🚨 The Fed Pulse 🚨

• 🎯 November Rate Cut:
  The Fed surprised markets with a 125-basis-point rate cut post-election.
  It’s symbolic but not a quick fix—rate changes take time to work through the economy.

• 📅 December Decision Uncertain:
  All eyes are on December 18th.
  Core inflation held steady at 3.3%, while overall inflation nudged up to 2.6%. Mixed signals make the Fed’s next move a coin toss.

• 🛍️ Economic Mixed Bag:
  Retail sales surged in October, thanks to hurricane-related stockpiling.
  On the flip side, U.S. industrial production hit a 22-month low—a sign of lingering economic weakness.

• 📈 Bright Spot in Capital Goods:
  Non-defense capital goods orders ticked up, hinting at some stability in business investment.

• 📅 Looking Ahead to 2025:
  My take rates should stabilize by mid-2025. But until then, inflation could rise further.

DEEP DIVE

A breakdown of new builds' 250K profit

If you watch real estate investors long enough, you'll see this: their careers often evolve in a predictable way.

It starts with flipping houses or renovating rentals, then moves to multifamily apartments.

Some graduate to commercial real estate or land development.

And finally, toward the end of the cycle?

They become financiers, at the top of the money pyramid.

They fund the next generation of deals.

This isn’t some hard-and-fast rule, but I’ve seen it play out time and again.

Of course, you can crush it staying in one niche—whether it’s flipping houses, owning multifamily, or playing the commercial game.

But for me?

In 2020, I pivoted to commercial real estate.

I sold my residential portfolio to focus on industrial properties.

That said, there’s one residential model I’ve kept in my toolbox because it is so reliable.

It’s not flashy, and it won’t make headlines.

But it delivers steady profits.

There's no need for heavy rehab.

I’m talking about infill urban new construction residential developments.

My partners and I have been building homes in Chicago's up-and-coming neighborhoods, like Bronzeville and Canaryville.

They're on the rise, and you can still buy teardown or vacant lots at a decent price.

Here’s why this model works.

1. Less Competition: Fix-and-flip is a bloodbath. This niche? It’s a much quieter.

2. Predictable: We build the same house design on cookie-cutter lots, so it’s rinsed and repeat.

3. No Engineering: Chicago city lots have utility hookups. So, no drainage or engineering issues.

4. Better Margins: The profit margins are higher and—more importantly—predictable.

5. Financing: Local banks love these projects, and you don’t have to rely on hard money.

6. No Sketchy Contractors: New construction attracts higher-quality contractors. No more chasing down Cousin Johnny, who’s juggling three jobs and ghosting your calls.

7. No Change Orders: Once you’ve done a few builds, the process is dialed in. Compare that to rehabs, where budget swings of 10-20% are standard.

The Downsides

1. It Takes Time: the full cycle is just over a year: 3 months for permits, 6 months to build, and 3 months to sell.

2. Hard to Scale: These lots are limited in these neighborhoods.

The Numbers

Here’s a real-world breakdown of these projects—a three-flat in Bronzeville:

• Sale Price: $900,000–$950,000

• Lot Cost: $125,000 (we’ve bought lots for as low as $75,000, but prices are climbing)

• Construction Cost: ~$525,000

• Gross Profit: $200,000–$250,000. This does not include closing and carrying costs.

Here’s the full breakdown of construction costs so you can see exactly where the money goes:

• Excavation/Foundation: $16,000

• Concrete: $35,600

• Water Service: $31,000

• Lumber: $49,600

• Framing: $32,000

• Trim: $25,000

• Drywall: $13,000

• Roof: $21,000

• Siding/Soffit/Gutters: $20,000

• Porch: $25,000

• Windows/Doors: $15,000

• Flooring: $19,000

• Tiles: $10,000

• HVAC: $31,000

• Electric: $35,000

• Plumbing: $24,000

• Painting: $16,000

• Insulation: $10,000

• Project Management: $25,000

• Masonry: $13,500

• Dumpster/Trash: $2,500

• Landscaping: $4,500

• Interior Finishes: $40,000

• Fence: $6,000

• Porta Potty: $2,500

Total Construction Cost: ~$525,000

The result?

A predictable $200,000–$250,000 gross profit.

And with the process dialed in, it's a hell of a lot easier than a heavy-lift renovation.

Let’s Wrap it Up ⏰

• New Construction > Heavy Rehabs: It’s easier and less stressful.

• The best models aren’t necessarily scalable, but they’re predictable and frictionless.

So, that’s my playbook.

Got questions or want to dig deeper into the numbers?

Hit reply.

(I read every email and care about your success).

Be well,

🗞️ News & Moves 🏠

Trump’s back, and so are his tariffs – but is this a smart play or a global gamble?

Trump’s “Tariffs 2.0” plan is stirring things up: a 60% tariff on China and 20% on everyone else.

The goal? Revenue and leverage in trade talks. Reality?

Tariffs might bring $1.1T but could shrink global trade, spook markets, and slap inflation on imports.

Mexico’s sweating too, with threats of a 25% tariff tied to migration.

If this turns into a trade war, the “Roaring 2020s” could stumble.

My bet? Tariffs are bargaining chips, not a long-term strategy.

Let’s see if this plays out smart—or sparks chaos.

Commercial real estate is feeling the squeeze—are banks ready to weather the storm?

The Fed’s latest report flags rising delinquency rates in commercial real estate (CRE) loans, now at a decade-high 11% for big banks.

Smaller banks, with heavier CRE exposure, are also feeling the heat.

Banks are beefing up reserves to brace for potential losses, but the pressure’s on with high borrowing costs and stressed property owners.

Fed Chair Powell says the banking system is resilient—my take?

CRE will stay rocky, but no major storms.

Thoughts?