What’s Going on with JWB as a Company?

A couple of years ago, we were so happy to see that 2019 was the best year in JWB history! By that time, JWB was listed among the top 10 builders in North Florida! That was a banner year for the JWB team!!! We had been building the organization year after year to finally reach that spot.

In 2020, in spite of the global pandemic, we experienced another record-breaking year with more properties purchased and more sales to investors who wanted to place their money in a positive cash flow asset class. Things kept looking up for the Jacksonville real estate market, and our team took radical action to make sure great communication was happening with our investors and tenants.

2021 continues to be a great year for turnkey rental properties. With low-interest rates, increased buyer demand, affordable housing prices, and more people working from home, Jacksonville truly is a booming real estate market. Migrating home buyers move to Florida every day, and this creates a large housing demand; scooping up existing homes which drives the listing prices up. 

Why Is Our Core Business Built Around Turnkey Property Sales?

JWB started in 2006, and that was before the Great Recession. We found that turnkey property sales provide returns for investors who embrace long-term strategy and thinking. 

For example, when we buy 600 assets, we can hold onto those assets that produce rental income and keep them in our inventory for when the market changes and people are seeking rental properties. We are holding on to these properties for future investors, and they create positive cash flow for JWB. It’s a win-win for everyone involved! 

Additionally, we are building new turnkey rental properties. We bought land lots and sat on them for a while. Over the past decade, we bought more lots because we knew at some point that inventory would become scarce and prices would go up.

If JWB already owns the land, we can assure our investors that they can purchase positive cash flow properties directly from us, especially when they would have a tough time finding these properties anywhere else. Another win-win!

The Real Estate Market in 2020–A Surprise to Everyone

Every year since 2019 — even during the 2020 pandemic — has been record-breaking years for JWB.  We say this humbly and with extreme gratefulness. We never expected to see these numbers during COVID because we were in unchartered territory, and admittedly, we were all scared. However, our JWB team pivoted and worked on all levels to ensure our investors and our renters were protected. 

Housing is a critical need for individuals and also for the government. Home prices in Jacksonville didn’t drop, even though the “world was on fire.” To come out of 2020 to see these numbers is reflective of the strength of this asset class. 

Regardless of what is going on with the economy, people need housing. The government sent stimulus to make sure people could stay in their homes during the pandemic. This asset class is a very good one to invest in, and the COVID crisis proved our theories correct. 

No one knows what will happen in the short term, but we are bullish here at JWB in purchasing properties. We predict that our long-term strategy of buying and holding will get us through the real estate cycle securely.

How Do We Know Jacksonville Is a Booming Residential Real Estate Market?

At JWB we regularly look into the future and plan out where to put our money. How can we provide inventory for folks over 2-3 years when housing inventory is scarce? We found a solution. We saw an even more significant buying opportunity in 2020, and it was a race for JWB to acquire as much as we could because we saw a lot of people wanting to invest in rental properties of single-family homes. 

In March 2019, things were “normal.” The median sales price was lower than the national average, and they have higher rents. That’s a great real estate market there!

We had never been above 3000 sales in one month before 2020. We were encouraged to buy lots and build new homes because we knew that inventory would someday go down, and our investors would have an advantage. Plus, the appreciation rate continues to increase, and we’ve never seen the JAX market move this quickly.

The numbers for the future real estate market look good as well. People want to live in warm weather, in single-family homes, in a beach community, and with no state income tax, plus the great quality of life and lower living costs. There are so many reasons to move to Florida. Those that are moving to Florida are eager to rent single-family homes or buy single-family homes.

What Is the Current Real Estate Market?

Our predictions for 2019 and 2020 were conservative, but we blew past those. We feel that the market will continue to do well in 2021 and the coming years. The median home price is still affordable when compared to other real estate markets. 

The information and data to verify our predictions are readily available. This all explains why educated forecasters and market observers feel that COVID accelerated people’s ability to move to Florida without giving up their jobs.

For example, before the pandemic, many families lived near family to be close by, but they didn’t have the time to visit in person. The untethering of people needing to be in person and using videoconferencing to keep in touch with work and family allows more people to live where they want. That is why so many people are moving to Florida.

Will Things Go Back to the Way They Were Before COVID?

No, we do not believe so. JAX has been a fast-growing community since 1970, and we were the 6th fastest growing area in the country back in 2018. Growth like that doesn’t just disappear.

Jacksonville has been known as a growth market for decades now. We expect that to continue, even when COVID has finished running its course. Plus, you don’t have to be wealthy to live in Jacksonville, which further solidifies our position that this is a sizzling hot residential real estate market.

How Are the Prices of New Houses Going to Affect the Renters in Jacksonville Neighborhoods?

JWB cares about affordable housing. We talk a lot about supply and demand. If homes no longer become affordable, a cap is placed on the home prices, and investors don’t want a cap.

It’s one of those “what’s coming next” problems to solve. We want to take care of your rental properties for a full 10- to 20-year real estate cycle. We think that when we can have housing prices go up and median incomes go up, everyone wins. That is why JWB is making an impact in downtown Jacksonville. We are creating an urban, walkable downtown that attracts high-paying jobs and younger demographics. 

Affordability is something we pay attention to here at JWB. In Miami, for example, home prices are so high that they cannot bring talent into downtown because it’s too pricey. Miami has become too expensive, and prices were unbearable for the average worker. But as those prices continue to grow, it’s tough for residents who aren’t making tech company wages — much like what we’ve seen in California and New York. 

Miami is benefiting from all the New Yorkers fleeing! If you have a portable job, why put up with high taxes and harsh weather when you can have beaches and no state income tax? This is a trend that is not going away.

Jacksonville has a much longer runway than other areas within Florida and the country. Home prices will go up and will continue to do so.

The good news for investors is that rent prices go up and appreciation, which continues positive cash flow. This applies to new construction homes and renovated homes. In JAX, most home prices will still be affordable for a while. 

Appreciation Rate Vs. Housing Prices: Will They Fall at the End of the Cycle?

Looking at the months of housing inventory is a numerical way to understand how many months it would take to exhaust the market of homes for sale. There is a strong correlation between the numbers with access to inventory and a sizzling hot real estate market. We can see where home prices are going. 

In the chart above, these are the months of inventory which shows us that home prices will not fall in JAX anytime soon. In 2019, we did not see an excess of properties on the market. Nor did we in 2020.

When the inventory is low, like it is in 2021, that puts the pressure on JWB to buy more properties than we will sell because we want to have that land under our control to continue to sell our investors some positive cash flow properties.

When you see six months of inventory, that’s when you see trouble on the horizon for the housing market. Six months of inventory is the line where you’ll see higher or lower home price appreciation. But that doesn’t mean the housing prices are dropping. 

We do not believe that home prices are going to drop anytime soon. We ran the numbers and saw regular appreciation numbers. There should not be any trouble with the housing market until we hit 8 – 12 months of housing inventory. Currently, we have a shortage of housing inventory, so we’re good. 

How Is the Current Real Estate Market Compared to “Normal” Markets?

Let’s look back in 2019 at what a “normal” home buyer experienced in a “normal” market. You were able to buy a house when you wanted and expect to go through a normal process of home inspections, negotiating the price you wanted to pay, and regular financing. 

But right now, when the inventory is super low, there are bidding wars. It is a frenzy to buy a home! To get the properties they want, they’re waiving appraisals, they are paying cash, buying over list price, and doing anything they can to scoop up properties. 

It’s doubtful we’re going to see total saturation from JWB in those neighborhoods where we are building and investing. In the current real estate market, Jacksonville is in excellent shape.

JWB investors know that we are conservative with our numbers, and the predictions of prices going up have been correct. Insanely low-interest rates help investors make more than 4.25% interest on an investment. That’s a huge generational wealth opportunity, coupled with the fact that home prices will rise over the next 12 months! 

More importantly, don’t look at investing in rental properties for the short term. If you buy and hold, you’ll not have to worry about how expensive your property is.

Why? Because you’ll still see higher appreciation, low-interest rates, rising home prices, more people are moving into Florida, plus positive cash flow on your rentals.  We speak so confidently because the numbers clearly show what’s going on.

What Does the Jacksonville Real Estate Market Cycle Look like over 20 Years?

On our live show, we showed you a chart displaying data over the last 20 years that shows a clear progression line of steady price appreciation (somewhere around 4%) over time in Jacksonville. In the mid-2010s, Jacksonville’s price appreciation was below this line and would eventually come up to meet it.  As the chart below shows, the price appreciation over the past few years has now shot significantly past this line in the Jacksonville market.

Buy and Hold in Booming Real Estate Markets.

Even when home prices go up or down, you want to buy and hold as an investor. That’s the way to win with your investments in rental properties. We are now meeting the end of the cycle in real estate in 2021. We’ve seen it all ring true.

One can conclude that after a stress test, we’re still hitting our trend line. What will happen over the next real estate cycle? It will be roughly the same answers as long as you buy and hold long enough. When you look over 15 – 20 year segments, you’ll see JWB go above that line and excellent performance. 

Are We Headed for Another Housing Market Bubble like the Great Recession?

It is doubtful we’ll see depreciation and lower prices anytime soon. It looks excellent that prices will continue to rise over the next market cycle.

We’re at the trend line, and we may go above it or below it, but it’s not normal to have a crash. Micro swings that go up and down are normal. Slowly but surely, you’ll see about 4% appreciation with fewer extreme swings than during the Great Recession. 

At JWB, we watch the numbers closely. If we are seeing another Great Recession coming, we will share that with you. JWB does not think prices will drop for a while. 

A complete market cycle is 10-, 15-, 20- years to see the historical norm. If you have a massive outlier like the Great Recession and held your property for a shorter time, you will not see the average numbers. We imagine, over the next 3-4 years, you will still see 4% appreciation. 

Now is the time to get into the game, and you’ll find comfort in the investments. Rental properties are a superior asset class as long as you hold onto them long enough. The short term isn’t going to show you the same returns. The longer your timeframe, the more you can rely on the data trends. 

If House Prices Drop, What Will Happen to Cash Flow?

Let’s Take a Look at the Worst-case Scenario.

Gregg, Alex, and their JWB business partners lived through that worst-case scenario in 2006. They were young, less experienced, and didn’t have much money, but they bought 40 rentals. They learned how to use financing to their advantage. 

JWB bought at the top of the market in 2006. The market proceeded to drop, but all those people who experienced foreclosures had to rent; hence the rental market stayed strong.

Where Did Gregg Get His Financing for Those 40 Rentals Back in 2006?

Regular Fannie Mae and Freddie Mac loans at 7%, which Gregg thought was a deal back then.

What Happened to Gregg and Those Rental Properties?

Home prices and rental prices are not on the same wavelength. The only way Gregg was able to hold onto those expensive properties because the rents went up, and they continued to be cash-flow positive. 

In a worst-case scenario, you still have the positive cash flow for rents that pay for themselves every month. That mitigates your risk because the rentals pay for themselves, which is why JAX is such a great market to invest in. 

In Short, JWB Lived Through the Worst-case Scenario and Came out Ahead over the Long Term.

After all, the Jacksonville economy is diverse and sustainable. We have the Navy, health care, financial technology, and large corporations keeping our economy strong that keeps the risk low. The market crash didn’t affect JWB and our investors because the rentals provided positive cash flow, and collectively, we have never been negatively affected.

What Are the Key Takeaways from Today’s NYAI Show?

Bringing transparency to this NYAI show is what we’re all about and educating investors about these exciting times. Low-interest rates, low inventory, and no dropping of housing prices anytime soon all make things look great for this JAX real estate market. As foreclosures go up in the coming years, there is lots of room to absorb it, and we’ll still see housing marketing prices increase. 

We are looking good about optimistic predictions because the data is stronger today than six months to a year ago. We are in good shape when we invest in rental properties in JAX.

It will be fun to see over the next couple of years if our future predictions will come true. Now is the best time to invest in properties in JAX with JWB. If you want to see if turnkey rental property investment is good for you, contact JWB at https://www.jwbrealestatecapital.com/. We also invite you to join our Facebook community at https://www.facebook.com/groups/1018012175251099.

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Now that you’ve gotten an update on the current real estate market, you may have questions about how rental property can support you and your family. Schedule some time to chat with our team of experts about how we can build and implement your plan for acquiring rental properties, click here to set up a strategy session call.

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To Your Success,

Gregg Cohen