Jake Marchini: Hello, everyone! Welcome to our August webinar here with the Entrust Group, and with Neil Baua of Grow Capitas. My name is Jacob, and I'll be your host today for our presentation.
Jake Marchini: Neil, go ahead and move us to the next slide there.
Jake Marchini: Alright, so before we get started, just some things that we have to go through before every webinar that we host. The Entrust Group does not provide investment advice or endorse any specific products, so all information or materials being presented today are for educational purposes only, and all parties watching this webinar are encouraged to consult with their attorneys, accountants, and financial advisors before entering any type of investment.
Jake Marchini: Here's a look at the bullet points that'll be covered today in Neil's presentation, and at the end, we will have a Q&A session, so if you have any questions about the material being provided today, or of IRAs investing in real estate in general, please feel free to type those into the question box, and we will answer those at the end of our session today.
Jake Marchini: Some information about myself. My name is Jacob Marchini, and I've been at the Entrust Group for nearly 10 years. In my day-to-day duties, my job is to provide customers with, service and support, so assisting with new transactions, opening accounts, and smoothing things over for our clients, and I do have a CISP certification from the Bankers Association of America.
Jake Marchini: Some information about the Entrust Group in general. We are self-directed IRA administrators, which means we keep records for our clients' IRAs of
Jake Marchini: rollovers, contributions, transfers from other IRAs, and as well as the outgoing funds to their investments, for income from those investments, liquidation, sales, and other things that are required of an IRA custodian.
Jake Marchini: We have lots of coworkers who are… have the same sort of CISP certifications as myself. We have $5 billion of assets under management across over 24,000 active investors. The Entrust Group has been in business since 1981, 40 years of service in the industry, and we offer our clients a single point of contact model for interacting with us. So if you have a question about your account.
Jake Marchini: and you need to get some answers about it, we do have a person like myself, or my manager, Mr. Bill Neville, or any of our coworkers who are your person that you can interact with via email or by phone regarding your account, in addition to our general client services department to handle overflow.
Jake Marchini: And without further ado, I'll turn things over to Mr. Neil Baua of Grow Capitas for the bulk of our presentation.
Neal Bawa: Thanks so much, Jake. Welcome, everyone, to the mid-year edition of the Disruptive 2025 Real Estate Trends Presentation. This is our most popular presentation. We typically have
Neal Bawa: to… between… somewhere between 2,500 and 3,500 people that watch this every year. And you know what's interesting is the first time I presented this was in 2016, so 9 years ago, and guess what?
Neal Bawa: I presented in the San Francisco Bay Area, and one of the people watching my first ever presentation was Jake's boss, Bill Neville.
Neal Bawa: So, he watched that presentation, and since then, I believe he has watched every single one of the nine versions. We've presented this twice a year for Entrust for the last 6 years.
Neal Bawa: So, now notice that when we present this to Entrust in January.
Neal Bawa: Obviously, we're looking at, you know, the new year, we're looking at what happened last year, so we do a screenshot, a snapshot of that, and then we do a mid-year version where we talk about, okay, well, what really changed in the last 6 months? And so it is a new presentation, all of the slides are new, none of these slides existed when I presented in January.
Neal Bawa: Before I get into the presentation, which is very fun and interesting, there's lots of talks about, you know, things like tariffs, all the new tax stuff that happened. We're going to be ranking about 50 cities in the United States for real estate investment. Before I do all of the fun stuff, just a little bit about myself.
Neal Bawa: For those of you that still haven't watched me, because I've done this now, I don't know, 8 or 9 times for Entrust, my name's Neil Bauwa, I'm CEO and founder of two companies, Grow Capitas and Multifamily University, Anna Myers is our COO, and we buy and build large commercial real estate assets, primarily multifamily related assets built to rent. Our portfolio is about $660 million right now, it's down because we sold
Neal Bawa: a lot of assets, 25 properties.
Neal Bawa: 1,200 accredited investors like you. We have, at last count, over 50 entrust investors, IRA investors, that are invested in our projects.
Neal Bawa: This is a… about a third of our portfolio, so you can see all sorts of different assets in all sorts of different places. You will see different kinds of assets, there's student housing, there's townhomes, there's large multifamily, there's, there's, industrial, there's office, flex, storage, all kinds of assets that we buy and build.
Neal Bawa: Our investors really like us. They believe that their return on investment with us beats their projects with other firms. We don't, in an Entrust webinar, ever talk about ROIs or return numbers, so if you ask those questions, I won't be able to answer them. But this is just an external comment from a third party that has not been modified.
Neal Bawa: Here's Dr. Pada. He is a seasoned general partner who's actually done many deals himself, both actively and passively, and what really stands out to him is the way that we use data to drive decisions. I am a data scientist, a computer science degree, so I use data in everything, and you can see his quote in orange, it says it all.
Neal Bawa: He sees it as a partner with rare clarity, with strong ethics, and that's exactly why he keeps coming back to us.
Neal Bawa: Two cents from my lawyer, in addition to the caveats that Jake provided regarding, IRA companies. Here are my caveats. We're not investment advisors, and this is an educational webinar
Neal Bawa: all investments provide risk, right? So be aware of your risk tolerance level. You're free to accept or reject the multitude of investment recommendations I'm going to make today, and keep in mind, a recommendation is never a guarantee for successful performance. In terms of recording, I do believe that the Entrust group sends out recordings, so for some reason, if you have to jump off, I believe you'll get a copy of this recording.
Neal Bawa: Correct!
Neal Bawa: Awesome. Well, I will get started, right? Well, you may not… you may like Trump, or you may not like Trump, but you can never say that Trump is boring, right? The kind of horse trading that we're seeing today is a recipe for upheaval and uncertainty and nervousness, and that's what we're seeing the market do.
Neal Bawa: Lenders are feeling it, brokers are feeling it, capital groups are staying on the sidelines because the Trump card is back.
Neal Bawa: This is the part where history really slaps us in the face. Tariffs just jumped to their highest level since 1937. Yes, pre-World War II. So we're now at about a 16% average on imports. It sort of changes every week, but as of this week, we're at 16% average, up from 2.4%.
Neal Bawa: And… that's not a ripple. I mean, that's a freight train, right? And yes, inflation has not reacted yet, except… except for last week, I saw a little bit, a little blip in inflation.
Neal Bawa: But I urge all investors listening, don't get too comfy. Delayed pass-throughs are real, they are coming. I'm expecting a significant increase in inflation in the coming 30 to 60 days, and you might see that drive up interest rates.
Neal Bawa: And so far, the economy is fairly chill. Job growth was steady at $135K. We did see a change in June, so jobs did dip there. Unemployment is at 4.2%. Inflation overall has actually dipped. Look at this chart on the right here, and you'll notice that inflation was actually higher.
Neal Bawa: in January, and then sort of started to dip, and now it's beginning to go up again, but it's just a tiny increase, right? Keep in mind, these numbers lag, the impact comes later.
Neal Bawa: So, if you wait for the CPR to blink, you're actually late. This is actually a time to game plan now, because the board is still quiet. If you're close to refinancing a property, close to buying a property, I don't think you should be waiting for lower interest rates, because if anything.
Neal Bawa: I don't think rates are going down. You might see a rate cut happen, but that doesn't mean rates will go down.
Neal Bawa: And given that inflation has been muted the first 4 or 5 months of this year, the only thing that could be responsible for this upward movement, right there, see this, of the bond market, right, these are the 10-year Treasury rates, is that markets are spooked, just like this cat.
Neal Bawa: Right? They're just freaking out, right? So, the rate, it's dropped a little bit right now, I think it's, you know, a little over 4% today.
Neal Bawa: For those of you who don't know, both single-family and multi-family rates are very deeply tied to the 5-year Treasury rate and the 10-year Treasury rate. So people like me obsessively track the rate, and we're very unhappy with where the rate is going, because this upward trend chart has nothing to do with inflation data in the last 6 months. It has everything to do with a market that's freaked out by tariffs.
Neal Bawa: And it's not just the market that's freaked out, right? It's also the forecasters. So we, for this presentation, gather forecasts from many different sources, half a dozen different sources. Now these same forecasters are cutting their forecasts for annual GDP growth. You see them downward? Remember, 2% is pretty good GDP growth, right? That's where we were in March.
Neal Bawa: Right? As of June, that forecast number is now falling to 1.4% for the year. So, so far, the first 6 months of the year, the economy has actually outperformed that 1.4% number.
Neal Bawa: Which means either that this number is bearish.
Neal Bawa: and wrong, or the second half is going to look pretty damn bad. And I'm honestly not sure which way it's going to get… going to go.
Neal Bawa: Alright, so obviously, the first trend, tariffs, right, this is a presentation about trends, was all negative. But the second one is really, really awesome.
Neal Bawa: Yes, folks, this is Oprah-level tax generosity. New incentives are making a comeback, and if, you know, and they could supercharge, they are supercharging deal math for all forms of real estate, right? These deductions, they're just flying off the shelves, you know? Just like Oprah, you get one, you get one, you get one.
Neal Bawa: And basically, real estate folks got everything that they wanted out of this tax bill, and also got some that we actually didn't think we could get.
Neal Bawa: My favorite, and the one that's most likely to juice real estate investor returns.
Neal Bawa: and, you know, get those, get the juices flowing, is bonus depreciation. Yes, bonus depreciation is now back for 5 straight years. As you can see on the screen, the gray bar was showing that bonus depreciation, which was enacted in the 2017 tax bill, it had been going down every year. And now 2025, it's back up to 100%, it stays at 100% until the end of 2020.
Neal Bawa: And that is incredible. There's lots and lots and lots of new people that are going to be buying real estate in the next couple of years because of this bonus depreciation. This is a huge, huge advantage. I cannot overstate the benefits.
Neal Bawa: Also, a big win for high-income earners, especially if you, like, live in a place like New York, New Jersey, or California. A lot of Entrust customers are in California.
Neal Bawa: the SALT, or State and Local Tax Deduction Cap, goes from $10,000, which I hated, to $40,000. So I live in a home in the San Francisco Bay Area, and my… I'm gonna use all of that difference between the 10K and the 40K, so…
Neal Bawa: I'm saving somewhere around $10,000 a year in taxes, just from the salt deduction cap that's on the screen. This means it's much easier for home prices to go up in high-tax states. It doesn't really make a huge difference in the low-tax states.
Neal Bawa: And then on the right side is this very interesting thing called QBI, the Qualified, you know, Business Income Deduction. It's alive and kicking, 23% write-off on pass-through income. It stays in place, it was there before and was going to go away, but now it stays in place.
Neal Bawa: High-income real estate pros get a massive write-off. Let's say you earn, you know, a couple hundred thousand in net income from some rental portfolio or your syndication fees.
Neal Bawa: that qualify as pass-through income under the QBI deduction, you get to write off 23% of that amount before taxes. So that's $46,000 a year shaved off of your taxable income, right? And if you're in the
Neal Bawa: you know, 35% federal tax credit, you're gonna save $16,000 a year based just from QBI.
Neal Bawa: Alright, on to this interesting one. Real estate, the estate tax exclusion boost. This is actually very personal to me, because I just did my, you know, my living trust.
Neal Bawa: And they made me change my living trust because of this, in a good way. So the estate tax exclusion jumps to $30 million for couples, right? That's real money, and this was… we were thinking this is gonna go down, because the estate taxes is one of the things that the Democrats have been attacking, they're no longer in power. So now, instead of going down, the estate tax exclusion actually goes upwards, 27% up.
Neal Bawa: real money that you can pass down without Uncle Sam crashing the party, and you can use it to transfer your portfolios to your descendants tax-efficiently, and you can lock in the succession values. So if you're thinking generational trust, you know, you're 50 plus.
Neal Bawa: The clock may just have been reset in your favor.
Neal Bawa: Alright.
Neal Bawa: So that was all the dense economic analysis stuff and taxes, tariffs. Now I'm gonna go get into something more interesting, you know, real estate, right?
Neal Bawa: Mortgage rates, home prices, incomes, I'm gonna bitch about the growing gap between mortgages and salaries, I'm gonna talk about the return of inventory on the single-family side, then I'm gonna jump into multifamily. And some of you are here for apartments, we're gonna talk about why rent growth is still stalling, we'll talk about shocking growth in occupancy, and then my favorite slide of this presentation, we're gonna talk about demand. And finally, we're gonna throw in a little bit of commercial real estate distress.
Neal Bawa: And then we'll talk about loan extensions.
Neal Bawa: All right.
Neal Bawa: For all of you single-family people out there, these are the updated 30-year mortgage rate predictions for the end of this year. So, end of this year, December 31st, right? So, this is what all these smart and important people think the rates are going to be at the end of this year.
Neal Bawa: Now, on the left side, Fannie Mae continues to be bullish. I think they don't think much of the tariff issue, or maybe they think the economy is going to weaken, which is going to force the Fed to cut rates, because today's rate is about 6.7%. So Fannie Mae thinks we're going to go down between now and the end of the year.
Neal Bawa: By about 60 basis points, or 0.6%, so very bullish.
Neal Bawa: At the other end of the spectrum, on the far right, we have Redfin, which is saying rates are going to be exactly where they are today at the end of the year. No change. So, take your pick. I think the real answer might be these dudes in the middle.
Neal Bawa: Alright, here's our updated slide on home prices. Now, almost across the board, the smart people out there do seem to think that home prices are going to go up slightly over the next
Neal Bawa: 12 months. Redfin is bearish, right? But they're still only at minus 1%. Now, I'm not so sure about that, and in a few slides, I'm going to tell you why I think we are going to see a decline, and it might be even a little bit bigger than this 1%. So, I'm going against the grain.
Neal Bawa: I'm saying I'm on Redfin's side, but I think even they are a little bit too bullish, in my opinion. I'll tell you why.
Neal Bawa: Now, here's the first of two reasons why I think we might see a slight adjustment downward in single-family prices. I just don't think that there are enough people out there who can afford single-family homes. This may not be true in the San Francisco Bay Area with all these AI startups going gangbusters.
Neal Bawa: But for the rest of the U.S, it's crazy, right? You've seen… you may have seen this chart, you know, over the years if you've watched my presentation, right?
Neal Bawa: In the last 4 years, right, salaries have gone up by 25% in 4 years, right? Which is pretty good, actually, pretty awesome. But mortgages in the United States have gone up by 110%. That's an absurd number, and a lot of that, of course, is because interest rates have doubled, and then home prices are up about 45-50% in that 4-year time frame. So if your salary goes up 25%, and your mortgage goes up 110%,
Neal Bawa: How many people are going to qualify?
Neal Bawa: Well, it's not a lot of people, and I can tell you that. So, look at the pie chart, right? So, I actually first look at this green bar, right? So, green bar, you can see that the estimated median price for a new home in the U.S. is about $460,000, right? And below that, in the pie chart, you can see that 70% of first-time buyers
Neal Bawa: They can't even afford $400,000, let alone 460,000.
Neal Bawa: On the right side, you can see that there are now 52.8, 53 million households in the US that, shockingly, can only afford a $200,000 home.
Neal Bawa: We're at $460,000 median and rising. Do the math. It's looking horrible for future home ownership in the United States.
Neal Bawa: And I know that people like me have been talking about rising home prices for a long time, so I understand there's a tendency to say, we'll just ignore what Neil's been saying, because he's been saying it for a few years, and that time home prices have ticked up slightly.
Neal Bawa: Yeah, but something's changed fundamentally. On the left side here, right, this is about 2020, you can see that homebuyers earned about 17% more than renters. 17%, right? Basically, they needed to earn 17% more than renters to qualify, and that was in February 2021, right? Almost a year after COVID.
Neal Bawa: And then, it went up to 55% more by Feb 2023.
Neal Bawa: Then 73%, and now 82%. This is new. This has not happened before COVID, right? When we, as a homeowner, need to earn $116,000 to afford a typical home, and renters only need to earn $64,000, this gap…
Neal Bawa: the biggest gap in history, it makes it very lucrative to be a renter. And home buying just doesn't make any mathematical sense, it only makes emotional sense.
Neal Bawa: And as they say, God is in the details. As it turns out, the situation's actually really, really bad in some cities, and not so bad in other cities, right? For example, if you look at Chicago, that's bottom right here.
Neal Bawa: the premium, right, between what you're paying for a home on a monthly basis and what you're paying for rents on a monthly basis is actually not much in Chicago. So it's fairly easy to jump that 20% gap that you see and, you know, go become a homeowner. So good for people living in Chicagoland.
Neal Bawa: Now, take a look at Vegas, right, at the top. So when you look at Vegas, the median home payment in Vegas versus a two-bedroom rent
Neal Bawa: is a shockingly difficult number, right? It's almost 150% more. That's the highest in the US, by the way. So it's astonishingly difficult for someone in Vegas to become a homeowner.
Neal Bawa: Right? Much easier in Chicago. So, same story for this one, Phoenix and Boise, Denver, Austin, Raleigh, Nashville. These are the cities where becoming a homeowner is becoming just about impossible. It's mission impossible. Right? This is why you, if you're a landlord in these cities, it's to your advantage.
Neal Bawa: Right? I would not want to be a landlord in Chicago simply because the gap is too small and people can jump across it. I want long-term renters. I want forever renters. And I get a lot less of those in Chicago, and a lot more in Vegas, Phoenix, Boise.
Neal Bawa: Alright, I'm done with my first argument on why I think home prices are actually going to dip later this year. Here's my second argument. Remember, for years, me and everybody else has been talking about this thing called the lock-in effect. And lock-in effect was that tens of millions of homeowners, like me, had locked in extremely low interest rates. My interest rate
Neal Bawa: right now is 1.75%. So if I basically sell my home and buy it back the next day.
Neal Bawa: My new interest rate was going to be 6.8%, so my average mortgage is going to jump by $75,000 a year.
Neal Bawa: This means I'm locked in, right? I'm not going anywhere. And lots and lots of people were locked in, but over time, that effect loses its momentum, and people need to move. Divorces, debt, debts, you know, debts that happen in the family, lots of family reasons, right? Jobs. And so now we're beginning to see the market actually adjust, actually loosen, and a lot more homes are coming into the market. You see this right here?
Neal Bawa: A lot more homes, right? And again, God's in the details, right? I wouldn't want to be selling in Miami right here, right now. Why? Because Miami's a buyer's market.
Neal Bawa: Right? So is West Palm Beach. Pretty much all of Florida is a buyer's market, right? So is Austin, because there's a huge number of homes that have flooded in the market in the last 6 months. So obviously, what you're looking at on the right side are only some cities in the U.S, right? If you go further down the list, they turn into seller's markets, right? So potentially places that are buyer's markets at this point in the U.S, and maybe you're a buyer.
Neal Bawa: Take a look at these.
Neal Bawa: Now, this slide gives you an overall view of the country, not city by city. So you can see what had happened to inventory for single-family homes. Down, down, down, down, down, down, right? So, you know, here, before COVID, we're right around 1.2 million in terms of home inventory. Then COVID happens, we went all the way down to 448,000. That was a crazy, crazy low number, right? That led to incredible increases in prices.
Neal Bawa: And now in May 2025, right, Here, right?
Neal Bawa: We're basically back to where we were, or almost back to where we were.
Neal Bawa: And what's important is that the projections here in Cream show that we're actually heading for a very aggressive increase in inventory over the next 12 to 24 months. If this stays on the same path, you are going to see a very significant number of U.S. markets flip from being seller's markets to buyer's market.
Neal Bawa: So my prediction is of a small, measurable decline in U.S. home prices in the next 12 to 18 months.
Neal Bawa: Where does it go from there? I don't know. A lot of it depends on whether we have a recession.
Neal Bawa: Alright.
Neal Bawa: That was a lot of single-family. I'm gonna move on to apartments or multifamily, right? A bunch of you now are on the multifamily side, especially people who invest with me.
Neal Bawa: A story there is mostly incredibly good, but then there's an exception or two. Now, firstly, if you look at the monthly rent growth, this tile here is 0.26% per month. So if you multiply that by 12 months, you're looking at rent growth of over 3%. And yay, that's pretty good in the multifamily industry. We love 3% rent growth, right?
Neal Bawa: But if you look at the tile on the right, and you look at the last 12 months, that number really sucks, because basically, 0.7% rent growth of the last 12 months means that rents are not even keeping up with inflation. Inflation's at 2.5%.
Neal Bawa: And historically, over the last 80 years, rents move up faster than inflation. So obviously, we're sliding backwards in the last 12 months. Of course, different regions, you can see here, are doing differently. The Midwest, outperforming, so is the Northeast, right? But the South is negative rent growth, so almost negative 1% rent growth, so that's really, really bad. And the West is just sort of sitting there, right?
Neal Bawa: Occupancy is very interesting, right? The Midwest is very highly occupied, so is the Northeast, right? Simply because they don't overbuild. There was no construction of any note in the Midwest and the Northeast in the last 4 years. All of the construction went to the South, and a lot of it to the West.
Neal Bawa: Right? So, there are these areas where there's a ton of inventory, and as a result, we've seen occupancy spike in the Midwest and stay more or less the same in the South and the West. Now, except
Neal Bawa: These numbers are through May. We are now in August. In June, July… well, August numbers are not in yet, so June and July, we saw huge increases in occupancy for the entire country. All regions are gaining occupancy aggressively in the last few months. So, very excited about that.
Neal Bawa: Okay, now this is my favorite slide of this presentation. A little… so I'm gonna walk you through it, right? Every time I look at this, I really feel great about my business plan to be a landlord.
Neal Bawa: This slide is really showing you these blue bars. You see these blue bars? They represent the U.S. annual demand for apartments, right? And it depends on how many renter households are created, right? So that varies. So if you look at the blue bar, you'll notice that it's higher than at any other time
Neal Bawa: since 2009. This data goes back all the way to 2009. It's higher than at any other time, right? Except for this one quarter in 2021, because money was raining down on us, you know, post-COVID money, right? That's not a good data point.
Neal Bawa: So, look at the number of renter households that have been created, right? This is an incredible number, not… right? And now, I want you to compare that to the number of starts.
Neal Bawa: And those are in green, right? The difference is massive. So you're creating 700,000 renter households a year in this country. You should be then building 700,000 apartments, right? Each household needs an apartment.
Neal Bawa: So far, we've only built 209,000 starts. These are both annualized numbers.
Neal Bawa: Right? So I can pretty much guarantee
Neal Bawa: that 18 months from now, we are going to see a huge rent spike in the U.S. Why 18 months? Well, because this is a delayed effect, doesn't happen immediately, it takes a while, right? So when demand goes up, it takes a while before rents spike. This is especially true of the south and the west of the US, because those areas, even though the demand is through the roof.
Neal Bawa: They've had a huge amount of inventory come in, so they've had no rent growth whatsoever. But now that inventory is getting absorbed, and will almost be fully absorbed by the end of this year.
Neal Bawa: So obviously, with that very significant rent spike coming very, you know, coming, and it's very highly predictable, it makes sense to go out there and buy multifamily, but the challenge is.
Neal Bawa: There used to be a big gap, right, between buying in primary markets, you know, LA, San Francisco, Boston, and buying in secondary markets like Austin or Dallas. See that gap in 2018, right?
Neal Bawa: And see that gap today? It's 10 basis points. Essentially, secondary markets, you know, the Phoenixes, the Atlantis, the Dallases, they're now priced exactly the same as the primaries. And that's bad. That's 3 red lights for me. And that's why I'm now looking at what are known as tertiary markets, like a whole bunch of other investors, right?
Neal Bawa: There's some compression there as well, right? But overall.
Neal Bawa: These tertiary markets, these, you know, next-level markets, Kansas City, Indianapolis, Reno.
Neal Bawa: These are sort of half-million to 2 million person markets.
Neal Bawa: And they're doing really well. There's still a gap between what you would pay in the primaries and secondaries and what you would pay in the tertiary. So I suggest you consider doing the same. Pick your favorite markets. I'm going to give you a list in about 8 or 9 minutes.
Neal Bawa: Alright. Now, couple things.
Neal Bawa: Many of you are on social media, and on social media, it's very popular to say that commercial real estate is distressed.
Neal Bawa: nothing… nothing around that is true. You could make a case that office real estate is distressed because of the fact that despite the return to office or RTO mandates, offices are still nowhere near the occupancy level that they were. With multifamily, there's a tiny amount of distress, but I can tell you this.
Neal Bawa: I have made 33 offers to buy multifamily properties in the last 12 months.
Neal Bawa: How many of those offers were successful?
Neal Bawa: Zero.
Neal Bawa: I only got into one best and final in 12 months of making offers. That's how good the multifamily market is. Still, it's still a seller's market, but there's some tick-up in delinquency rates. But if you're going to basically read the nonsense of the web and think that this distress is spreading, or it's getting worse.
Neal Bawa: We're seeing zero evidence of that. In fact, prices for all kind of commercial real estate assets, whether it's industrial, or office, or multifamily, or hotels, or retail.
Neal Bawa: have been increasing for the last two quarters. Prices are going up.
Neal Bawa: There are a wave of maturity, some of you have read about this, but the bottom line is that the lenders are doing a great job kicking the can down the road. Almost everybody that needs an extension is getting an extension. This is not 2009. Lenders did something very stupid in 2009, they pulled back millions of these homes, and then the value of those homes went down.
Neal Bawa: Today, lenders are very smart, and they're basically offering extensions to buyers, as many extensions as possible.
Neal Bawa: So, to summarize.
Neal Bawa: I don't think… and I go back and forth on this, but at the moment, I don't think it's a good time to buy single-family, because single-family prices did not course-correct at all during the last two bad years of 2023 and 2024.
Neal Bawa: Single-family prices are about 40% higher than they were in 2022, before interest rates started going up.
Neal Bawa: On the other hand, multifamily is about 25% to 30% cheaper than the 2022 peak. So our summary is, while rates
Neal Bawa: Probably won't fall this year, they might pick up a little.
Neal Bawa: The incredible boost from the tax bill is driving up prices for apartments and other real estate, commercial real estate. Remember, the rent-to-buy ratio isn't massively in favor of renting. We're creating an incredible number of renter households.
Neal Bawa: the best ever increases in rental household demand in the US. So that's your key trigger. The rest is up to you.
Neal Bawa: All right, we finish our presentation with a city-by-city shootout. I know lots of you are here just for that, so let's get started.
Neal Bawa: We always start with U-Haul, and you've seen this slide for the last 10 years, and the winner this year was very surprising to me, guys. I've been watching this, tracking this for 10 years. South Carolina beat Texas in terms of migration. And in some ways, it makes sense, because Texas is becoming more expensive, people want to migrate to inexpensive states.
Neal Bawa: You know, Florida and North Carolina, as you can see them in the list, are pretty much where they were. Texas moved down a level, but the most important statistic on this slide is not South Carolina, it is Indiana.
Neal Bawa: Indiana is up 27 spots in a year to number 8, the first time it's ever made the top 10, and it's moving at an astonishing speed. So keep an eye on Indiana.
Neal Bawa: This particular slide deck shows, top new home sales markets for 2025. The one that I'm pretty fond of
Neal Bawa: is, is Cincinnati. I think Cincinnati is actually, you know, not a high-growth city, so pretty much keeps its population, doesn't go up or down.
Neal Bawa: But I think that there's, it's a hard market because it's an inexpensive market. You can buy new homes in Cincinnati for under $300,000, so take a look at this, but that's only for new homes. Now, this one is much more interesting to me. I love this, because our favorite city ranking group is Milken Institute.
Neal Bawa: Over the last 10 years, our projections for best cities have often matched that of Milken, but I have to say that we usually come in one year before them. They're a very large organization, very conservative. For example, their pick for City of the Year, at the top, you can see it, is Raleigh, North Carolina.
Neal Bawa: Now, for those of you that watched my Entrust presentation last year, you noticed that our pick of the city for last year was Raleigh, North Carolina. We've also picked Austin in the past before they did. Now, the most interesting city in this list is Ogden, Utah. So if you don't know about Ogden, definitely take a look at Ogden.
Neal Bawa: I also really, really like the Northwest Arkansas area. So, one of the cities in this area is number 7 on the list, that's Fayetteville. So, fantastic area, incredible growth. I like Benton better than Fayetteville, but it's the same area, so check out Northwest Arkansas. Incredible growth.
Neal Bawa: Here's a list of best performing small cities from Milkins, smaller cities, so these are cities that are typically 150,000 people or lower. Once again, we've also in the past picked both St. George, Utah, and Idaho Falls.
Neal Bawa: in the last 3 or 4 years in our ranking, the one that we present to Entrust every year, so it's wonderful to see them at number 2 and number 3. Those are the two that I recommend you look into if you're looking to invest in rentals.
Neal Bawa: Here's Zillow's list. They have Buffalo repeating at number one. Buffalo was number one last year as well. What's exciting to me is to see Indianapolis at number two. We've been talking about Indy for a while. It was our internal runner-up last year as the best up-and-coming city.
Neal Bawa: It's also great to see Kansas City at number 8, so it doesn't quite have the momentum of Indy, but both cities are doing extremely well compared to the past 10 years.
Neal Bawa: All right, and now the last list that… all of those previous lists were single-family, this is actually the multi-family list for those that, like apartments. What do I like here? I really like Vegas. So this market is changing. Just like Phoenix changed after the Great Recession into a broader market, we are seeing that change happen
Neal Bawa: with Vegas, right? It's gaining all kinds of jobs, it's actually losing gambling jobs, it's losing tourism jobs, but overall, there's a gain in jobs in Vegas as the market diversifies, so strong thumbs up.
Neal Bawa: All right?
Neal Bawa: It's my tradition to finish this presentation with me sticking my neck out, making two predictions. I pick both the best up-and-coming market in the US, and those typically tend to be smaller markets that I think have lots of potentials, and then I pick what I consider to be the best market for real estate investment in the entire country in 2025.
Neal Bawa: Are you ready?
Neal Bawa: Alright, our pick for best up-and-coming market is…
Neal Bawa: Las Vegas! This is the first time we've featured Las Vegas in the last 11 years, but the numbers are just too good. There are so many good numbers, but we chose to highlight just one.
Neal Bawa: population growth over the last three years in Vegas has been 4.5 times faster than the national average. Even Texas doesn't see that kind of growth. There's just a lot going on in Vegas beyond the casinos, beyond the tourism. So, enthusiasting, two thumbs up, as the best up-and-coming market in the U.S.
Neal Bawa: And now, drum roll… Our pick for the best market in the United States for 2025 is…
Neal Bawa: No surprise, Indianapolis. We could have picked Vegas, they're both big markets, but we picked Indy because we're seeing a higher quality of job growth in Indianapolis. We're seeing significant institutional interest, maybe because Vegas doesn't have a good name, right? We're seeing strong rent growth, we're seeing very little supply.
Neal Bawa: There's just a lot of reasons why Indy is a terrific market for both single-family and multifamily. Now, if you're looking
Neal Bawa: in Indy, don't look everywhere in Indy. There's a lot of very sketchy, high-crime places. Look at Fishers, Indiana. So that's, northeast of Indianapolis. If you're looking at single-family, look at Carmel, Indiana. So, Carmel, these are part of the Indy Metro, right? But I'm asking… I'm sort of directing you to the part of Indy Metro where the growth is, so…
Neal Bawa: So, you know, I'd like to say I'm very pleased to finally have a city in the Midwest be our
Neal Bawa: best city in the US, first time that's ever happened, so go Midwest!
Neal Bawa: But I highly recommend that for those of you that are looking to get into rentals, and you want to buy ourselves, you don't want to invest with groups like us, to look at both Vegas and Indy. They're both terrific.
Neal Bawa: So, a lot of people here might think, okay, why… how do we come up with our list of cities? I don't just want a list of cities, I want to figure out how you do it, right? What is the methodology? What's the process?
Neal Bawa: For those of you that are into those kinds of things, we have a data-driven guide that we use to rank 323 cities in the US every year. You can scan the code.
Neal Bawa: There's no, call… there's no call to action, we have no subscription, we don't sell education, so this is just something for you to take and keep and become more data-driven as an investor. So, if you're interested, scan the code, I'll leave it on screen for 5 seconds.
Neal Bawa: All right.
Neal Bawa: And I'm gonna… that's it for me. I'm gonna turn it back over to Jake. He's got a few things to go through, and then I will take questions. Jake?
Neal Bawa: You're muted.
Jake Marchini: Alright, thank you. Thank you very much, Neil. So, yeah, that is the end of our presentation. Thank you all very much for showing up.
Jake Marchini: But if you are interested in opening an IRA, if you're joining us for the first time today, and not already an Intrust Group client, you can sign up for an SDIRA account on our website, online at theintrustgroup.com.
Jake Marchini: And three steps to making an investment are to open an account by submitting an application, funding your account by transferring or rolling over from a previous IRA, or making a contribution, directly to your new interest group IRA, and then direct us by filling out paperwork to purchase your investment.
Jake Marchini: And we can go over that, more if you have further questions about that.
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Jake Marchini: Recordings of all of our webinars, including this one, so if you have any
Jake Marchini: want to see any of this information again, this will be up on our website very shortly, and you'll get a copy of the slides and a recording in our follow-up email afterwards.
Jake Marchini: And then you can also register for our next month's webinar on another new topic of investment for self-directed IRAs.
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Jake Marchini: And without further ado, we will get to the question and answer session, and I will address the topics that deal more with the logistical, concerns for SDIRAs and for, and with the Entrust Group, and I'll turn over the questions that have to do with the information presented by Neil to him.
Jake Marchini: Just taking a quick look at our… Question and answer section here.
Jake Marchini: We have a question that I think is going to be for you, Neil. Somebody asks, bonus depreciation is not permanent in the new bill?
Neal Bawa: No, bonus depreciation basically goes from
Neal Bawa: it was going to be 40% this year, if the new bill had not been passed, which is… which is okay. Back up to 100% until the end of 2029, and then it starts to phase out just the way it was phasing out now. Remember, in the 2017 bill, I think you got 4 or 5 years at 100%, and then it went down 80, 60, 40, 20.
Neal Bawa: And zero, and the same thing will happen starting 2030, where it'll go phase downwards.
Jake Marchini: And there we have it. And that is currently the only question in our Q&A section here. Sure.
Neal Bawa: I'll encourage people, if you want to ask about any other cities that were not in our list, we do city… we travel to cities all the time, so if there's any cities that you're interested in knowing about in terms of real estate prospects, plug them in, just the name of the city, and I'll be happy to answer your questions about them if I know about them.
Jake Marchini: Okay. Well, we've got, questions about some specific cities here in response to that, Neil. What do you think of Atlanta?
Neal Bawa: Terrific market. It's doing really well for a number of reasons. I tend to, look at where the data centers are being built. Atlanta.
Neal Bawa: had 1 gigawatts of data centers that were built in the last 12 months. That's always a very good sign. In general, the city of Atlanta is doing well. Population growth is slowing, so that's a concern. At one point, it was one of the fastest growing cities in the U.S. for net migration. That is slowing, but overall, its overall rate of in-migration is still superior to the average for the U.S.
Neal Bawa: So, a strong market.
Neal Bawa: and has seen a significant price declines for multifamily, not so much for single-family. So I would say, yeah, strong market.
Jake Marchini: Very good. Now we've got somebody asking about Memphis.
Neal Bawa: So, you know, there are 4 markets that we, look at in Tennessee, and I would say Memphis is the weakest of them. So we like Nashville, we like Knoxville, we like Chattanooga. The problem with Memphis is very high crime and just continuous population loss, and that prevents us from recommending Memphis.
Neal Bawa: I have to say there's plenty of good things going on in Memphis, I'm not blind to them, but overall, I just am very cautious about investing in markets that are high crime and have population loss.
Jake Marchini: We have two people asking about Jacksonville. One of them specifies Jacksonville, Florida. I'm not sure if there's other Jacksonvilles, but we've got two people asking about Jacksonville.
Neal Bawa: general… most times… most times when people are talking about Jacksonville, they are talking about the one in Florida, so we'll assume that. So, what I can tell you is that it's… Jacksonville's a very strong market, but it's not in a good place right now. So, we expect home prices to fall in Jacksonville over the next 12 months. We expect home prices to fall in all markets in Florida over the next 12 months, because that's where the momentum, downward momentum, is strongest.
Neal Bawa: So, what I would say is, good market, but don't be in a hurry to jump in in Jacksonville. Better prices are coming.
Neal Bawa: And then, Austin. Yeah, so, in my mind, the only market in the US that I consider to be stronger at this point in terms of momentum is Raleigh than Austin. But Austin has seen huge home price declines because it had the biggest, most aggressive run-up of home prices.
Neal Bawa: Between that 2020 and 2022 timeframe, and now they're adjusting. I think that prices could still drop in Austin by the… by 2 or 3%, so don't be in a hurry to buy.
Jake Marchini: Okay.
Jake Marchini: Hilton Head is the next question.
Neal Bawa: So, South Carolina is a very interesting market. You just saw it ranked number one in, in, you know, the U-Haul rating, so there's obviously a lot of great things happening.
Neal Bawa: I don't track Hilton Head as much as I track, you know, Myrtle Beach or, you know, some of the bigger markets. So it's an interesting market, but it's also challenging, so here's what I would say. Hilton Head.
Neal Bawa: You gotta spend some time with ChatGPT on that one.
Jake Marchini: San Antonio.
Neal Bawa: Same sort of issues. Austin and San Antonio are only 79 miles apart, so some of the downward drag that we are seeing in Austin is also happening in San Antonio. I would say I'm more bullish about San Antonio, but I would say there's just no harm in waiting 12 months. I like San Antonio a lot. I just don't think there's a harm in waiting.
Jake Marchini: Atlantic City, New Jersey.
Neal Bawa: That particular market is very hard for, you know, data guys like me to track because of, you know, it's a gambling market, and those tend to mess up our numbers, so I'm simply going to say it's very difficult to compute what's happening in Atlantic City, so I'll pass on that.
Jake Marchini: Paradise Chico, California.
Neal Bawa: It's an interesting market. I wouldn't say it's the best market. You can probably do better by going, you know, into the Central Valley. You can do better in, you know, the Inland Empire than in Chico. So, I'd say, okay market, but, you know, not really hard on it.
Jake Marchini: Do we cover Houston, or do we just do all.
Neal Bawa: We didn't, we didn't. So, obviously, 3 large markets, there's 4 large markets in Texas, you know, there's Dallas, San Antonio, Austin, and Houston. Houston's a very large market, more than 5 million people live there. Right now, it's doing really poorly.
Neal Bawa: And I think that's because it had a very large number of illegal migrants that have left. So, until that stabilizes, I would stay away from Houston, maybe stay away for the next 12 months, and then see how it's doing.
Jake Marchini: Hmm.
Jake Marchini: Alright, another New Jersey question here. Jersey City, New Jersey.
Neal Bawa: It's pretty decent. I mean, as a market, strong, there's nothing wrong with it. I just… I just caution you, I think real estate investors don't understand just how outrageously absurd the property taxes are in New Jersey. Nobody does their math right, and then, you know, people go in there, and then they realize they're not even breaking even. Please make sure you fully understand property tax math in New Jersey.
Jake Marchini: Hmm.
Jake Marchini: Alright, going further south to Tennessee in Nashville and Knoxville, specifically the suburbs of Nashville and Knoxville. Is this….
Neal Bawa: I like Nashville, but there's no cash flow. So I would say if cash flow is really important to you, Knoxville is better. If you want higher quality of suburb, then Nashville is better, but I like both.
Jake Marchini: Alright, next question asks, what about Dallas and San Antonio? We've covered San Antonio. What are your opinions on Dallas? We think.
Neal Bawa: Dallas is the number one metro in the U.S. for growth. There is nothing that comes close to Dallas in terms of growth, its ability to absorb massive numbers of immigrants, not just immigrants, but just inbound migration from different parts of the U.S.
Neal Bawa: It's the best market in the U.S, Raleigh has the most momentum, but Dallas is the best market in the US. It's just, be aware that, you know.
Neal Bawa: right now, there's just a flood of new, you know, apartments coming there, so you're not gonna get good rent growth for 2 years. If you're a 10-year investor, I don't think you can find a market better than Dallas.
Jake Marchini: Alright, next question is, opinion of multifamily in Portland, Oregon.
Neal Bawa: There's too much of a run-up in Portland, Oregon. I think that the market is soft, and I think it'll stay soft for the next year, so you might see more opportunity if you wait.
Jake Marchini: Hmm.
Jake Marchini: Next question, do you foresee a relative big correction on the single-family house market in Las Vegas?
Neal Bawa: Possibly, but not a big one, a small one. So, you know, you could… you might see a 5% correction in Vegas, but overall, Vegas' demographics, job growth are stunningly good. So, you might see 5% down, but not more than that. And even that 5% is because there's a lot of immigrants fleeing.
Jake Marchini: Next question asked about, do you track Lake Tahoe, Nevada?
Neal Bawa: I don't track Lake Tahoe, but I'll say this, that one of the markets that I'm obsessed with is Reno, Nevada, and I would say it's an incredible market. If you think about it, Lake Tahoe is not a market by itself. Lake Tahoe is, you know, about 30 minutes away from Reno. It's part of the Reno MSA, the Reno-Carson City MSA.
Neal Bawa: That metro is one of the most unique in the United States, so I would simply say Tahoe is going to do well, as long as stock markets keep rising.
Neal Bawa: The big driver for Tahoe is very, very rich people that drive on Friday from the San Francisco Bay Area, all these VCs, all these startup people that have tens of millions or hundreds of millions of dollars, and they own or rent in Tahoe. And right now, the stock market's doing really well, especially tech stocks, so if that continues, Tahoe will do well. I can tell you that if there's… if the stock market goes down by 20%, you're not going to see Tahoe do well.
Jake Marchini: Alright, going back across the country again, what do you think about Columbus, Ohio, and Charlotte, North Carolina?
Neal Bawa: I'd say Charlotte is much more of a growth market. Charlotte is the capital of North Carolina. It is the largest city in North Carolina, largest metro. I like Raleigh better than Charlotte, so I'll say that from a relative perspective. I'd much rather invest for a 10-year time frame in Raleigh than I will in Charlotte.
Neal Bawa: But Charlotte is a high-growth market, it's been very impressive, it's absorbed a very, very large amount of inventory that came in into the multifamily market. It absorbed all of it, did not
Neal Bawa: No change in rents. So, it's a powerful market.
Neal Bawa: Columbus is the best market in Ohio, but that's as far as I'm willing to go and say, of the four markets that we track in Ohio, Columbus is significantly better than Cincinnati, way better than Cleveland, and a heck of a lot better than Dayton, Ohio.
Jake Marchini: Coming back to the West Coast, Bookings, Oregon is the next.
Neal Bawa: Too small of a market? We don't track markets of that size?
Jake Marchini: Hmm.
Jake Marchini: And then finally, what are your opinion on Opportunity Zones, Neil?
Neal Bawa: It's actually good, but here's what I'll say, right? So, the opportunity, you know, part of the law was that Opportunity Zones are back, and I should have had a slide on that. It's actually better than before, because Opportunity Zones before were a limited time thing, now they basically just said they're back, right?
Neal Bawa: But here's what I would say to you, right? Why are these Opportunity Zones? They're Opportunity Zones because their income is low, their growth is low, their crime is high, their schools are bad. There's a reason why.
Neal Bawa: an area is tagged as an Opportunity Zone. So, what I will say is this.
Neal Bawa: Of all the data-driven things that you could do, the best money that you could spend is find sites, and there's sites out there, ask ChatGPT, it'll give you sites, that rank opportunity zones in terms of quality.
Neal Bawa: Now, once you've… once you've picked one that's high quality, has basically momentum going forward from the Opportunity Zones bill, you're gonna do really well.
Neal Bawa: But otherwise, understand opportunity zones are opportunity zones because rents are low, quality of tenants is low, incomes are low, and often they're losing population. So, be aware of what makes them Opportunity Zones.
Jake Marchini: Hmm.
Jake Marchini: All right, we have another question, or really not much of a question here, but more of a… an observation that you might want to comment on here, Neil. It says, the House version had bonus depreciation expiring in 2029. The Senate version has no expiration date. The Senate version is the final version. What's your answer to that?
Neal Bawa: In that case, you are correct, because this deck was built using the House version, because the bill had not passed on the day that this deck was built. So in that case, if the Senate version is a final version, you are correct. Opportunity Zones are back.
Neal Bawa: period, sorry, you know, there is no expiration for bonus depreciation. Keep in mind that if the Democrats come back in 2028, then they'll…
Neal Bawa: You know, fiddle with it in 2029, so keep that in mind.
Jake Marchini: Okay, another person here. I have multiple beach condos. Does the rental market show selling and buying homes a better approach?
Neal Bawa: That's… because I don't know where your beach condos are, or what your appreciation is, that's an impossible question to answer, so I'll just simply say, too little information.
Jake Marchini: Next question. How do you measure the accuracy slash success of your prediction? Any data on that?
Neal Bawa: So, what… we used to do this manually, and it was a painful thing to do, where we would basically make predictions on where various metros would go at the beginning of the year. At the end of the year, we would manually tally it up. We no longer need to do that. We use an AI engine that we've developed ourselves. We'd say we're…
Neal Bawa: We're right about 75% of the time on metros, and wrong about 25% of the time.
Neal Bawa: I don't particularly know if that's good or bad. I would just simply say it's better than 50%.
Jake Marchini: Okay, the previous… the previous person who asked about their condos, clarifies, condos are in Miami and Atlantic City.
Neal Bawa: My honest answer is that the Miami market is not going to be good for condos for a long time, so if you're getting a good price, get out. Atlantic City is very variable. It's a, you know, gambling market, so I wouldn't comment on it.
Neal Bawa: But I am not at all hot on the future of condos in Miami. They've been hit with something that is a multi-decade correction. I'm sure you've heard of it after the collapse of that condo building.
Neal Bawa: we are seeing outrageous, you know, increases in, in, you know, the condo fees. I don't think that that is going to reverse.
Jake Marchini: At least not for the next 5 or 10 years.
Jake Marchini: Alright, new question. In general, what do you think is the sweet spot in terms of number of dwelling units in a senior development community?
Neal Bawa: That's… the honest answer is, the sweet spot is either 5 or 6 units in a single-family home. Those are very profitable, they fill up really easily, you know, they're not high density. If you're…
Neal Bawa: going beyond that 5 or 6 in a single-family home, and you're building something bigger, I would definitely go for 125 units, and that may not work for you in terms of, you know, the equity you have available, but you ask the question, so the answer is either I'd go for 5 in a single-family home.
Neal Bawa: Or I'd go for $125 along with memory care. So, you don't just want to have seniors in there, you want to have some memory care. Memory care is more profitable.
Neal Bawa: All right.
Jake Marchini: Alright, any….
Neal Bawa: We're done with all of them.
Jake Marchini: It appears so. Well, thank you very much, everybody, for the questions. Thank you, Neil, very much for all of the answers and all of the incredible information you've provided to us today.
Jake Marchini: Anybody who would like to get in touch with myself or Neil, our contact information is available on this last slide. Please feel free to give us a call or send us an email with more questions, or if you want to follow up this
Jake Marchini: webinar today.
Neal Bawa: Well, thank you, Entrust, folks, for allowing me to do the webinar again. Enjoyed it, and everyone that's interested in our projects, please connect with us via the poll or via the barcode that we provided.
Neal Bawa: Thank you, Jake.
Jake Marchini: Thank you, Neil.