The company led by former Goldman Sachs partner Don Mullen also said in a statement that it has now invested a total of more than $2.5 billion in purpose-built rental homes. The investment has resulted in 7,500 new built-to-rent homes acquired across 37 cities and 11 states.
“Decades of under-building and under-investment have led to today’s shortage of viable housing in the United States. That deficit can only be fixed with new capital invested to create new housing supply,” Josh Pristaw, Pretium’s head of real estate, said in a statement. “We are proud to be in a position to create necessary new housing throughout the United States and eager to continue investing in new homes to expand housing choice and supply over the next decade.”
Since borrowing costs surged in 2022, investors have developed other ways to buy homes, including directly from builders. In January, Blackstone announced plans to buy Tricon Residential, which owns more than 37,000 U.S. rental homes.
In June 2023, Pretium also acquired thousands of homes in a $1.5 billion deal with D.R. Horton, one of the nation’s largest builders.
Investors and second homebuyers should have these four international property markets on their radar at the start of 2024. These markets have been home runs for capital gains while also earning decent rental investment income.
They’re the top performers in a study produced by my team at Global Property Advisor. Using price per square foot (based on the average cost of a two-bedroom, two-bathroom apartment with an ocean view in each place), the team has monitored price performance, demand, and momentum in 28 property markets around the globe.
Let’s take a closer look at the top four performers, where momentum is strong but there’s still room to grow.
#4 – Puerto Vallarta, Mexico
- Cost per square foot: $532
- Three-year price change: 66.2% increase
Puerto Vallarta has been a top resort market since 1963, when Richard Burton, Ava Gardner, and Tennessee Williams put it on the map during the filming of “The Night of the Iguana.”
It commands a strong per-square-foot price because it’s a branded city. In other words, it’s synonymous with the beach, natural beauty, and fun in the sun. That public image makes it an easy place for property investors to rent or resell.
Three other factors combine to keep investors in Puerto Vallarta’s property market for the long haul. First, most homes offer ocean and sunset views because of the elevation that rises as you go inland from the beaches.
Second, Puerto Vallarta is simple to reach from the United States and Canada with dozens of direct flights, and third, it offers a wealth of residential options, including neighborhoods of different characters with solid infrastructure.
#3 – Providenciales, Turks And Caicos
- Cost per square foot: $1,056
- Three-year price change: 77.1% increase
Providenciales is an upscale market with one of the highest costs of entry in the world at $1,056 per square foot. Nonetheless, it offers strong total returns, placing it among the top performers in Global Property Advisor’s study.
Stunning natural beauty provides Providenciales’s market appeal. This is the Caribbean at its best, with white-sand beaches, electric blue waters, and spectacular coral reefs. Onshore, there are luxury resorts, fine dining, and other high-end amenities.
Because of its small population of about 25,000 people, Providenciales has a more refined, relaxed feel than bustling resorts like Puerto Vallarta. Best of all, it’s easy to reach from the United States and Canada, at about a two-hour flight from Miami.
Turks and Caicos also offers a favorable tax picture, with no income tax, capital gains tax, inheritance/estate tax, or sales tax. The capital gains or income that you make here will be yours to keep, making this an attractive market for property investors.
#2 – Mazatlán, Mexico
- Cost per square foot: $295
- Three-year price change: 77.3% increase
Mazatlán is just 200 miles north of famous Puerto Vallarta, yet it has long been overlooked by investors and property homebuyers.
This is changing, however. More people have taken notice of Mazatlán’s long, sandy beaches, lined by one of the longest boardwalks in the world, its sprawling historic center, and its wide variety of entertainment options, from restaurants and shopping to theater and live music.
Plus, a new highway that connects Mazatlán to big cities in Mexico’s interior (like Durango, Torreón, and Monterrey) was recently completed, which opened it up to new tourist markets.
Global Property Advisor has watched Mazatlán’s property prices rise alongside its popularity. Specific projects recommended through this advisory service have seen as much as an 118% appreciation since 2020.
Inventory is currently low in Mazatlán, but there’s room for investment growth, with more than a dozen condo projects underway on the waterfront.
#1 – Iskele Long Beach, Northern Cyprus
- Cost per square foot: $241
- Three-year price change: 100% increase
With a 100% increase in average property costs over the past three years, Iskele Long Beach stands out among the 28 property markets surveyed by Global Property Advisor.
Found in the eastern part of Northern Cyprus (a region and de facto state of the Republic of Cyprus), Iskele boasts a 1.5-mile beach. It’s bathed in sunshine year-round and lapped by the balmy waters of the Mediterranean Sea.
On top of a beautiful beach, Iskele is close to charming small towns like Bafra and Bogaz, and it commands strong tourism numbers with its restaurants, clubs, and casinos. It’s a safe, low-crime environment with a low cost of living.
When Global Property Advisor first recommended this market, it was possible to buy new beach condos for less than $60,000. Despite the 100% price jump, property still remains amazingly affordable—especially in comparison to other Mediterranean resorts.
Property trades in British pounds in this market, which, with the U.S. dollar’s strength against the pound, enhances the bargain for dollar holders.
At $241 per square foot, the average property investor can still reasonably afford a foothold in Iskele Long Beach. It’s only a matter of time, however, until prices in this market outlier rise to meet the approximate level of prices in its Mediterranean peers.
”There are known knowns; there are things we know that we know.
”There are known unknowns; that is to say, there are things that we now know we don’t know.
”But there are also unknown unknowns – there are things we do not know we don’t know.”
Try pulling that pithy rhetoric out at a cocktail party!
While these three sentences are a hot mess, there are some surprising parallels that can be drawn between this phrasing and the Australian property as we head into 2024.
Real estate markets across the nation are being “taffy pulled” in many directions by multiple drivers. It is perhaps one of the most divergent periods we’ve seen in the sector in recent memory. Rising interest rates, tighter lending restrictions, anti-investor legislations and tax changes, increased inflation and cost of living all dragging the market down. But driving values higher has been record immigration, strong buyer demand for quality assets, wage growth, low unemployment and historically tight vacancy rates.
Throw in the high cost of construction (bad for new homes and renovations, good for established housing) plus the ups and downs of remote working, and we should be seeing a market that’s bouncing about like a pinball.
But … it isn’t! The general resilience of Australian real estate shines through. That said, the new year brings new considerations.
My ongoing analysis of data and conversations with industry experts have led me to several conclusions about what’s in store for 2024.
Here’s what I think is set to unfold in the year ahead.
For new home builders and renovators, the first bit of good news is that the rate of price growth for building costs has slowed.
This will no doubt assist some project bottom lines; however, the cost of labour is rising, and I don’t see that retreating anytime soon. In fact, increased labour costs have offset lower price growth in materials to the extent that the net result will still be higher overall project costs.
Why do they keep increasing? Well, governments across all tiers are ramping up infrastructure programs. Couple that with the federal government setting an unrealistic construction target to address the housing crisis, and the level of demand for builds is steaming. The target of building 1.2 million homes over five years from 1 July 2024 is fanciful at best, but nigh on impossible given the fact that it’s a pace the country has never achieved. In addition, it’s being targeting during a period where close to a third of all construction companies are reporting job vacancies.
Frankly, the rental crisis is unlikely to ease this year.
New construction supply is consistently overstated as the panacea for the rental crisis, but the pipeline of higher density residential projects is a third of the normal figures at present. Developers’ margins are being screwed down by construction costs and the price of developable sites in near-city suburbs remains high.
And demand isn’t going away anytime soon. Immigration remains at record levels, and these new Aussies typically rent on arrival. I suspect we will see further increases in average household densities this year as a result, and vacancy rates that continue to hover around 1 per cent to 1.5 per cent.
Interest rate increases were influential during 2022 and early 2023, particularly as we saw many loans move from fixed to variable rates. However, the shock and influence of rate rises faded somewhat towards year’s end.
There’s now speculation the next move will be a cut in the latter half of 2024.
My thoughts are that if there’s any upward shift in rates, the impact would be insignificant and diluted.
Interestingly, if rates were cut the outcome would be more substantial. A fall in the cash rate would open up borrowing capacity – particularly for those at the affordable end of markets. An easing in the cash rate also flags that the Reserve Bank of Australia is comfortable with the inflation figure. This will feed directly in property stakeholder confidence and, subsequently, property prices.
Property is reliant on stakeholder confidence to drive price growth.
The rising cost of living has affected overall consumer confidence as demonstrated by the Westpac/Melbourne Institute’s Consumer Sentiment Index, which remains weak.
That said, when it comes to property, the story is a little different. The gap between consumer sentiment around property prices and the “time to buy a dwelling” measure indicates many Aussies actually believe values in major population centres will continue to grow in 2024. Further evidence of the faith our nation has in real estate as a secure, long-term vehicle for building wealth.
So … what’s the net outcome for 2024?
In short, I think it will be an overall positive story for residential property this year.
Market experts are predicting the national property market to grow anywhere between 1.5 per cent and 8 per cent. It’s a wide range, but then that is across multiple opinions. Meanwhile, there are bank economists expecting some locations (i.e. Perth and Brisbane) will come close to, or even exceed, double-digit capital gains in 2024.
I tend to agree with these assessments. The fundamental supply/demand imbalance across capital city markets will continue to bolster the chance of capital gains. I wouldn’t be surprised to see properties achieve more than 10 per cent over the next 12 months in some instances.
I also believe there’s plenty of steam in larger regional markets, especially where there is a diverse range of employers, and major infrastructure projects, like the inland rail corridor, are underway. Diversified locations with median price points under $600,000 will perform strongly – particularly with investors. Our own data shows Aussies are now extremely comfortable with investing in assets well away from their hometowns if the numbers stack up.
Apartment prices will remain strong too, with some good upside potential. High construction costs are restricting the supply pipeline for this property type. Less supply plus high renter and home owner demand equals robust price growth.
As I alluded to at the start of this article, there are multiple drivers pulling the property market in all directions but, in the end, I think the only way is up in 2024. As such, those who act earlier in the year look set to benefit most.
Mike Mortlock is the managing director of MCG Quantity Surveyors.
Ultimately, that attribute led the 44-year-old to a career she never imagined: a real-estate agent and investor.
“All I wanted to be when I grew up was a lawyer,” Casey, who graduated from SUNY Albany in 2001 with criminal justice and psychology degrees, told Business Insider. “I had no other plans.” Until she started her first job as a paralegal at one of the biggest law firms in New York City, that is.
The job was demanding and often required 18-hour work days.
“There were times when I slept in the office,” she recalled. A particularly intense case that went to trial and relocated her to Florida for two months prompted her to reevaluate her career path. “That case just killed me. I gained 20 pounds, I never saw my friends, and when you’re in your early 20s, you want to have a little bit of a life.”
At the end of the case, which her team won, Casey gave her two weeks’ notice and walked away from a comfortable salary.
Draining 6 months’ worth of savings and becoming a real-estate agent
Casey didn’t have another job lined up when she quit, but she had about six months’ worth of expenses set aside.
“Because I worked so much — and when you’re on trial, after a certain time, you get double time — I just saved my money,” she said, but her savings went fast in a city as expensive as New York. “I just needed to really destress, and that’s what I did.”
Additionally, she spent time thinking about what she wanted her days to look like. For starters, she wanted more flexibility: “I wanted something where I wasn’t sitting in an office, and I wanted something where I can control the income that I could make,” she said.
Becoming a real-estate agent satisfied both of those criteria. Plus, she hoped it would set her up to one day invest in properties.
“I grew up in New York City. I’ve seen the changes as far as property values go,” said Casey. “So yes, becoming a real-estate agent was about time freedom, but the major factor was I was going to learn how to be a landlord and do leases and figure out how to get a building.”
She executed the first part of her plan and got her real-estate license in February 2006. Over the next 15 years, she worked on the leasing side of the business while pursuing various side projects in her spare time, from Amazon FBA to launching a YouTube channel — but she didn’t buy an investment property.
From agent to investor: Buying her first property in her 40s and cash flowing $1,000 a month
Casey spent her 20s and 30s in no rush to become a real-estate investor.
“I’m single, no kids, so I definitely have a different lifestyle and a different timeline than other people,” she noted. Since she plans to adopt, “I have never been on a clock. Being single has really helped me, but also hindered me: I can do whatever I want at any point, and so that’s helped me in leading a very stress-free life, but it has hindered me because I’ve always thought, ‘I’ve got so much time, I got so much time, I’ve got so much time.'”
Her mindset changed when she turned 40.
For Casey, who has been self-employed for most of her career and doesn’t have a traditional 401(k) plan, owning real estate has always been synonymous with retirement. When her 40th birthday rolled around, she realized that taking out a 30-year mortgage would mean she’d be 70 when she paid it off.
“I don’t want to retire at 70; I want to retire at 55, maybe 59,” she said, “So I was like, ‘Wait a minute, now that I’m 40, I need to get it into gear.'”
She decided to pause the serial entrepreneurship and dedicate the next three to five years to buying real estate. Specifically, she aimed to build a $5 million portfolio.
It was a number that felt like “enough,” she said. “As long as I have my retirement set, that will allow me to feel more comfortable jumping around from thing to thing.”
Her first step was to find an affordable market. New York City, where Casey has lived her entire life, was out of the question. She had about $40,000 in savings. While that wouldn’t go far in her home city, it was enough to get started in Baltimore.
Casey settled on Maryland’s largest city after researching various markets online. One of her strategies was to follow real-estate content creators on social media and pay attention to where they were investing and their returns. After selecting her market, she contacted a Baltimore-based investor she followed on YouTube, Charles Blair, and asked for a consultation.
At the time, she’d never set foot in the city she intended to invest in.
Blair put her in touch with his agent, and Casey was off to the races. She bussed back and forth between New York and Baltimore for about six weeks before finding her first property. It was an off-market deal she found on a real-estate wholesale website.
“I put in an offer, and that was that,” recalled Casey, who used a hard money lender and personal funds to close on a $105,000 single-family home in December 2021. “When I make a decision, it’s go time. What are we waiting for? Does this look good? Do the numbers make sense? That’s it.”
The purchase nearly wiped out all of her savings, she said: “Because I was a first-time investor, I had to put down 20%, three points to the lender. Including all closing costs, it was around $37,000, almost every dime I had.”
The property also required renovations.
“When you get a hard money loan, they give you 80% of the purchase price and 100% of the renovation. But it’s in draws, so you have to front the money first, and then they refund you,” explained Casey, who used business credit cards to start the renovation project. It ended up taking three months and cost her $45,000.
“I definitely made quite a few mistakes,” she said, noting that the renovation could have been done in three weeks on a $36,000 budget. But at the end of the process, she’d converted a four-bed, one-bath into a five-bed, two-bath with a fully finished basement in an emerging Baltimore neighborhood.
A tenant placement company helped her fill the rental with a Section 8 tenant. Casey started bringing in $2,350 a month, which the government covered for her tenant. Her mortgage was $1,433 at the time, she said, meaning she started profiting nearly $1,000 a month. Insider verified her property ownership by looking at a copy of her mortgage statement and confirmed the rental price by looking at a letter from the Housing Authority of Baltimore City. She profits even more now, as rent has increased and her mortgage has decreased.
Using creative financing to expand her portfolio and focusing on appreciation over cash flow
After draining her savings to acquire her first property, Casey decided: “I don’t want to spend my money on properties anymore. It’s not really scalable using your own money.”
She started researching creative financing strategies and how investors buy properties without tapping into their own savings.
Casey bought three more properties in Baltimore over the next year and a half, including one flip, using subject to financing (when the buyer takes over the existing financing) and seller financing (when the seller acts as the lender and provides a loan).
She considers her first deal a “slam dunk,” she said. “To get $1,100 right now in gross cash flow on your first deal in a low market is really, really good, especially in Baltimore where the average is $300.”
But cash flow has never been her main objective. For her, real estate is a retirement plan. She’d rather focus on long-term appreciation.
Her latest deal, which she purchased for $250,000, was purely an “appreciation play,” she said. She had to convert it into a rooming house just to cover the mortgage, but she’s bullish on the neighborhood: “I took the chance because I’ve seen the property values just in the last two years go from $300,000 to $500,000, $600,000. The property around the corner sold for $570,000.”
The way she sees it, going for big appreciation will help her get to her $5 million goal faster.
“I don’t need the cash flow. It’s nice, but that’s what working is for,” said Casey, who documents her real estate journey on YouTube and is aiming to buy her first multi-family property in 2024. “Also, I’m the type of person that, when I have a lot of money, I’m less motivated to do things, so I try to keep myself as poor as possible.”