How to Find Undervalued Markets, with Stefan Tsvetkov

Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. If you’ve been listening to this show you’re probably starting to get a hang of how we mitigate CRE risk. We analyze and manage the risk based on good data. Our guest today, Stefan Tsvetkov, a financial engineer turned multifamily investor and analytics speaker, is all about market data analysis. In our conversation, we talk about how the real estate market changed in the last 2 recessions, what markets are over or undervalued right now, and what to expect in the industry if another recession comes. Join us to evaluate your target market better!

Learn more about Stefan and his story at shineinsurance.com/managing-commercial-real-estate-risk!

“Market valuation is a measure of where a real estate market, city, county, or metropolitan area is valued relative to its key fundamentals.”

 

5:34

Stefan moved to the US in 2009 when he was 22 years old. He started his career as a financial engineer and over the years, transitioned into the real estate world and market analysis.

 

Stefan explains how he’s evaluating a particular market. He looks at 3 key fundamentals: income, population, and housing supply. He measures if the market is overvalued or undervalued, and how would it handle a peak market cycle and subsequent fall off.

“At the current time, the undervalued markets tend to be in the Midwest and Northeast.”

 

11:40

Based on data from the last 2 financial crises, the dot-com bubble and the 2008 financial crisis, Stefan can evaluate how a specific market would react to a potential recession. He shows us a heatmap of US real estate market valuations by state for 2020. This displays undervalued and overvalued markets.

Stefan explains that the less overvalued a market is at the time of a recession, the more likely that market is going to do well in the coming decade. This means that investing in an undervalued state or city potentially has less downside in a possible recession, however, the 3 key fundamentals also have to make sense to evaluate these markets.

About our Guest, Stefan Tsvetkov

Stefan Tsvetkov is the Founder of RealtyQuant (www.realtyquant.com), a company that brings data-driven and quantitative techniques to the real estate industry. On a mission to add massive industry value through education, investment, technology, and analytics.

 

Financial engineer turned multifamily investor, analytics speaker, and live webinar host. He holds a Master's degree in Financial Engineering from Columbia University, and during his finance career managed ~$90 billion derivatives portfolio jointly with colleagues.

 

Featured on multiple Podcast and Webinar events including Elevate, Best Ever Real Estate Show, Investing in the U.S. etc. Host of Finance Meets Real Estate webinar series.

Mentioned in the show:

1. https://www.realtyquant.com/
2. Finance Meets Real Estate Youtube Channel
3. His LinkedIn
4. Shineinsurance.com
5. www.shineinsurance.com/managing-commercial-real-estate-risk
6. Jeremy’s LinkedIn

Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/ 

 

Special thanks to Stefan Tsvetkov for taking the time to share so many great insights with us

 

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