Episode Transcript:  

  U-Haul S 2025 midyear migration trends report just came hot off the press and it could definitely mislead a lot of investors. Why we're gonna unpack that and more on today's episode. Let's get REady2Scale.

Hey guys, my name is Jeannette Friedrich and I'm the director of Investor Relations here at Blue Lake Capital, where we specialize in multifamily investments across the United States. Now, as I mentioned, the 2025 midyear migration trends for. Court recently came out from U-Haul, and it's fun to read. What it basically does is it shows you the top 35 cities that people have been moving to throughout January to July of 2025.

So for example, Austin had a lot of people come to it from apparently California, Florida, and Illinois. Charlotte pulled people from South Carolina, Florida, and Georgia and Phoenix apparently attracted Californians, Texans, and people from Colorado. So it sounds like it's a gold mine of insights. Right? But the reality is, is that this is very misleading because if you take this information and you try to look at it as a list of the biggest winning cities and losing cities, you're really gonna end up making a bad decision.

So this is basically where people go wrong when they try to read these types of reports. There's basically three mistakes that I see most often. The first one is people are assuming that destination is the equivalent of net migration. So just because a lot of people moved into a city doesn't actually tell you if that is true net migration, because what.

Just the same amount of people moved out of it. When you're only seeing half of the puzzle, then you don't know what the other pieces look like, and people can make the mistake that assuming because it's hot, that it doesn't just mean that it's safe. There could be plenty of people moving out and you wouldn't know.

The second is confusing frequency with volume. So just because you see a state like California appear on this report several times, that doesn't actually give you the real picture of the volume behind those moves, where those individual moves, where they, was it literally a college kid? Was it a family?

Was it an entire community? It doesn't, it, it's not the equivalent of volume. And so it can be very easy to think because you saw the name California on the list several times that that metro is actually in distress, which I assure you it's not. And then the third mistake, which my husband would love for me to say this because he's a scientist and he says that all this.

All the time is that you cannot turn correlation into causation. So what I mean by that is just because you suddenly have a lot of people moving from say, New York to uh Miami, doesn't mean that you're automatically going to see the rinse skyrocket in Miami. You have to look at additional factors like job growth, wage trends, and housing supply to really know if demand is truly outpacing inventory.

And here's the even crazier part. This report doesn't even take into account a very critical macro layer that's missing. So while people are reading this report and looking at where all of these inbound moves are happening, what they are not picking up is that if certain immigration and deportation policies go through, there's the real possibility of negative net migration.

In the United States, meaning that more people leave the country than come into the country for the first time in 50 years. Now, if things play out that way, then basically think tanks and economists are projecting that we could lose between 115 to over half a million people that move out of the country.

This would shrink the labor force. Slow down GDP growth and reduce demand for rental housing, all which could actually impact cities that are hot on the U-Haul list right now. So what are the best practices for conducting due diligence in a way that you won't be misled by reports like the U-Haul mid-year migration trends?

So first of all, what you wanna do is you wanna make sure that you cross reference with multiple sources. So you can look at this report from U-Haul, but make sure to also buffer it against the data that you get from the US Census net migration from local building permits and from job growth stats. The second thing that you can do is don't just pay attention to who is moving in.

Pay attention to how many people are moving out. So you want to look at outbound flows just as much as you look at inbound flows. Third, make sure that you drill down into the details. So just because you see that Phoenix is hot, it doesn't mean that the entire MSA of Phoenix is doing well. It could be particular pockets of Phoenix and some other submarkets could definitely be struggling.

So you wanna make sure that you get down nitty gritty into the details. And then last but not least, ask yourself a very important question, which is, why are people chasing jobs? Are they looking for lower cost of lifestyle, lower cost of living? Uh, those types of reasons will impact, rather or not they're gonna be likely to even rent.

And if so, for how long? So real due diligence means that you have to be able to connect the dots between who's arriving, why they're coming, and what this means for long-term demand. Because in multifamily investing, the best decisions cannot be made on hype. They have to be made on context. So I hope you guys found this helpful today.

It was interesting. There's a lot of little tidbits there, but there's also some really important data points that you need to be aware of, and there are ways to make sure that you learn how to interpret data the best way possible to have long-term successful investments. I hope you guys found this helpful, and I'll see you on the next episode.

Ready to Scale is brought to you by Blue Lake Capital, where we hunt down the best multifamily investment opportunities that we can find and invite investors to join in with us. We target class B value add multifamily properties across the Sunbelt. Our CEO Ellie Pearlman, invest a substantial amount of capital into every deal.

This means our interests are aligned with yours. If you're an accredited investor looking to expand your portfolio and diversify sponsors, be sure to visit us@bluelakecapital.com. Blue Lake Capital, be bold, be extraordinary, and keep moving forward.