If you follow economic news at all, you’ve taken note of the changing conditions of the American housing economy in the last few years. First, high demand, low supply, and cheap debt fueled an extraordinary (and unhealthy) price surge. In response, the Federal Reserve ratcheted up interest rates to cool an overheated economy in the wake of pandemic-related disruptions
In years prior, economic conditions supported a vast proliferation of real estate investment. Individual investors to multinational corporations scooped up properties across the country for cheap. The returns were fantastic. But in my mind, those days were decidedly over.
When my guest today, Michael Farnsworth, discussed his novel concept of real estate investment, I was all ears. Do many of the real estate investment rules-of-thumb still function in a world of 7%+ mortgage rates and all-time high prices? Is now really the time to start a real estate investment portfolio? Is this even the time to buy a personal residence? And when it comes to short-term rentals, what are the ethical considerations for local economies and community fabric? We cover all this and more in today’s episode.
Topics Discussed with Michael Farnsworth
- The “Triangle of Death:” Michael’s unique form of House Hacking
- 2024 climbing goals: 100th first-try 5.12 and V10
- Stock market vs real estate investing
- Michael’s struggle with remote work and feeling grounded
- The characteristics of a real estate investor
- The viability of real estate investing in a high-interest and low-supply (e.g., expensive) market
- Michael’s ongoing landlord nightmare scenario
- Decision to leave his traditional career to pursue property management full-time
- Intellectual stimulation without a traditional job
- Financial metrics and characteristics of the ideal rental property
- Understanding costs and the importance of detailed accounting
- When and how much to raise rents
- Nontraditional means of mortgage funding
- Considerations on property managers
- Ethical considerations of short-term rentals (Airbnb, etc)
- Michael’s ideal lifestyle
- Suffering from lupus and two kidney transplants
- So much more!
Get in Touch with Michael Farnsworth
Michael Farnsworth on Instagram
Relevant Interviews, Articles, and Publications
EP 25: Erich Purpur: What is the “Good Life?”
EP 81: QA12: Will A Life Of Financial Independence Meet Expectations?
Community Consequences of Airbnb (Allyson E. Gold, Washington Law Review)
A list of all Clipping Chains real estate articles and interviews is here.
Real Estate Resources
Rentometer (House and Apartment Rent Comps)
Airdna (Short-term rental economics)
Pricelabs (dynamic pricing software)
Hostaway (Short-term rental channel manager)
Books and Podcasts
The Book on Rental Property Investing: How to Create Wealth With Intelligent Buy and Hold Real Estate Investing (Brandon Turner)
What Every Real Estate Investor Needs to Know About Cash Flow… And 36 Other Key Financial Measures (Frank Gallinelli)
Minds, brains, and programs (John Searle)
Making Sense Podcast with Sam Harris
The Prince of Tides (Pat Conroy)
Ministry for the Future (Kim Stanley Robinson)
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