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- [00:01]
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McDonald's Promo Host
K Pop Demon Hunters, Saja Boy's breakfast meal and Hunt Tricks Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day.
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Paul Morris
It is an honor to share.
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McDonald's Promo Host
No, it's our honor.
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Paul Morris
It is our larger honor.
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McDonald's Promo Host
No, really stop. You can really feel the respect in this battle. Pick a meal to pick a side
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Paul Morris
and participate in McDonald's while supplies last welcome to the Paul Morris Podcast, hosted by Paul Mark Morris and formerly known as Radical Wealth Plan. Today I'm going to break my own rules because I've gotten the question from the audience. If you are a professional investor using professional criteria, what would you look at and where would you buy in 2026? So I have done that. I've taken the things, the 5, 4, 5, 6 things that professional investors look at to try and see where are we going to invest our money. And I've taken those factors, applied them across the United States and picked the top three cities. So in 2026 this is where professional investors would tell you to invest. And of course this is for informational purposes only. So do not rely on anything I say in this podcast to buy a particular property. If you've been listening to the Paul Morris Podcast, you you will know that I say so many times that the deal itself is so much more important than these other factors. And you can often find a deal close to home. But we're looking outside of the close to home because I get so many questions from online. Where would you invest? People love to ask that question, so I'm diving in to answer it. And you're going to be looking at things like affordability, jobs, also migration rates. Migration rates, of course, how many people are coming into a city versus leaving a city? Louisiana, Louisiana County, Louisiana City in particular is famous for these stats where people are just fleeing from Los Angeles. If you look at the stats and I'll talk a little later in the podcast, why I think that may not maybe that shouldn't scare away all investors, but those are the factors also, of course. What's the cap rate? Cap rate is a cash on cash return on your investments. We'll look also at climate and. And what are the regulations in a particular city in terms of, you know, are they. Are they overly tenant friendly, Are they overly landlord friendly? Is it somewhere in between? So it's using all of those factors that I examined very closely in order to come up with three cities. And those three cities are Knoxville, Tennessee, Tulsa, Oklahoma and Savannah, Georgia. Some very beautiful places to live. So when you look at migration, there are a few aggregators that show you where people are moving to, where they're moving from. Migration. Buddha is one of them. Also, some of the moving companies publish some data. U Haul publishes some data. There are various real estate sites that publish data. And so we're looking for migration patterns. And that is, where are Americans moving away from and where are they moving to? Okay, so I'll talk about the five top markets and why I selected them, and we'll go through the criteria as I talk about the markets. So let's talk about Knoxville, Tennessee. It is showing one of the largest migration rates in the United States for people coming in versus going out. Again, looking at these different signals, also, the average home price in Knoxville is still around $350,000. Let me tell you, you can buy nothing in Los Angeles for $350,000. So that's the good news. Um, and it's also showing a rental increase, steady rental increase, with really about $1,700 per month rent for the $350,000 house. The job market is more robust in Knoxville as compared to other places. That's another factor. And also, the regulations are such that it's still, you know, I don't want to say landlord friendly, but the regulations are not impacting landlords in a way that make it less attractive for people to go in and invest in Knoxville. So that's overall, why Knoxville? When you look at the statistics, just the statistics, you're looking at the number one market being Knoxville, where experts would tell you to invest. And that's based on those five factors also, you're going to be looking at somewhere between a 6 and 7% cap rate when you do that math, if you do that math in terms of looking at vacancy and also all the other costs associated with owning property. So that's going to give you a 6 to 7% cap rate. Again, very hard to find that right out of the box in more mature cities like Los Angeles or larger cities. So the smaller to midsize cities are providing that sort of opportunity. Okay. The next city is Tulsa, Oklahoma. And you're finding again, sort of a 5 to 7% cap rate on average. Again, pretty strong rents, 13 to 1400 dollars per month for a fairly low acquisition price in the mid 200. So it seems like a great starter market. Also, interestingly, and I think this goes to migration rates and job data and that is that, that I read some statistics that there are approximately seven people looking for, looking to rent a particular, each particular unit. So seven people per rental unit available. That is the sort of demand that is going to push pricing up. So again, this is why professional investors are looking at Tulsa, Oklahoma. Okay. And number three is Savannah, Georgia. So at least we're warming up. Nice coastal town. One of the things I like about Savannah, Georgia is it also has a very diversified group of people there. So there's diversified demand. That's great. All tied to one particular industry. Where you see some, like Detroit, tied to the auto industry, obviously had a huge downturn when the auto industry took a downturn. Savannah's got great diversification, it being a port city. There's logistics, there's military, there's tourism. So a really good mix of demand for housing. Again here your sort of average home price is in the low three hundreds. And in the low three hundreds it's going to produce a rent of, of about 18 to 1900 dollars a month would be pretty typical for something like that. You're also getting a great coastal town that's still quite a bit less expensive than most of the coastal towns in Florida. So, you know, professional investors definitely bullish on Savannah, Georgia. These are the things that are making sense. So you've got Knoxville, Tennessee, Tulsa, Oklahoma, Savannah, Georgia. This is where the professionals are putting their money in 2026. They meet the criteria that we're talk. And now back to the Paul Morris podcast. And that is that a place like Los Angeles where the migration patterns, if you're following migration patterns, they will tell you that people are fleeing Los Angeles. And I can tell you that it doesn't seem like it in my neighborhood. And it's not just because, oh, that's maybe an affluent neighborhood. The middle class neighborhoods are likewise filled. We don't see tons and tons of people moving out, that there's barren space in Los Angeles. And the other thing too is I haven't been able to track down a statistic, but let's just say you have a net loss of migration from Los Angeles. And it's probably in part due to affordability. So people fleeing Los Angeles because it's not as affordable and people are still coming to Los Angeles. I do believe that there could be a shift in affluence to match that increased cost of living. That maybe makes sense that even with a net loss, you're still a net loss of population. It still might make sense to invest in Los Angeles. Here's the thing I wouldn't tell listeners of this podcast rush to Los Angeles to invest. What I tell people on the podcast is to look very hard in your own backyard because you will be able to find deals. There are deals in every single market. Additionally, centering, when you talk about following demand and jobs and that sort of thing, it varies neighborhood to neighborhood. So the other place that I invest, I invest only where I know. So I really only have investments in Pittsburgh, which is where I grew up. Very, very, very different place than Los Angeles. And Pittsburgh being a Rust belt town. And there's a lot of demand left that just like a place like Detroit. And however, there are parts of town like near the major medical centers. University of Pittsburgh Medical center is not just serving Pittsburgh. It's a regional medical center. It's surrounded by universities and lots of hospitals. The areas right around that, that epicenter of schools and medical center and also financial center is right there. That's where there are lots of jobs. So the outskirts of Pittsburgh, definitely, definitely very tough and affected by migration and population loss and loss of jobs and demand. But right in the heart of town, you're still seeing it behave like a city that's very, very vibrant. So the neighborhoods make a big differ. When you look at these, at these sort of national statistics, it's not a great way to buy real estate. And when you're leaving your town. So when you look at the averages and what I did was I took Los Angeles and I ran it straight through the same criteria that I ran through in order to produce these three top cities to invest in in 2026. And running Los Angeles through those same measures, you know, migration, migration's bad. It's showing people are leaving Los Angeles. Affordability. Affordability is bad because the cost of living, cost of housing continues to go up. Rentals, yes, there's a lot of demand for rentals. And the flip side of that is these places tend to be very, very tenant friendly. So tenant friendly that lots of investors will not invest in Los Angeles because of things like rent stabilization, rent control. People just run from that. And again, when I do the Statistical analysis, I'm finding a cap rate of about 3% on average for Los Angeles. So now you're looking at very significant in terms of percentages. So when you're going from 3% to 5%, that is a 66% increase from 3 to 5% in terms of cap rate. So you're getting that reduction by coming to Los Angeles. It really looks like everything is stacked against. Now, even when I ran climate through, you would think that Los Angeles would win based on climate, and yet it does not win based on climate. The climate in Los Angeles is second to none. But included in that, in the climate metric that I was applying to these other cities are things like wildfires and mudslides and earthquakes, natural disasters that make real estate even more expensive or more risky because there are homes that the fire insurance and the fire zone. I live in a fire zone. The home insurance rates are astronomical. So further making this on paper, a terrible place to invest. So if you're listening to this podcast, you and you don't live in Los Angeles, I would not suggest running to Los Angeles to invest. And I will tell you that when I invest dollars in 2026, I personally will not be investing in the three cities that I mentioned. I will be investing in Los Angeles. And that is because when you really look and you examine deal by deal, all of the things that we've mentioned are averages. And averages are important, especially if you're signature homes or one of these massive REITs that, that have to buy a thousand doors or more, maybe 5,000 doors, they're going to buy in 2026, maybe 10,000 doors. Now you really have to look at averages. And it's, it's hard to, it's hard to get a great investment deal. If someone hired me said, you know, we want you to buy 5,000 doors, I have a very, very hard time doing that in Los Angeles. If you come to me and say, hey, we're going to buy 10 properties, we can do that in Los Angeles and we can absolutely beat a 3% cap rate. I wouldn't look at anything that didn't start out as well. If it's a value add, you could go into a value add that starts out at 3%, but you want to have a very quick turnaround. And really in the 6, 7, 8% cap rate. And that is not the sort of thing that you're going to find when you look at these statistics that are sort of overly broad. The particular deal and expertise outweigh the statistics every single time. So investing in 2026 I do believe is a great time to buy. You're going to see more and more properties. And coming off of this debt wall that I talked about, if you haven't listened before, what is the debt wall? And that is there is $1 trillion worth of debt that's going to mature in 2026. That's an average number. That's normal. However, 130 billion to 150 billion of that debt is totally upside down. And that is not average. And, and how that happens is we're now in an interest, interest rate environment of let' and people that bought five years ago, six years ago, when this debt is maturing because oftentimes the multifamily sector is really done on a 5 or 10 year, it's on a 30 year amortization, but it's on a 5 to 10 year rate. Lock those rates they were buying, they made sense at 3% interest rates. And now in 2026, a lot of that debt is maturing. That's the debt wall. That's 130 to 150 billion dol worth of debt that is totally upside down. Those folks are going to have to sell. They're not able to refinance in a new loan or keep the loan that they have that adjusts from 3% to say five and a half or 6%. It will totally wipe out their profits and turn that particular project upside down. You're going to see a lot more distressed assets coming on the market. I'm seeing that. And so the point is it is the particular deal more than the place that makes the difference. And you can win in your own market by using the principles that I talk about and that is find value add. You are essentially looking for a house that is the, you know, the cliche is the worst house in the best neighborhood. That's not going to work in la because what you're talking about is let's go and buy the worst house in Beverly Hills. That, that could work. It's probably not, not where I'm going to look, but it would be sort of an emerging neighborhood where a more affordable neighborhood. For example, North Hollywood, you know, used to be a lot more gritty than it is now. It's starting to turn around. And if you buy something that needs work in North Hollywood, you can, you can buy something, fix it up, reposition it and you really can, you really can get, you know, 7, 8% cap rate once it's repositioned. So my advice always is look in your own market. Being an Absentee landlord trying to control a property across the country. Pretty much a recipe for disaster. I haven't seen that work out well in the long run for lots of people. Study your own market, look at deals in your own market and apply the principles that work in your own market and you'll end up with great investment opportunities in 2026. You know, so what is it with this advice? You know, the advice that I was asked to give and you know, I tried my best and I backed off of it. That's the advice that you get on podcasts, but it's not the advice that you're going to get on my podcast because the national markets and the headlines don't make sense as much as the study that it takes to find a great deal. And I, I would go and find a realtor in your area that specializes in investment grade properties. You don't want the busiest person. You also don't want someone that doesn't have a lot of experience representing investors and approach that person and, and see what kind of deals they're finding for their clients and then become a very easy client for them to sell the deal to. And one of the ways to become an easy client is make sure you have your financing in, in line and be ready to go study the market, be ready to say yes when that great deal comes up and you will win in your market. Thank you again for watching or listening to the Paul Morris Podcast. We really appreciate it, would love for you to subscribe. If you've loved the episode, give us a five star review and happy to take comments, especially on YouTube and answer questions. That's where I got this question from viewers that we're very interested in. They're reading the headlines, they're listening to other gurus and they're like, hey, where should we invest? You know my answer, Invest where you know. But I did my best and I'm, I tried, but I'm still coming home. So looking forward to seeing you on the next episode of the Paul Morris podcast.
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