Habibis. I have some bad news. WE ARE IN A RECESSION! I know… shocking. And yes, we’re starting to really feel it with the current interest rates. At the time I’m writing this, we are at 7.42%. That is HIGH. I am getting calls daily from realtors, multifamily operators, and house-flippers about how the economy is impacting them in a big way. Real estate guys are HURTING, but not me. 

Why?

I’ve prepared for this situation. Recessions are simply just a part of the economic cycle, it happened now and it will happen again. It is something I’ve accounted for, and actually planned for. In fact, would you believe me if I told you I was actually waiting for this moment? You’ve heard me say it time and time again: flex space real estate is recession-proof. 

interest rates graph showing how high they are

I don’t want you to just take my word for it, this has been tried and tested in 2016 in Houston with my very own properties. I actually had an inverse effect with this asset class during that time and had a two year waiting list on my properties. As the recession hit Houston, e-commerce surged, and big companies were looking to downsize into smaller places with flexible leases. Guess who had the product these businesses were looking for… me. 

Now a question I keep getting asked is: are interest rates impacting your construction?

Of course they are! They’re impacting everybody’s construction. 

So why am I developing flex space real estate then?

Because the returns are extremely high, and the leasing process is EASY. The process is so simple that paying a little bit more money right now to build these developments is a no-brainer, and that’s not even accounting for the fact that the first thing that drops in a recession is land.

It’s not even denting my pocket when it comes to calculating my returns at the end of the day. With my developments I am getting a 2-3x return on each project, easy. 2-3x is easy over 5 years. With the interest rates, it would be 1.9x to 2.9x instead?

Doesn’t make a big difference. 

We never stop building. We need to keep building flex space and we need to keep leasing. We need to build these projects now. The reality about these high interest rates is that not a lot of people are building. People are afraid. And this actually works in my favor. By building when nobody else is, I actually end up getting a discount on labor and material because of the drop in demand. 

man doing construction

If you really think about it, high interest rates are actually helping my business. I am able to leverage the interest rates to get material at a discounted price. AND the demand for this project is HIGH, and will continue to grow during the recession. 

The next few years for Hamza Invests are going to be insane. We have 4 projects already in the pipeline, and I’m always looking for new land. Make sure you are signed up for my newsletter so you can stay up to date with what I’m doing, and our developments that are going to be starting in Q1 of next year.