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IMN, 2023 Predictions & Q1 Returns

IMN in Scottsdale, AZ - December 2022

It was an eventful sight to see over 2,000 industry professionals buzzing around from panel to panel and meeting to meeting. Though this was the 10th anniversary of the Single Family Rental IMN and the most attended event thus far, the tone was more melancholy than excitement. With the capital markets being all but shut off due to the Federal Reserve raising rates so quickly, real estate activity has diminished.

2023 Market Predictions

I was part of a panel of experts speaking on the subject of land acquisition and development at this event in Scottsdale, AZ. Here are some of my takeaways:

  • As this recession continues to deepen we will see more buying opportunities in 2023 – be ready.
  • Pricing continues to fall in this stagnant market – be patient.
  • Builders are giving away homes at steep discounts.
  • The pinch that the capital markets have been feeling the last 3-6 months is just barely seeping into the market as a whole.
  • In a few more months everyone will feel it as demand takes a dramatic drop and job loss follows.

For me, none of this was new or a surprise. It simply just confirmed where I thought we were and where we are headed.

2023 Q1 Returns - Timing is Everything

As I moderated this panel of experts and listened to their concerns for the upcoming year & market, I felt a tremendous amount of optimism and was reminded that timing is everything. 

I had a similar feeling in 2020 after the economy shut down and build-for-rent communities became the most sought after real estate investment. I recalled the voices of others telling me that building an entire subdivision of brand new rental homes was too outside the box and not proven. To me it was just math. I needed to know how to protect my money and my investors’ money and our thesis worked.

At Arabella, we’ve been preparing for this opportunity in the market for the past 6 years. We recently launched a fund with 15+ projects that are already entitled and ready for development. Projects that we have carefully underwritten & purchased over the past six years. Now because of the decisions we made then, investors in our fund will be receiving cash flow in Q1 of 2023, just as other ships are going down.

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