In October 2019, Tzadik Management’s Adam Hendry sensed the looming economic uncertainty in December of 2018. From it, he made a prediction: “The Federal Reserve will lower interest rates over the next one to two years due to an upcoming recession,” said Hendry.
When rate cuts happen, it forces investors to pump capital into the economy instead of letting it erode away from zero interest rates on savings, that are in fact negative when taxes and inflation are taken into consideration. Thus, instead of losing money via savings it encourages people to speculate and make poor decisions. Hard to blame the drug addict (investor) when the rehab center (Federal Reserve) is the one supplying the drugs.
Now a year later Hendry’s forecast is accurate. The Federal Reserve has lowered interest rates, not once, but twice already. Adam Hendry believes it will not stop there. Hendry’s next prediction is that there will be another round of cuts before the end of 2019, bringing the total to three times for the entire year. He thinks the Federal Reserve will cut rates to 0% eventually in 2020 or 2021.
As for the next recession, Hendry says, “Everyone thinks they are preparing for another 2008, but most likely, the upcoming crash will be much different.” He also states, “We have to be prepared for a Melt-Up, not a Melt-Down.” The 2008 recession was an acceleration in the massive decline in values. All investment channels saw a drop. Like common stocks, corporate bonds, and real estate. Due to the nation’s risk of a total breakdown in industry and finance, the 2008 recession was a “Meltdown.” If Adam’s vision of the future is accurate, as the latter one was, then America’s future recessions will be a “Melt-up.”
A “Melt-up” is a sharp and unexpected rise in the price of an asset class, like real estate. However, while the price or rent in real estate may go up 1-2%, expenses like taxes, insurance, utilities, and materials could go up 5%+ annually. This Stagflation is going to find many people scratching their heads how they are upside down on their lifestyle while prices didn’t drop.
Due to a “Melt-Up” and potential Stagflation 1970s projection, the company repositioned itself strategically. Tzadik Management decided to head to the Upper Midwest. Why the Midwest? It has the most recession-proof cities in the United States. Adam Hendry said:
“We were looking geographically in the US where cities weathered 2008-2010 well, have booming population growth yet not too much multi-family construction, under 3% unemployment, attractive financing, and overall properties where instituting over company culture and DNA into the staff would give us a tactical advantage.” Additionally, Tzadik Management purchased an office building in downtown Sioux Falls where they now have over 30 employees working in that Regional office.
Adam Hendry currently owns and manages over eight thousand units. He has properties in Florida, Georgia, Texas, South Dakota, North Dakota, Nebraska, and is looking to expand opportunistically where the criteria are met. Hendry and his team of professionals are preparing for a Melt-Up by expanding to ensure that each Region of the company is at least 2.5x on the Labor Efficiency Ratio and over 50% Net Promoter Score respectively.
Tzadik Management is a thriving real estate and property management company. The Florida-based business began in 2007. Its CEO, Adam Hendry, and his team, value hard work and exceeding expectations. Hendry has fifteen years of progressive real estate and property management industry experience.
Learn more about Founder and CEO, Adam Hendry
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