each week via listings and how many building permits are approved. The latter will reveal how much new construction is coming online to add to the supply. For demand, you can ask your realtor for data on how fast those listings are going under contract. Your realtor may also have access to how many offers, on average, the listings receive. One data point that captures both demand and supply is the Months Supply of Inventory (MSI), which is calculated by dividing the current months’ inventory by a rolling 12-month calculation of pending sales. MSI seeks to determine how many months it will take the market (in its current condition) to absorb all the active inventory. So, we’re easily able to see if the market is favoring buyers or sellers. Generally, a balanced market ranges somewhere between a four- and six-month supply. If MSI shows fewer than four months, the market favors sellers; if it’s above six months, buyers have the advantage. In Florida, MSI is 2.1, indicating there is only 2.1 months’ worth of inventory on the market. This means that it’s not likely for pricing to come down because sellers have more of the negotiation power. PLAN After we‘ve observed and gathered all the facts, we consider how the situations they represent impact us today and how they may impact us in the future. Based on that conclusion, we can create a plan of action. For example, one thing people are worried about right now is what will happen if real estate prices decrease. The wonderful thing about real estate as an investment asset class is that we have four ways we make money on

Keep a healthy amount of cash reserves as a safety net in case anything happens as well.

investments versus other assets classes where there is usually only one way to make money. In real estate, we have: CASHFLOW: in other words, we get recurring income. APPRECIATION: meaning the price of real estate can increase over time. LOAN PAYDOWN: as our tenants pay down our loan each month, our equity increases. TAX BENEFITS: The government gives us an incentive to provide housing in the form of depreciation tax benefits. With stocks, on the other hand, most of the time there is only appreciation and sometimes there is cashflow in the form of dividends. Because we don’t rely on just appreciation in real estate, even if the price of real estate goes down, there are still three ways to make money on investments: cashflow, loan paydown, and tax benefits. These three allow us to continue to pay the bills and ride out whatever “crash” there may be. If we plan to mainly invest for cashflow, loan paydown, and tax benefits—and leave appreciation as icing on the cake—we can remain calm and keep investing.

ACT AND ADJUST Another important thing that

changed recently is the interest rate. In January, an investor could get an investment loan in the 4% range, now we’re in the 5-6%+ range. But, we can plan to analyze our deals with the higher interest rates, and just offer what makes sense and where we are still happy with the cashflow we receive. We know inflation is high, and if we don’t invest, our money is guaranteed to lose 8% or more or purchasing power a year right now. By adjusting and acting, we can keep investing. Even with higher rates, we are still in control of our investment decisions. •

Arianne Lemire, former speech language pathologist turned real estate investor, was able to retire with real estate as a passive income by the age of

27. She now co-owns more than 2,400 multifamily rental units in the Southeast with partner investors. Lemire is a big foodie, travels several months a year, and is passionate about sharing financial freedom strategies with others. She helps busy professionals retire in 1-3 years through wealth consulting and real estate investing partnerships. You can reach her at, www., or

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