fresno in California. I live in the San Francisco Bay area. I own a dozen properties and they’re all single-family homes very beautiful Kaufman and broad built about 15 years ago. Nice. Nice looking homes. I keep them in good repair and I always get top rents in the market.

[00:02:01] If you were to ever do an analysis you’ll notice that my rents are in the top 10% of the market, right? I have a good sense of where the market is because I’m using rent management tools to make sure that I’m at the top 10%. I’m never in the middle. I can tell you my rents have fallen a great deal because I know a huge amount of inventory came into Madera and Fresno. Almost 2,000 apartment units were built there, right?

[00:02:23] And that’s more than were built in the San Francisco Bay area because it’s very hard to build in the San Francisco Bay area. Fresno and Madera they’re sort of more loose and they allow stuff to be built a lot of stuff came in and my rents fell. The feedback that I gave you a year ago was there’s a lot of inventory coming in. We don’t know what that’s going to do to rents. Well, we didn’t end up with negative rent growth in the country. 

[00:02:45] There was positive rent growth in the first half of 2025. We talked a little bit about that last year and then there was negative rent growth in the second half because a lot of the inventory came in then. It takes a while for the concessions to start going up when people are competing with each other and more concessions more concessions. The second half was negative.

[00:03:02] Overall rents in the United States single-family multi-family mixed were flat. Basically zero and I think the national number was 1753 or something like that. And that was the same number as last year. The caveat is that inflation was about 3% in my world. The way I look at it, we lost 3% in rents last year because if you look at the 50 year average rents are usually 1% above inflation. If you look at any 10 year time frame, let’s say inflation was 20%. 

[00:03:33] Well, you’ll see rents at 30% if you see a 10-year time frame and rents are, inflation is at 30% in those 10 years, aggregate well rents will be at 40. Rents tend to be a little bit above inflation, right? That’s normal because we’re not able to build as many houses as we need in this country, they tend to be a little bit further about inflation. Inflation is really the point at which supply and demand are in balance. 

[00:03:57] If you get more supply then, you know inflation goes down if you get less supply then inflation goes up. Well, rental supply has always been tight, right? Especially in places like California or on the coast and so that means that rents are always a little bit above inflation. We tend to think oh, well if we had 3% inflation, we’re thinking 4% rent growth. Well, we had zero.

[00:04:18] In my mind it wasn’t a good year for rents, but it was a good year for renters because their salaries went up 3.9% but their rents went up 0%. They gained a little bit because they’ve been losers or losing against inflation for the last, 2021, 22, 23, 24 were all years where inflation was much higher than income growth and this year the reverse was true.

[00:04:42] Toby: That’s going to beg the question that’s going to happen going forward because if we had a whole bunch of inventory come in and in 2025. Is it done? Are we done? Are we going to have a bunch more inventory in the beginning of 2026?

[00:04:58] Neal: You know Toby, my great white hope was I come on this podcast at the beginning of 2026 and say thank God done with 2025 all that stuff landed. It didn’t happen because and the big reason was in the ice crackdown, right? For the people that are listening to this podcast, you should know that some, depending on the state between 20% and 35% of any person that’s building a single-family building or a multi-family building anywhere in America. They’re undocumented, I’m not say using the word illegal. I’m just saying undocumented, right? Because it’s such a big number, the ice crackdown didn’t really just start at the beginning of 25 because they had to hire a bunch of ice agents, it took a long time.

[00:05:39] The crackdown really started to move along in the second half of the year and in the second half of the year the buildings that were building all of a sudden 20% or 30% of the workforce would not show up for work. Something that would take a week to build now is taking two weeks to build. As a result a whole bunch of that supply in the second half got rolled over into 2026.

[00:05:59] We expect that rent growth in the first half of 2026 might again be zero. But it’s not going to be zero in the second half. We think rent growth catches up. We think that as the year goes on every successive month rent growth accelerates and it might even be negative in Q1. It’s below zero and then it gets to zero and then it goes up 1%, 2%. I think we end the year close to 3% rent growth, but that’s probably Q4 of 2026. Each quarter gets stronger, but Q1 still is going to be pretty weak for rent growth single-family and multi-family.

[00:06:32] Toby: What’s the story then for somebody who’s thinking about investing?  I know there’s been blood in the water in the syndication world and multi-family because of this. A lot of folks are basing projections on increases and if they don’t happen and like you just pointed out. If there is no increase, it’s actually negative because inflation’s popped up, there’s more expenses.

[00:06:56] Insurance has gone up, property taxes have gone. Everything’s gotten more expensive. Those loans that a lot of the people have it’s not like the interest rates dropped a whole bunch. Still things got more expensive, but you didn’t have an increase in rents. If I’m an investor now, what should I be looking at? Should I be scared or should I be sitting on the sidelines? What should I be doing?

[00:07:19] Neal: Let’s talk separately about single-family and multi-family,right? To have this conversation, first you’ve got to know how have things gone in the last five years? The peak of the market right for multi-family for all kinds of apartments was 2022. Since then in the last four years 23, 24, 25, 26. In four years, 20-family prices are down 20% to 30% across the board apartment prices are down 20% to 30% percent in real dollar numbers, right?

[00:07:53] You might say well, is that adjusted because rents go up? Yeah, but rents haven’t been going up. If you were paying, I’m going to just use a number if you were paying $200,000 per apartment unit in 2022 today, you’re paying a hundred and sixty thousand or you’re paying $140,000 depending upon the metro. Some metros are down 30% like Texas metros, other metros are down 20% like non-texas metros.

[00:08:19] The rust belt is probably down 10%, 15% because they didn’t have a lot of building. California’s down about 15%, 20% now, let’s first contrast that to what’s happening on the single-family side, 2022 was supposed to be the peak of single-family because interest rates were really low. I mean, I have a 1.755% mortgage on my home, right? I didn’t buy the home in 2022, but I refinanced right so I was able to get a 1.75% mortgage, a 15 year mortgage.

[00:08:47] The three per the 30 year mortgages dropped as low as 2.5 percent, right? Given that it was reasonable to expect that if the mortgage rates go up from 2 1/2 %, 3% to 6% that single-family home prices should drop all logic says they should drop. But they didn’t, 2022 was not the peak of home prices in the United States since then home prices are actually up more than 10%. They stopped going up in a crazy way like 2021 they were going up 15% that that kind of madness is not happening.

[00:09:18] But home prices are still going up one or two percent last year. They went up about two percent this year they’re projected to go up between one and two percent and so that the bottom line was the. The bottom fell out of the multi-family market. It didn’t fall out of the single-family market and the big reason for this was the lock-in effect.

[00:09:34] When I locked in, I live in an expensive home and when I locked in my rate at 1.75%. If I sell my home to myself today and get a 6 ½ % mortgage, I have to pay $60,000 a year more in mortgage just for doing that. There are about 15, 20 million homeowners that refinance at absurdly low rates during that 21-22 time frame that just can’t move. Even if they’re getting divorced. They’re trying not to sell their home. They’re trying to basically work out some kind of an arrangement and as a result home prices have not fallen.

[00:10:11] The logic made sense for home prices to fall, but they didn’t. Today if you’re a spam investor, you’re in with single-family. You should be aware that single-family was the more resilient asset class of the two. But it’s also the most over more overpriced asset class of the two. This is the point where cash flow is the lowest it has been as a single-family landlord in history.

Why? Because home prices went up 10% to 20% and interest rates more than doubled so your mortgage more than doubled.

[00:10:45] Obviously single-family people have been hit very hard with the insurance increases, property tax increases, so you’re paying a lot more in property taxes and insurance. Your mortgage is more than doubled, your rents haven’t increased. But the home prices have gone up. So you’re paying more for the home. Being a single-family landlord right now is challenging, but at the same time I’m in awe of the fact that there was no adjustment in pricing in the last three or four years.

[00:11:08] Single-family simply ignored the rules of money in the last three or four years. It should have gone down, it didn’t. Multi-family’s a business when I buy multi-family. I have no emotional attachment to the building. Usually, I’m buying a 40 year old building. It’s fairly ugly. I’m buying a business like buying a Taco Bell or buying a Burger King. I’m looking at my net operating income. If the net NOI net operating income is down 30% I’m going to pay 30% less.

[00:11:34] It’s as simple as that and because of that multi-family had a very smooth decline in prices. Now they’ve stopped declining for one simple reason, that interest rates have gone down, my mortgage has gone down a little bit, right? But it hasn’t gone down enough for my prices to go back up. At this point in the last 12 months, there’s been no decline in multi-family prices. They’re just sitting at what we call an extended bottom and anytime, any investor can buy into any asset class near the bottom. 

[00:12:04] It’s a great time to buy. Sadly enough the emotional feel of the investors in the United States is, oh it dropped 20% to 25%. I don’t want to invest. Maybe I lost some money. Maybe I didn’t make the money that was supposed to make. The competition is down a lot. A lot less people want to invest in multi-family because it went down. One of the biggest fears of course is it may go down again.

[00:12:26] Well, it won’t because it was tied to interest rates and rates have now started to go downwards instead of upwards. We haven’t seen any decline in pricing and I don’t think we will but oddly enough there’s less competition. I called a bottom to multi-family prices in Q4, 2024 I can tell you we’re still within a percent of that, right?  I don’t have the ability to tell the exact bottom but we were close. This is the bottom for multi-family. If people are interested in apartments, this is a great time to buy.

[00:12:56]  If people are interested in multi-family, all I gotta say is ,very robust asset class. I expected prices to go down, I said on this channel two years ago that I expected prices to go down. I was wrong, very robust asset class. If you value robustness and resilience by a single family, if you value bargains. multi-family is in a much better place than 2022, 2023, 2024, just being less.

[00:13:23] Toby: Looking forward. I appreciate that I’m a single family guy, you and I’ve had this conversation a whole bunch. I  do have multi-family, but it’s not my primary. I tend to like little houses that are inexpensive that rent decent and need a new roof every 10, 15 years. You’re putting some money into them and I’m okay with that. It’s my world. But what are we looking at? Going forward where I’m in 2026. I’m a little investor, what’s my playbook? What should I be looking at? Should I be just looking around for opportunities?

[00:13:56] I’m a supply and demand guy. I’m like, are we going to keep up with the demand? Is demand shrinking because of what ICE is doing? Are there other things or are we looking at a situation where we’re going to be under built again and we’re going to be post. You remember the years after 2008 where it’s just like. He just didn’t have new inventory and the prices just started going up. Are we looking at that scenario?

[00:14:25] Neal: We are but people are a bit more cautious this time. We are looking at a scenario where we could see rapid price. Rapid rent increases, which obviously lead to price increases in 2027 and 2028. I’ll tell you this, when I make a prediction, right? It’s a crystal ball. I could be right, I could be wrong. But there are some predictions that are more comfortable with and some that are more confident about.

[00:14:47] One of the predictions are more confident about today is that we will have a supply shortage of rentals whether they’re single-family or multi-family, doesn’t matter. Overall as an industry the rental industry we’re going to have a shortage in 2027 and 2028. It’s not going to last. It’s a two-year shortage and I’ll tell you why this crystal ball works really well because, what happens is it takes a year to build a single-family home on average and it takes two years to build an apartment.

[00:15:15] Apartments take two years, single-family takes a year. If today in 2026, I’m looking at the number of permits that single-family builders are pulling nationwide and multi-family people were pulled a year ago. Shouldn’t I be able to predict how many units drop a year or two years from now? That works most of the time. I screwed things up on our schedule a little bit but now that we know about that ICE impact we can still say this with a high level of confidence. 

[00:15:43] The total amount of demand for rentals is not going to be met with incoming supply or even close in 2027 and 2028. Note that we’re doing this in the beginning of 2026 and I’m very carefully excluding 2026 from that because 2026 is still seeing the end of that supply wave that comes from 2022 people going crazy and investing all this money into these apartments. That last wave comes in the beginning of 2026 and it takes all of 2026 for them to get leased up where they’re not offering concessions or crazy prices or rent declines.

[00:16:17] By the end of 2026 that’s done and then 2027 is about normal price discovery. Is it supply? That’s the winner or is it demand? If demands high, prices will go up, rents will go up, concessions will go down. I expect that regardless of whether you’re buying a single family at the beginning of 2026 or multi-family. You’re getting one benefit on either side and that is that your rents today are artificially low, especially if you’ve offered concessions and those are factored into the price. Then they will be a year from now. A year from now I expect concessions to be very low today. They’re pretty high.

[00:16:56] Toby: Okay, fair enough. What you’re saying right now is that the rents are what 20%, 30% artificially pushed down or?

[00:17:09] Neal: I wouldn’t say they’re 20%, but I’d say that on the multi-family side

 They’re probably 10%, 15% down single-family maybe closer to 7% or 8%. I might sound like 7% or 8% doesn’t make a difference. No, it does if you do the math, right when you’re a landlord 7% or 8% doesn’t increase your profit by 7% or 8%t because remember your profit is not a hundred percent of the property.

[00:17:31] There’s a big mortgage on it. Your profit is usually the last 20% or 30 %. When rents go up 8% over a year or year and a half all of a sudden your profit not your property value. Your profit can easily go up 20%, 30% because your profit is really at the end in the margin and rents are increasing in that margin. I expect a boost to rents. I also expect a boost to occupancy. Occupancy in the U.S right now for single family is about 95 for multi-family is about 93.

[00:18:02] Expect both of those to go up, right? Expect that you know in 2027 when you put a property on the market on Zillow or apartments.com. Expect to get a ton more phone calls immediately. That’s not happening today. We’re competing.

[00:18:14] Toby: Really?  I always feel like we’re under-built. As a nation I’m always worried that we’re not going to be able to keep up with the demand. Are you saying that there’s more?

[00:18:27] property available than there are people looking to rent and that’s what’s pushing it down or what are the factors that are causing you feel like the rents are so low?

[00:18:37] Neal: Well at the beginning of 2026 the renter has the upper hand, right? If they have the ability to go into a Class A building they’re getting two months for free. They’ve got the upper hand and because of that Class B and Class C have dropped their rent a little bit, right? The renter has the upper hand in 2027 and 28. I think that the landlords will have the upper hand but that’s not the question you’re asking. The question you’re saying is like are we going to catch up in terms of demand and supply?

[00:19:04] My answer last year was, our chances of catching up in the next five years are zero or close to zero. That is not my answer in 2026. If you go back to last year’s recording, I said we’re not going to catch up for five years. Now I’m not sure because I believe that AI might create substantial job losses. If AI creates the job losses in that 2028, 2027 time frame it will reduce the total demand for housing. 

[00:19:32] The total demand for housing doesn’t have anything to do with the number of people, Toby. It has to do with the number of people that can afford a household and so there can be tens of millions of people that are living with their mom and dad or you know living in their car and that can happen. I no longer believe that supply and demand imbalance to continue beyond 2030 because of AI.  AI is such an x-factor that I can’t even predict what will happen.

[00:19:58] Toby:  It’s interesting you say that. If I’m sitting here in 2026 and I’m thinking I like all right guys listening to this. What are my takeaways? What are my action items? Is this something where I’m like, okay it’s a good opportunity to get involved in. Real estate investing and if so, what areas would you be? Like if you were just brand spanking new, you’re walking in, you’re watching these guys on YouTube and you’re like, what are they talking about? I just want to know what kind of investments I should be looking at. What would you tell somebody?

[00:20:31] Neal: I think rentals still remain overall the best asset class unless you’re a specialist and you understand things like industrials and hotels which only work in niche areas. I wouldn’t say that those are for anyone but specialists. But a non-specialist person who doesn’t understand anything about the fine points of multi-family or apartments or single-family rentals can still make money.

[00:20:59] The beauty of rentals is that you don’t have to be technically savvy or be a specialist and still make money, right?When I did this in 2009, I was a technologist. I had a big fat tech salary. I basically bought a dozen properties because I wanted my taxable income to fall, right? I live in, taxifornia. I did it basically for the wrong reasons, I should have been doing it for cash flow and building my wealth. But I did it because I wanted my taxes to go down, wrong reasons.

[00:21:27] I still got it right and I made money on those dozen rentals California rentals for 16 years. What I’m saying is this is still the most forgiving area. I don’t think that other asset classes are forgiving. I don’t think Bitcoin is forgiving, I don’t think gold is forgiving. I don’t think that you know retail self-storage, student housing is forgiving. But rentals tend to be forgiving so only from that perspective I think it’s still easily the best asset class for people to get into. With some rent growth coming up in 27 and 28, you’ve got a nice tailwind that is being set up for you. That’s nice

[00:22:03] Toby: All right. If somebody’s in a syndication and, again, things that sounds like things got pushed down. They’re probably going to be unhappy. Imagine the majority of the multi-family syndications people are probably griping right about now. What’s your advice in those people? Is it the hey hang on or is it the look for deals? And you know continue to double down or like what is your advice?

[00:22:28] Neal: The answer is there’s probably several million investors that invested in multi-family syndications in the 2020 to 2025 timeframe. My feeling is 80% to 90% of those projects, you know people are unhappy. It’s a high percentage but it’s also truthful and I think that the reason for that is market conditions. 

[00:22:51] Where those prices adjusted to 25% down. Just remember this, if you bought something for a hundred dollars and the bank loan is 75. The last 25% was your equity if the value of that asset adjusted down by 25%. Then your equity got wiped out. The bank didn’t get hurt at all. That’s what we’ve seen that we’ve seen that banks are really not in any significant amount of trouble. They can just take the asset back and sell it because it sells very quickly.

[00:23:21] But the equity is in trouble. If I was an investor just purely for my own assets. If I was in that position what I would say to my syndicator is make every possible effort to hold on. Because today if you sell a hundred percent or close to a hundred percent of my equity might be lost. That’s not the key in every case, but a significant portion of my equity, maybe 20%,30%, 40%, 50% would be lost.

[00:23:46] If there’s anything that I can do to help you, like a cash call, do a cash flow and I’ll put it another 10,000. Let’s just continue operating. Don’t sell, stay at break even don’t think about giving me cash flow. Don’t think about distributions, I just want you to keep my asset at break even because I know better times are coming just hold. That’s my message if I am a limited partner to my syndicator.

[00:24:10] Toby: Yeah, and you’re saying hey, we’re going through a temporary push down but we can see the light at the end of the tunnel. What about interest rates would that shake things up? Let’s say we get a, obviously Trump really wants to push these interest rates down and you get someone who actually says yes. They start pushing downward on the interest rates. Would that bail some of these folks out? Would that have an impact or is that kind of just baked into your thinking?

[00:24:37] Neal: I think it’s significantly has an impact because right now multi-family prices are based on interest rates. They’re based on interest rates and net operating income. If you wait for two years as I predicted you’re going to get some rent bumps there. That’s going to increase the value of your asset, right? They’re higher rents, higher value of asset.

[00:24:55] The second thing that increases the value of your asset is, how much of a loan can the other party get? Now with a 50 basis point or half percent decrease in interest rates in 2026. That same asset let’s say it’s 20 million dollars, now you realize someone can pay 21 million dollars for it. It’s not a huge difference between 20 and 2, 1 million dollars. But let’s say that there’s 5 million dollars in equity if you sell today. Let’s say half of that equity is lost two and a half million.

[00:25:23] If you wait for a year now, you sold for a million dollars more instead of two and a half million equity being lost, it’s one and a half million in equity being lost. Well, that’s a break swing from two and a half to one and a half for investor equity loss, right? If you wait for another year that one and a half million might go to five hundred thousand equity loss. If you wait for three years, it might break even or better. The point is that small changes in the assets prices. Let’s call it five percent,seven percent, can make a very large difference to the amount of equity loss, often 20% 30% right?

[00:25:57] A half percent change in interest rates can easily increase the price of multi-family by five percent and easily affect the loss of the investors by 20% or 30%. The needle doesn’t need to move a lot, I don’t believe despite whatever Trump says that we’re going to see a hundred basis points or one percent rate reduction this year. Because the Fed fundamentally is still I mean, they haven’t managed to make the Fed, bring it under political control.

[00:26:26] Sure, he’s going to select a chairman. He’s probably going to select one more Fed board member but there’s a lot of people on the Fed board. All of these people are very careful if we start seeing inflation start to take up. The Fed will simply pause for a while and Trump will do what he does. He’ll tweet, you cannot raise or lower interest rates with tweets. You can affect them.  I think we get 50 basis points. I think that helps multi-family. I think it helps single-family. I don’t think it makes a huge difference.

[00:26:53] Toby: Well, it looks like it’s going to be a wait and see. Wait for the inventory that’s coming online to get brought to market. Let it do its thing. Is it the next year or two where you just don’t have a ton of building permits.

[00:27:07] Neal: Twenty seven, 28 we don’t have a lot of delivery, not a lot of building permits. I think we have good building permits but remember if you pull a building permit in 27 that building is going to get built in 29 and lease in 30. I’m not predicting that those are good years. I’m saying 27, 28 the deliveries are low, right? That’s not a lot of lease. There’s one final factor that I want to point out that could be very useful for investors to know.

[00:27:29] So far everything that we’ve been talking about is logic, things like rents, and prices, and interest rates. There’s one factor that sometimes is bigger than all of them and that is emotion, how investors feel. In the last three years people have felt bad about multi-family and not so good about single-family because single-family interest rates were going up, right? People haven’t felt bad about there’s not a negative buzz on single-family, but there isn’t a positive buzz. 

[00:27:57] With multi-family, there’s a negative buzz. At some point in 27 the buzz could turn. When enough people start thinking that the good times are coming, often the good times come because enough people are thinking about it, right? Emotion is actually a fact, something that you should factor in because largely real estate has been an emotional market even on the single multi-family side. I think it’s been emotional maybe less now, but you know in 2022. I think it was very highly emotional.

[00:28:27] My feedback is I expect in 2027 for there to be positive buzz today. If you read a hundred real estate articles, 90 are going to be negative in some way. But what if 90 were positive in 2027, 2028 then all of a sudden the investors they love to follow. I mean right now everyone wants to invest in AI and when there’s a crash happening people will run away from it, right? You should be doing the opposite when there’s a crash should be running towards AI but people don’t do that, there’s a hoard mentality. I think emotion I expect 2027 to be a different year for emotion for real estate.

[00:29:02] Toby: You feel like, hey the last year multi-family the last couple years multi-family has been getting beat on a little bit. There’s a negativity around it. If you’re in it, don’t let that sway you into dumping something that you’ll be regretting later. Look for the opportunities in 2026 because they’re going to be out there because there are people that are looking to bail out.

[00:29:23] Neal: I think this is a great time to buy. To be honest, I’m selling a property and a full disclosure. This is a property in Texas very high property taxes and insurance so the value got beat down because of the high property taxes and insurance. We did everything we could possibly do with, rents property is 96 occupied. Occupancy is not an issue. But we’re still selling it at a loss compared to its value when we purchased it. 

[00:29:46] My investors will take a hit with this property and we’ve talked with them four times a year. They’re okay with it. They understand what we’re going to do. But the person that’s buying this property from me. I feel this very sad thing that this party that’s buying it from me is getting a great deal. Because they’re getting the beat down rents, the high concessions, and all of those things that’s pulling the price down temporarily and there’s nothing I can do about it because in this case the property has been bleeding.

[00:30:15] I’m not talking about the property going through some radical change or the market going through some change. But it’s just you take the concessions away and you normalize the rents, they’ve built up millions of dollars of equity without really doing anything with the property. That’s awesome for them, not so good for me. 

[00:30:36] Toby: That’s the lesson you can see it and you’re saying, hey I’d rather not but that’s the joy of having a bunch of investors, I imagine. I tend to buy cash and just for me so I don’t have to worry about those things but. It’s not just you, I’ve heard it from a number of syndicators. The same thing is that people get nervous. They fear missing out on other things. They want to take their money off the table here and move it over there.

[00:30:57] Neal: There’s a lot of fomo right now on other asset classes and I think money is being diverted from real estate but the cycle turns.

[00:31:06] Toby: They’re going to get squished over here and then they’re going to come back but real estate will have jumped up again. What was it, old Charley Monger used to always kind of give us the lesson. It’s just resisting your emotions and keeping your money in that market and not interrupting

[00:31:22] Neal: I will sometimes just go read something from Charley Monger or from Warren Buffett just to remind myself. You know what you know what these people are saying, but it’s still good to go to youtube and listen to Warren and Charlie sitting next to each other. Because the stuff that they’re saying it’s true such an insane percentage of the time. That the only reason that the world is what it is, is because not enough people listen to them.

[00:31:49] Toby: That’s it. They’re always like hey, it’s human nature. It’s human nature. If you could just get rid of that human nature thing you’d be very very successful. Hey Neal. I just want to appreciate you coming in. I just want to say how much I appreciate you coming in and doing this again. Every year you seem to be right on right on par. I don’t think if you missed it last year, you missed it. You didn’t miss it by much, I think that maybe there was a little delay into 2026, but if anybody was listening they heard this last year.  

[00:32:17] Year before probably the year before that so they had some time to prepare but this sounds like there’s opportunities out there. And the going is don’t be scared of this asset class. If that’s something you’re interested in this might be a good time to pick up some of those deals from people that are bailing out.

[00:32:33] Neal: Yeah, yeah, absolutely. Absolutely. We do eight webinars a year where we actually take some of the data that I mentioned. Some of the numbers and we put them into beautiful powerpoint slides and we do this. We have a website called multifamilyu.com and @multifamilyu.com/club. We do eight webinars a year, what we can tell you is there’s no upsell. There’s no subscription. There’s no premium tier. Everyone gets stuff for free. We have a community. We love working with them, we love getting feedback from them. So you can check out those eight webinars @multifamilyu.com/club.

[00:33:09] Toby: I’ll put the links in the show now so people can get to it easy, too. Perfect Neal. Thanks again.

[00:33:15] Neal: Thank you. Thank you. Let’s do this again a year from now and see how we did.

[00:33:19] Outro