🗞️ News & Moves 🏠

December housing starts just popped off—up 16%. (Bloomberg)

But is this the start of a rebound or just a mirage?"

Multifamily construction went bananas—up 62%, the biggest spike since 2011.

Meanwhile, single-family homes saw a modest 3.3% climb.

Sure, that sounds good, but if we zoom out: 2024 still closed as the slowest year for new builds since 2019.

What’s driving the slowdown?

Two words: mortgage rates.

With 7%+ rates squeezing affordability, builders are pulling out all the stops—think mortgage rate buydowns and other incentives.

The bright spot?

The South, where housing starts jumped 18%, continues to lead the pack.

So, was the December surge a turning point—or just seasonal noise?

Only time will tell.

The U.S. office market just hit a new record: a 17.2% distress rate (Commercial Observer)

Office buildings are taking the hardest hit in commercial real estate.

Distress rates for offices surged from 15.5% in November to 17.2% in December, marking the sharpest monthly jump all year.

That makes offices the most distressed property type by far.

What’s behind it?

Loans tied to offices are struggling as vacancies stay high and refinancing becomes tougher.

Even multifamily, which usually thrives, isn’t immune—its distress rate jumped to 12.5% in December, up from just 2.6% at the start of 2024.

Retail saw some improvement, but it's still the third most distressed sector.

Bottom line?

The cracks in commercial real estate are getting wider, and the office sector is leading the charge.

As we head into 2025, the big question is:

How much worse does it get?

🚨 The Fed Pulse 🚨

Inflation continues to climb, with the latest CPI rising to 2.9%, marking three straight months of increases.

Energy prices fell, but higher costs for food and shelter (+4.6%) are squeezing consumers.

Core inflation dipped to 3.2%, tying its low from 2024, but remains above the Fed’s 2.5% goal—keeping rate cuts uncertain.

The Producer Price Index (PPI), a leading indicator for inflation, also rose in December, climbing to 2.8%.

This suggests price pressures are still building and could keep inflation elevated in 2025.

While retail sales grew 3.0% year-over-year in December.

Meanwhile, the bond market remains skeptical of inflation relief.

The 10-year yield rose to 4.61%, and 30-year mortgage rates are below 7%.

My $0.02 is that this high-rate environment isn’t going anywhere soon.

When I started this newsletter seven months ago, I set out to find the best value-add model possible.

I became obsessed with studying case studies.

I wanted the most effective model.

It should add the most value in the least time and with the fewest resources.

What I've come to realize is that a model that works brilliantly for one operator can be a complete disaster for another.

Yet finding good deals can make or break your success, and every real estate professional needs to master this skill.

With that in mind, I'll answer a question from Ruta (one of our readers).

How do you buy real estate that's sold off-market? Whether residential or commercial, I'm interested in properties that never hit the market.

Great question.

The strategies I will share work for both residential and commercial real estate. 

And no, these aren’t some gimmicky hacks like "magic postcards" or "secret probate lists." (Those tools have their place, sure, but they’re not the foundation.)

At the core of every successful off-market strategy is the list. 

Everything starts there.

After that, you select the marketing channels to communicate with the people on that list.

And here’s the thing about marketing campaigns: they only work if you actually do them.

Consistently!!!

It’s not a one-and-done thing; you’ve got to work at it, tweak it, and stay consistent.

My rule of thumb?

Spend 20% of your time and effort optimizing campaigns.

Let’s dive in.

Two Lists You Need

1️⃣ Broker List

Most people overlook this, but brokers are one of the best sources for off-market deals.

Why?

Brokers often shop deals to their most trusted buyers before they hit the market.

Why?

They like working with closers—buyers who are easy to work with and don’t retrade.

Plus, they get to keep the entire commission when they don’t co-broker the deal.

Here’s how you build your broker list:

📍 Use CoStar to pull 5 years of closed comps for your target asset class in your market. Identify the listing brokers on those deals and start adding them to your list.

📍 Introduce yourself. Call them. Compliment their work on specific deals. Then share your “buy box” (the type of deals you’re looking for) and your track record.

📍 Set alerts on platforms like CoStar or Crexi to track new deals and identify new brokers to add to your list.

For your broker list, you'll need the basics: their name, email, and birthday (yes, you can find most of them on Facebook).

Also, include notes on your conversations.

Target 20 active brokers to start.

If you’re operating in a larger region, aim for 50.

Rank them on a scale of 1–10 based on the quality of the deals they bring you.

Focus your energy on the top performers.

Pro tip: Email your broker list consistently.

Remind them of your buy box.

Congratulate them on wins.

Share testimonials from other brokers.

Provide feedback on the deals they pitch you, especially the ones you pass on.

2️⃣ Owner List

This is where the technical heavy lifting happens.

The better your owner list, the better your campaign results.

Here’s how to build it:

1. Use CoStar to pull properties in your target market.

2. Identify the LLCs or entities that hold the title.

3. Scrub your list.

   Remove institutional owners—they rarely sell value-add properties in off-market situations.

   Focus on mom-and-pop owners instead.

4. Skip trace the members of the LLCs to get their contact info.

   You can use tools like TLO, LexisNexis, Lead Sherpa, IDI Core, or even hire freelancers on Fiverr to help.

Aim for a minimum of 1,000 owners on your list.

If you can get 5,000, even better.

Three Channels That Work Today

Once you’ve built your lists, the next step is putting them into action.

These are the three marketing channels I’ve found work consistently:

1️⃣ Email

Your broker list thrives on email communication.

At a minimum, you should be emailing them twice a month.

Don’t overcomplicate it:

📌 Share reminders of your buy box.

📌 Congratulate them on birthdays or professional achievements.

📌 Provide value—offer insights, tips, or even case studies of how you’ve added value to other properties.

📌 Invite them to lunch or coffee.

If you’re just starting out, Gmail will work fine for managing this communication.

But as your list grows, consider using tools like ActiveCampaign, Mailchimp, or Beehive.

(Beehive is my favorite.)

The goal is simple: get 5 phone calls per week with brokers pitching you deals or discussing your buy box.

2️⃣ Direct Mail

Direct mail works best with your owner list.

Write a simple letter introducing yourself and expressing interest in buying their property.

Keep it short—around 100-150 words.

Mention if you can close quickly or buy “as-is,” but don’t overpromise.

Direct mail's effectiveness isn't in the letter.

It's in the quality of your list and consistency of your outreach.

Send letters monthly.

It’s not unusual to get calls after 6–8 months of mailing consistently.

3️⃣ Cold Calling

This is the most underutilized channel, but also one of the most effective.

Take your owner list and start dialing.

If you can dedicate 2 hours a day, you should expect to generate at least one lead per day.

When I say “lead,” I mean someone who’s open to hearing your offer—not necessarily someone ready to sell immediately.

Takeaway

You can build one list and one channel in a quarter.

Within 9 months, you can have all three channels up and running by dedicating just 10 hours a week.

You should expect, at bare minimum, 1 deal in those 9 months.

On average, you should expect one deal per quarter from running these 3 channels consistently.

Let’s do some quick math: If a deal nets you $1M in value-add potential, and you spend 360 hours to land it, that’s $2,777 per hour.

For perspective, that’s twice the average hourly rate of an NFL player.

They are exceptionally talented and have trained their whole lives for that performance.

The difference?

Today, what I've shared with you doesn't need someone with extraordinary talent or years of training.

All it takes is consistency, time, and persistence.

Hope it hits home for you!

Got more questions?

Hit reply and ask me anything.

(I read every email, and I may feature your question in the next newsletter.)

Till next Sunday @ 9:07 am.

Be well,