Month: August 2022

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Blogs Real Estate

How The Unemployment Rates Impact The Looming Recession

In the face of higher interest rates and rampant inflation, the jobs market is somehow still going strong. For instance, the economy added an estimated 390,000 jobs in May 2022 and 528,000 in July.

Many businesses have “hiring” signs up, proving that although the current global economic crisis is slowing down the U.S. economy, we are not quite in a recession yet. So, here’s a look at how a recession affects unemployment rates.

Unemployment Rate Measures

To better understand the job market and unemployment rates, it’s essential to know the different categories of ‘unemployed.’ To calculate the unemployment rate, the U.S. Bureau of Labor Statistics (BLS) uses six measurements ranging from U1 to U6.

  • U1 refers to the percentage of people who’ve been unemployed for more than 15 weeks.
  • U2 is the percentage of people who have lost their jobs or finished temporary work.
  • U3 is the official unemployment rate for people without jobs who actively sought work within the past four weeks.
  • U4 encompasses U3 individuals plus those who are discouraged. They stopped looking for work because they believed that current economic conditions were unfavorable.
  • These include individuals described in U4 in addition to marginally attached workers. U5 also includes individuals who would like to work but haven’t looked for work recently.
  • These include people described in U5 plus part-time workers who want to work full-time but economic conditions do not allow it.

The different measures of unemployment can be better understood using the table below.

U3 is the most commonly reported of the six measurements, with U6 being a better depiction of the current unemployment rate. Despite the BLS focusing on U3 as the official unemployment rate, many economists feel U6 is more meaningful because it factors in a more significant percentage of unemployed people.

The current rate for U3 is 3.6%. However, this only takes into account unemployed people actively looking for work. So, if unemployed people stop looking for a job, they no longer form a part of the U3.

This “discouraged” person decreases the unemployment rate since they no longer count as unemployed. What this leads to is a false rate of unemployment.

The U6 unemployment rate as of June 2022 stands at 6.7%. One of the best indicators of the employment market is the temporary help penetration rate. June saw an increase in the temp help employment rate to 2.07% of the total labor market, and the trend is likely to continue.

Another issue affecting employment is the number of workers re-entering the job market as there is increased selectivity in looking for new opportunities.

Typically, one of the indicators of a looming recession is high unemployment. Indeed, apart from scrutinizing factors such as income, manufacturing activity, output, and business sales, the National Bureau of Economic Research (NBER) also factors in the employment levels.

While the GDP has contracted two consecutive quarters, a traditional indicator of a recession, the strong employment market is a real head-scratcher. Staffing companies report finding it difficult to fill the number of open jobs available.

But the NBER is on to something because the common denominator in all recessions seems to be jobs. Take 1960, for example. Household incomes rose if you adjusted them for inflation, but that was a recession. In 2001, the GDP didn’t contract for two consecutive quarters, yet the NBER called it a recession.

Through all the recessions, be it the 1960 or 2020 recession, the unemployment rate always stood higher than 6.1%. With the current figure of 3.6%, it’s perhaps easy to see why the NBER is slow to call this a recession.

Besides, payrolls keep expanding, hitting 1.6% between December 2021 and May 2022. Labor is scarce, with the BLS reporting more than 10.7 million job openings as of June 2022. Those are hardly the signs of recession.

Or maybe the job market is slow to react to the downturn. After all, sales and manufacturing have weakened. Whatever the case, recession or not, it’s a long shot to expect unemployment to rise to the ‘normal’ levels witnessed during a typical recession.

With that, some experts expect a shallow recession, and the jobs market will help cushion against severe dips. That employment growth should also assist in productivity. Most corporates also raked in exceptional profits, which should cushion them further.

President Biden lamented that oil and gas companies made profits at the expense of consumers. He famously quipped that “Exxon made more money than God” after the company posted a first-quarter profit of more than $5.48 billion.

Strong Job Seeker’s Market

Despite fears of a looming recession, the current job market favors job seekers. Job openings are high, while layoffs are extremely low. Daniel Zhao, a senior economist at Glassdoor, agrees that this doesn’t look like a job market headed into a recession, as labor demand is still red-hot.

The uptick in hiring works out for the Federal Reserve’s plan to slow the rising inflation rate. In May, the Federal Reserve increased interest rates by 50 basis points; a move meant to slow down consumer demand without tipping the economy into a recession.

Despite higher interest rates and inflation, the labor market continued going strong in May. A LinkedIn survey showed that hiring went up by 9.8% in May 2022, a figure 10% higher than pre-COVID. Industries with the most significant increase in hiring include accommodation, healthcare, and construction.

Final Word – Recession Threats Have Little Impact On Employment

Despite fears of a recession, the job market is not showing any signs of slowing down. This will continue to positively impact the unemployment rate as job openings remain high and employees continue to select the jobs they want.

A critical element that is often overlooked is not just simply the overall employment rate, the quantity of jobs; but the income associated with the job, the quality of the job.  Despite returning overall employment to pre-pandemic levels, global wage growth has not kept pace with real inflation, and actual productivity has fallen off of a cliff.

At a macro level, I suspect we are in deep trouble.

www.redpillkapital.com

If you simply need more information. have questions, or want to discuss a specific deal, I’m always excited to help. Reach out to me at info@redpillkapital.com

If you are ready to start your journey to financial freedom but want specific additional educational materials, we have a course designed for physicians.

Categories
Blogs Real Estate

How Successful Companies Handle Crises

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Handling Crises 危機 (“Kiki”)

危機 (“Kiki”) is the Japanese word for crisis, it is composed of two letters:

(危) means “dangerous”

(機) means “opportunity”

Combined, crises are both an opportunity and a threat.

 

No matter your company’s age, size, or legacy, it is vulnerable to a crisis. Recently, some of the world’s most prominent brands have come under fire from the media. Like when Uber lost 200,000 customers after the hashtag #DeleteUber trended when they operated during the Trump strike. Or when United Airlines lost $800 million in value in a matter of hours.

A 2021 PWC study showed that 35% of respondents had a crisis plan in place when the COVID-19 pandemic hit, and only 20% felt the pandemic positively impacted their organizations. Seeing the consequences Uber and United Airlines faced, companies must have a crisis management strategy.

Crisis Management For Real Estate Companies

The pandemic brought unprecedented challenges to businesses, not just the real estate market. Statistics showed that nearly 100,000 businesses closed shop permanently. That forced many companies to reevaluate their crisis management strategies.

Many developers experienced stoppages and delays in their real estate projects, requiring companies to think outside the box to create safe and smart solutions.

Many companies tend to be reactive instead of proactive regarding crisis management, but lacking a crisis strategy may lead to the following issues:

● No designated spokesperson to coordinate communications can lead to a communications breakdown.

● A lack of clear messaging to stakeholders to address the situation can make them confused, scared, and angry, which is bad for business.

● Outsiders looking in will place your company on the list of companies facing a PR disaster in that year.

● Solving the crisis will take far longer, so you may hit some snags.

● If you do not take control of the situation, the company will face negative financial ramifications.

Crisis Management Examples

1. Cracker Barrel

In 2017, Bradley Reid posted on the restaurant’s corporate page, asking why they fired his wife, Nanette, after working at the restaurant for 11 years. Soon enough, the hashtag #JusticeforBradsWife began trending online. Shortly afterwards, someone started an online petition at Change.org, seeking answers. 17,000 went ahead to sign it.

The response the restaurant gave to the crisis was silence. They ignored the hashtags, petitions, and firestorm surrounding the situation. Cracker Barrel did run through the crisis without so much as a tumble in its net worth.

The key takeaway from this is that sometimes silence works best. It is a risky choice, but like Cracker Barrel, it may turn out well. A new video trends every other day, and people are quick to forget and move on. This strategy may just work out if keyboard warriors find something else to focus on.

2. Johnson & Johnson

In 1982, Johnson & Johnson faced a crisis where 7 people in Chicago died after ingesting over-the-counter Tylenol capsules laced with cyanide. To date, the incident remains unsolved. How the company handled the crisis is a textbook example of crisis management today.
Following the deaths, Johnson & Johnson immediately responded by stopping advertising for all its products. The company then sent out 450,000 messages to healthcare facilities and stakeholders, informing them of the crisis. Johnson & Johnson also sent out safety warnings to consumers.

Evidence later showed that the substance was accidentally introduced through store shelves and that it was not the company’s fault. However, the company still took full responsibility. This incident led to the company eventually manufacturing tamper-proof packaging.
Experts roundly regard the response as one of the best in the history of crisis management. The media praised how J&J handled the situation and how it also helped Tylenol recover as a brand. The key takeaway is that integrity and transparency go a long way towards building consumer and public trust again.

Crisis Management Planning Tips

Having looked at how some companies managed their crises using essential principles, below are a few steps to create a successful crisis management plan.

1. Anticipate Crises

Instead of waiting to scramble a team and a plan together after a crisis, plan ahead for the worst-case scenarios. During brainstorming sessions with the team you put together, quickly determine which situations are preventable. You can include variables in the plan that allow tweaking in response to a real crisis.

2. Create A Crisis Team

By default, the crisis team should include the management team, the CEO, and the PR manager. If possible, have web and social media managers on the team. Social media managers are on the frontline and can detect the public’s consensus and mood.

They can also gather insight from online mentions, hashtags, or posts that the company can use to steer the crisis on the right track.
Next, you want to choose the right spokesperson in place—one who is comfortable in front of cameras and people. If possible, the spokesperson you select should have some media training.

3. Know Your Stakeholders

The internal and external stakeholders are the first people you should communicate with. Develop communication channels that will resonate with stakeholders individually.

4. Develop Holding Statements

With the proactive planning in place, you should already have pre-planned holding statements ready to release inside the company’s online newsroom. The main aim of a holding statement is not to plead for forgiveness or grovel; the idea is to acknowledge the situation and provide contact information that the public can use.

5. Post-Crisis Review

As insignificant as it may seem, this is a step that major companies focus on that helps evaluate and update the crisis management process. Develop, assess, and discuss strategies to update potential scenarios that may happen.

This is a crucial process as you now have data and facts regarding how the company reacted to the crisis, the public’s response, and stakeholders’ reaction to the situation. You can use the information to ensure the company creates an even better crisis response.

In Conclusion

Any company can implement the same strategies big companies use for their crisis management. Combine the swift and transparent response that Johnson & Johnson used, with the crisis plan outlined above, to ensure your company stays ahead in any crisis it may face.

I personally look forward to times of crises, it dramatically improves my returns and allows me an opportunity to test myself against unknowns. The most important thing that crises brings to the forefront are my inherent weaknesses in my structures, it allows me an opportunity to prune dead wood and recharacterize / recast the future. Look to crises as an opportunity, not a threat.

www.redpillkapital.com

If you simply need more information. have questions, or want to discuss a specific deal, I’m always excited to help. Reach out to me at info@redpillkapital.com

If you are ready to start your journey to financial freedom but want specific additional educational materials, we have a course designed for physicians.

Categories
Blogs Real Estate

How The COVID Recession Shaped Real Estate

Failure to contain COVID-19 led to a global pandemic in 2020. To curb the spread of the disease, governments worldwide imposed lockdowns and stay-at-home orders.

In the following months, vacant office buildings, dead silent bars and restaurants, and empty shopping malls became symbolic of the limited interactions and social distancing.

Consequently, that led to a global economic crisis, with real estate one of the worst hit industries. In 2020, home listings dropped by 40%, while places like New York witnessed a 58% drop in pending home sales.

In 2021 however, housing prices rose, reaching 19.3% in July. That kept rising until the median home prices hit an all-time high of $405,000 in March 2022. So, here’s a look at how the COVID-19 pandemic shaped the real estate industry.

Home Prices Continue To Climb
Projections of the US home prices expect it to climb by up to 16% over the next year. Homes are nearing half a million dollars, and buyers are pulling out of the market. By the end of June 2022, mortgage applications dropped to the lowest level in 22 years.

The housing market change depends on the economy and consumer habits. There are currently signs of a weakening economy, as the country’s GDP has declined for the past two quarters. Economists suggest that the lower GPD is a sign of a looming recession.

The Mortgage Bankers Association (MBA) suggests a 50% chance of the U.S economy tipping into a recession within the next 12 months. On the flip side, consumer spending and the job market are still strong, muddying the projections of an incoming recession. All these factors contribute to higher home prices.

Higher Investor Interest
Real estate is one of the biggest targets for investors in private wealth, private equity, and institutional investors. Investors are looking to add hard assets to their post-pandemic portfolio.

According to Preqin, fewer than 500 institutional investors account for 84% of all real estate investments. That presents a problem because they can withstand the shocks of a downturn in the economy and keep prices stable, even in their currently inflated state.

There is a lot of competition in prime assets in segments like multifamily, commercial real estate, data centers, and logistics. The low supply of new buildings in specific markets due to the pandemic’s impact on construction exacerbates the situation.

However, interest in the real estate market has diminished thanks to measures to curb rising inflation. The Federal Reserve announced an increase in its key interest rates by 0.75% in July 2022, affecting investors’ ability to get a loan.

Navigating Increasing Uncertainty
Real Estate Private Equity (REPE) funds and Private Equity (P.E.) firms are in a better position to invest in real estate assets. These firms purchase and develop properties and later sell them for profit. This comes in handy post-Covid-19, where many real estate assets need repurposing and redevelopment.

Given that there was no extensive prior data regarding the impact of a global pandemic on real estate, it is challenging to determine core business aspects of investment targets. Data-driven investment analysis is necessary for optimal business during uncertain times.

Investors must also have access to informed guidance and marketplace insight. Because Covid-19’s effects varied across countries and regions, having insights into local markets is increasingly important.

For example, areas like updating tenant risk profiles and recalculating future rental cash flows are on the to-do lists of investors and construction companies. Investors will include risk mitigation strategies as a part of their deals when expanding their real estate portfolio.

Growth In Flexible, Hybrid Workspaces
Stay-at-home mandates forced many companies to allow employees to work from home instead of the office, leading to empty office spaces.
This did not mean farewell to office spaces, as post-pandemic workers slowly trickled back into the office. The future of work looks like a combination of working from home and in-office, that is, a hybrid workspace.

A study carried out by Building Owners and Managers Association International (BOMA) found that 37% of office tenants expect to rent less office space in the future. Real estate companies and investors are looking to repurpose existing office space and improve building layouts to accommodate collaboration spaces.

The risk that investors and real estate companies face is the possibility of asset obsolescence. If real estate needs continue to change, the concern is whether certain assets may lose value.

That leads to increased flexibility in newer constructions to counter concerns of obsolete spaces. Real estate companies must ensure that spaces are adaptable, allowing for change whenever the need arises.

Increased Interest In Technology
There is increased investor interest in the technology used in real estate, construction, building interactions, and property management.
For instance, there’s an increased demand for buildings with intelligent air quality monitoring and touchless technology. Such buildings fetch premium rates from both tenants and investors.
Data analytics is impacting the maintenance and monitoring of buildings. Improved construction software systems are simplifying and streamlining building processes like:

● Inventory management
● Project and contract management and documentation
● Budget control
● Regulatory compliance
● Performance data tracking

For investors, keeping track of emerging possibilities spearheaded by technological advancements, and looking at which companies are making use of them, makes it easy to decide which investments to target and pursue.

ESG And Sustainability
Environmental, social, and governance (ESG) and sustainability are increasing attractiveness and earning potential for buildings and real estate in the blueprints stage. Investors and tenants alike value climate adaptation, energy efficiency, and construction carbon emissions.
The pandemic further pushed the importance of ESG and sustainability that can help create market traction during uncertain times. Real estate construction is shifting towards net-zero emissions, which helps contribute to a building’s attractiveness.

For example, if a building can be self-sufficient by processing its wastewater or generating its power, it can significantly increase its earning potential. These are a few examples of how construction is turning to ESG and will continue to do so in future.

In Closing – What To Expect
The real estate market is changing, with upcoming trends like hybrid workspaces and touchless technology forming core aspects. Investors looking to boost their portfolio will do well to focus on multifamily housing and flexible alternative spacing.

Categories
Blogs Real Estate

How To Make Use Of Real Estate-Friendly CRM

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As your real estate business grows, relying on a bare-bones spreadsheet to record business dealings won’t cut it anymore. While spreadsheets might barely get the job done, they don’t have the capabilities to help you track hundreds or thousands of clients, prospects, and listings. That’s why 91% of firms with more than 11 workers use CRM software.

Real estate-friendly CRM can help you improve customer care, lead conversion, and sales. Hardly surprising, considering 74% of companies said utilizing their CRM improved access to customer data. The key takeaway here is to make correct use of real estate CRM. How do you do that? That’s what we’re here to find out, so keep reading.

Top 8 Effective Usage Of Real Estate CRM

1. Track Clients

With a CRM, you can organize your client data and all relevant information about each customer in one place. It makes it easier to find their information at any time, including phone numbers or email addresses. That allows you to gain a 360-degree overview of every customer.

By tracking customers, you can gain more leads as tracking assists in identifying trends, planning for future listings or purchases, and identifying potential customers.

CRM software is particularly effective at this, helping track a target audience’s journey across devices and platforms, highlighting their interactions and purchases. That will help you pinpoint what works and what doesn’t so you can target your marketing effort more precisely.

It is the key to understanding and capturing valuable data about a customer, so you can better understand the customer and create a better customer experience.

2. Remind Prospects Without Hassle

The best CRM software will allow you to remind prospects without difficulty. All you have to do is select a batch of specific customers and send a particular message relevant to them with the click of a button.

It means you can send out helpful information and updates about your services or properties without spending hours on the phone or computer.

3. Economical Means Of Marketing

Real estate CRM allows you to target specific groups of people with customized messages based on their demographics, interests, and past purchases.

It means your target audience is more likely to click on your online ads as they are more relevant than the generic ones they would typically see from other real estate agents.

Such targeted ads mean you would only advertise on fewer websites and fewer times. That will bring down your advertising costs and land you more leads than generalized ads.

4. Schedule Appointments Effectively

Real estate CRMs can help automate the process of scheduling client appointments. You can set up an automated calendar so that when you have a new client, the CRM will automatically schedule an appointment.

You won’t have to worry about forgetting to schedule an appointment or double-booking. And if there’s ever any confusion about where a client needs to go or what they need to bring with them, the system will remind you.

5. Sealing Deals

A CRM helps you seal deals faster and easier. With a CRM, you have a centralized platform to keep track of all the essential information about your clients — their likes, dislikes, hobbies, birthdays, and children’s names.

That makes it easy to tailor your pitch when you meet them again for the next deal.

6. Enhance Customer Retention

Real estate CRMs improve retention by helping agents stay in touch with clients after closing a sale or purchase. The system lets you track previous customers’ complaints and suggestions. These will help you improve service delivery, hence keeping customers.

The automated emails feature also allows agents to send personalized messages at specific intervals, such as after each showing or when someone visits a new listing on their website. It helps maintain a consistent connection between agent and client over time.

7. Centralized Platform For Data Storage

Real estate CRM software provides a centralized platform where you can store all your data. It means you can view, analyze and manage all your clients and properties in one place, which saves you time and money.

You can access your information from any device with an internet connection, so there’s no need to carry binders or folders full of paper records.

8. Improves Productivity

Real Estate CRM helps agents increase productivity by automating repetitive tasks like follow-up calls and emails, scheduling appointments, and generating reports on time spent working with each client.

It allows agents to spend more time on high-value activities such as prospecting for new business or finding ways to improve their processes.

Real Estate-Friendly CRM Software

Some of the top CRM tools available include:

I) Podio

Podio is a top recommendation for anyone looking for a basic CRM solution. It has all the essential functionality you need: contact management, scheduling calendars, email campaigns, and drip marketing tools.

Ii) InvestorFUSE

InvestorFUSE is among the best CRM software on the market today. It has an intuitive and easy-to-use interface for efficient and effective team supervision—a smart choice for anyone who needs to manage their contacts and leads.

Iii) FreedomSoft

FreedomSoft allows users to create relationships with their customers based on how they communicate with each other—via email, phone calls, or social media. The CRM also offers advanced analytics and data mining to see what customers say about your brand online.

Iv) REI BlackBook

REI BlackBook integrates seamlessly with other apps like Google Analytics so that you can keep track of all your customer information in one place.

Final Thought

CRM software is essential for any real estate company looking to provide the best customer experience possible. As you know, the real estate industry is constantly changing, and the best way to stay competitive is to keep up with these changes.

CRM software allows you to provide a central location where you can store and access customer data anytime. It means you’ll never have to worry about losing track of important information about your clients or forgetting their needs as they change over time.

CRM software also helps you streamline your business processes, so you spend less time on manual tasks and more time doing what matters most: assisting customers in finding their perfect home.

Interested in exploring Real Estate Opportunities? Get in touch with us.

www.redpillkapital.com

If you simply need more information. have questions, or want to discuss a specific deal, I’m always excited to help. Reach out to me at info@redpillkapital.com

If you are ready to start your journey to financial freedom but want specific additional educational materials, we have a course designed for physicians.