<br>

*This writeup was provided by an OfferMarket homeowner selling their [turnkey rental property](https://www.offermarket.us/real-estate-glossary/turnkey-rental-properties) at [5655 Harbor Valley Dr, Brooklyn Park, MD 21225](https://www.offermarket.us/listings/5655-Harbor-Valley-Dr-Brooklyn-Park-MD-21225-USA)*

<br>

## Buy On The Path To Progress

<br>

Sounds catchy, but what does it mean? To buy on the path to progress... 

<br>

The greatest hockey player, Wayne Gretzky famously said:

<br>

## *I skate to where the puck is going, not where it has been.*

<br>

The best deals are where large investment, population trends and home sales trends are signaling that an area will likely be significantly more attractive in the near future than the present. If you strategically buy real estate where economic development is happening, you will de-risk your investment and likely end up with above average returns from both a cash flow and appreciation perspective.

<br>

This concept is similar to Warren Buffett's contrarian value investing philosophy which was covered by our sister site: [Real Estate Blogs](https://realestateblogs.us/2020/10/03/warren-buffett-real-estate-contrarianism/)

<br>

Speaking of Warren Buffett, his value investing philosophy is perfectly aligned with our view of correct way to treat real estate investments. Focus on [locking in value at entry (buying at an attractive price)](https://www.offermarket.us/frequently-asked-questions/when-is-the-best-time-to-buy-a-house) and long term horizon (never sell mentality) is paramount in getting successful outcomes. 

<br>

## Brooklyn Park, MD: Smack Dab In The Middle Of The Path To Progress

<br>

This property in Brooklyn Park is less than 10 minutes away from Port Covington and all of the future development that is going to take place there. It’s supposed to be something like TomorrowLand, or Harbor East on steroids. Also, the trip from Brooklyn Park might get shorter after they complete the planned bridge from Brooklyn to Port Covington. Sources: [Port Covington Tomorrow](https://pc.city/development/#under-development), [Goldman Sachs Urban Investment Group, TIF Funding](https://www.southbmore.com/2020/06/22/port-covington-development-approved-for-148-million-in-tif-bonds-construction-to-resume-this-fall/)

<br>

Giant property developer, Bozzuto, recently developed and now manages [Woodfall Greens](https://www.woodfallgreens.com/), Brooklyn Park’s first ever luxury apartment complex. It was completed in 2018, with 230 luxury units. It is less than a mile from the subject property at Harbor Valley Dr.

<br>

Ryan Homes, the largest homebuilder in the Mid-Atlantic, is currently developing a luxury townhome community in Brooklyn Park, [Cedar Hill Townhomes](https://www.ryanhomes.com/new-homes/communities/10222120151368/maryland/brooklyn-park/cedar-hill-townhomes), again just a few minutes away from the subject property. This Ryan Homes development is expected to be over 100 townhomes with prices starting in the $300s.

<br>

The city of Baltimore is planning for a complete renovation of the waterfront along Cherry Hill and Brooklyn (as well as Westport and Port Covington). They’re going to turn these waterfront areas into parks, walking trails, bike paths, and green space. The plan includes a new bridge to connect Brooklyn to Port Covington. This development plan also includes turning the Hanover Street Bridge into a pedestrian/bike path, with parks and green space on either side. Sources: [Middle Branch Waterfront Master Plan](https://www.southbmore.com/2020/06/09/middle-branch-waterfront-master-plan-aims-to-turn-hanover-street-bridge-into-a-park/)

<br>

Northeast Maglev is planning to build a high-speed train line between D.C. and Baltimore, with the Baltimore station being developed and located in Cherry Hill—the proposed location for the station is just 3.5 miles, or an 8 minute drive from the property at Harbor Valley. [15 Minutes from Baltimore to Washington DC on Northeast Maglev - South Bmore](https://www.southbmore.com/2020/08/04/high-speed-maglev-train-hopes-to-build-baltimore-station-in-cherry-hill/)

<br>

Some local non-profits have teamed up to create a bike path and pedestrian foot trail connecting the BWI trail in Linthicum Heights to the Gwynn Falls Trail in Cherry Hill. This trail will link the Baltimore & Annapolis Trail and the BWI Trail to the South, with the Gwynn Falls Trail to the North, that goes up to Baltimore City. This trail will pass right through Brooklyn Park, and within 200 yards of the property at Harbor Valley Dr. [Middle Branch waterfront in South Baltimore is getting face-lift - Baltimore Sun](https://www.baltimoresun.com/maryland/baltimore-city/bs-md-middle-branch-20190531-story.html)

<br>

JP Morgan Chase just opened the very first banking center in Cherry Hill—ever!
[First bank in Baltimore's Cherry Hill neighborhood to open - WBALTV](https://www.wbaltv.com/article/first-bank-baltimore-cherry-hill-jp-morgan-chase/30569948)

<br>

Baltimore City Recreation and Parks announced in September 2020 the construction of the Middle Branch Fitness and Wellness Center at Cherry Hill and its adjacent multi-purpose, state-of-the-art playing field at Reedbird Park slated to open in 2022. [Baltimore Rec & Parks announces Cherry Hill Reedbird Park to become 'Super' Rec Center - Fox Baltimore](https://foxbaltimore.com/news/local/baltimore-rec-parks-announces-cherry-hills-reedbird-park-to-become-super-rec-center)

<br>

### Full deal overview: [6% Cap Rate Turnkey Rental Property at 5655 Harbor Valley Dr, Brooklyn Park, MD 21225](https://www.offermarket.us/listings/5655-Harbor-Valley-Dr-Brooklyn-Park-MD-21225-USA)

<br>

Learn how investing along the path of progress in Brooklyn Park, MD, Anne Arundel County can yield great returns in real estate investment.

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Buy On The Path To Progress: Brooklyn Park, MD - OfferMarket

Buy On The Path To Progress: Brooklyn Park, MD


<br>

**Last Updated:** October 23, 2022

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<div style="width:100%;"><iframe width="100%" height="315" src="https://www.youtube.com/embed/Bz8Z-D5q21I" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe></div>
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<br>

## DSCR Loan Interest Rate Index

<br>

In our effort to be the most competitive and transparent private lender, we publish our [DSCR Loan Interest Rate Index](https://www.offermarket.us/blog/dscr-loan-interest-rate-index) which tracks the prevailing interest rates for competitive DSCR loans.

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<div style="width:100%;">
<iframe width="100%" height="371" seamless frameborder="0" scrolling="yes" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRJPw1fYWqj_5mdlNBrD5MLne_ApqpOXlNmkmNE_sZfPgsbn9pU0mWUenEO1x6WE9237S7jzaQE2Hig/pubchart?oid=262687025&amp;format=interactive"></iframe>
</div>

<br>

***Note:** based on 30 year fixed rate, 75% LTV, 1.2 DSCR, 720 credit score. Conventional 30 year fixed rate mortgage courtesy of CNBC. DSCR loan interest rates and spreads are based on best available nationwide private lender data for competitive rates. OfferMarket Capital LLC DSCR loan interest rates track DSCR Low and are typically more competitive than peers.*

<br>

## Spread between DSCR Loans and Conventional 30 Year Fixed Rate Mortgage

<br>

As you can see from the chart above, DSCR loan interest rates nearly doubled from 4% in Q4 2021 to 7.5% in Q2 2022 and again in Q3 2022. The spread between DSCR loans and the 30 year conventional fixed rate mortgage nearly doubled from 0.85% to 1.5%. This means that the fixed income investors that buy DSCR loans, primarily through securitizations, demand a higher premium (spread) during times of market uncertainty.

<br>

Let's take a closer look at how the market works to understand why DSCR loan interest rates can be volatile.

<br>

## Market For Securitized DSCR Loans

<br>

There is a multi-billion dollar market for securitized DSCR loans, also known as non-QM or non qualified mortgages -- mortgage backed securities composed of hundreds or thousands of DSCR loans for rental properties. This product is most commonly purchased by institutional asset managers such as insurance companies, mortgage REITs and pension funds that are looking for fixed income at an attractive yield compared to conventional mortgage backed securities and US Treasury bonds.

<br>

## Positive Feedback Loop: DSCR Loan and Non-QM Securitization

<br>

During times of interest rate volatility and economic uncertainty, the institutions that buy DSCR mortgage backed securities do two things:

<br>

1. they pause or slow their purchasing of this asset class
2. they demand a higher premium compared to lower risk alternatives such as the 30 year conventional fixed rate mortgage 

<br>

When interest rates rise, the value of loans at lower interest rates declines. This leaves private lenders and non-QM lenders that originate these loans in a difficult situation:

<br>

- if the investment banks and firms that securitize these loans and sell them to institutions stop buying, they are forced to hold these loans on their books which means they have less capital to originate new loans
- if the securitization firms are buying loans, private lenders are forced to sell at a loss because their newly originated loans are at significantly lower interest rates than the current interest rate

<br>

While this is happening, overall demand for loans from rental property investors is declining rapidly because of the spike in interest rates. This forces private lenders and non-QM originators to layoff staff and raise fees to avoid further losses. Everything we just covered explains why interest rates for DSCR loans spiked. While the conventional 30 year fixed rate mortgage was spiking, grabbing headlines, the DSCR loan was rising in a more pronounced manner.

<br>

## Locking In Your DSCR Loan Interest Rate

<br>

Now, you may be thinking, isn't my interest rate locked in? Unlike the conventional mortgage market (Fannie, Freddie), interest rate locks are not common for DSCR loans. In calm markets, minor movements are absorbed by the private lender and securitization firm. But in turbulent markets, interest rate spikes need to be revised and accepted by the borrower.

<br>

Volatile markets such as this are extremely disruptive to what is normally an orderly, functioning marketplace between originators, securitization firms and institutional consumers of credit. At times the market has been definitively dysfunctional, with borrowers experiencing significant delays and frustrations. This is a major reason why we published this article, because we believe in transparency and educating our borrowers.

<br>

## Refinancing Out of Cash or Bridge Loan

<br>

There are many real estate investors who use the BRRR strategy and now find themselves in a situation where they are either in a high interest rate bridge loan ("fix and flip" or "hard money") or their cash is tied up in one or more deals. They need to refinance into lower interest rate or pull their cash out of their deals but DSCR rental loan interest rates are significantly higher than what they were expecting. 

<br>

We can be talking a $250 - $750 per month hit to free cash flow depending on loan amount when you move from 4% to 7.5%. That takes the deal from positive free cash flow to breakeven or negative free cash flow. This is a difficult and painful situation to be in financially.

<br>

## Solution for Private Lenders: Setting Better Expectations

<br>

Setting clear expectations is absolutely critical. Being transparent with your borrowers regarding how you operate and is absolutely critical. Educate your borrowers -- borrowers deserve to be informed and to understand the inner-workings of the DSCR Loan market. Their real estate investing business relies on it.

<br>

## OfferMarket Capital: Your Hard Money Private Lender

<br>

- [Get a quote in under a minute: DSCR Loans, Bridge Loans](https://www.offermarket.us/loans)
- [OfferMarket Capital: Private Lender Program Guidelines](https://www.offermarket.us/capital)
- [Private Lender Guide](https://www.offermarket.us/blog/real-estate-private-lenders)
- [Bridge Loan Index](https://www.offermarket.us/blog/bridge-loan-interest-rate-index)

<br>

The market for DSCR Loans is experiencing significant turbulence. Interest rates for DSCR loans have spiked 2% in the past 2 months. Here's what's happening, how this affects borrowers, and the DSCR Loan Index to provide more transparency.

What's going on with interest rates for  DSCR Loans?

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What's going on with interest rates for  DSCR Loans? | OfferMarket

What's going on with interest rates for DSCR Loans?

<br>

Facebook Groups are an incredibly important source for off-market listings. If you are in the market for a primary residence or investment property, and you want to [avoid the panic buying in the current housing market](https://www.offermarket.us/guides/how-to-avoid-panic-buying-in-the-current-housing-market), then you will want to take a closer look at Facebook Groups.

<br>

There are Facebook Groups for just about everything, so it should come as no surprise that there are Facebook Groups for real estate. Most Facebook Groups for real estate are regional (i.e. State-specific) or local (i.e. City or County-specific). Facebook Groups are strictly for [wholesale real estate](https://www.offermarket.us/guides/wholesale-real-estate-101) listings while others are strictly for [For Sale By Owner](https://www.offermarket.us/real-estate-glossary/fsbo) listings.

<br>

There's a [world of off-market real estate most homebuyers do not know about](https://dwshorowitz-offermarket.medium.com/wholesale-real-estate-the-world-of-real-estate-you-probably-know-nothing-about-but-you-should-b544c6ad69b5), and Facebook Groups are a great place to access it.

<br>

## Join the [Real Estate Marketplace: Wholesale, For Sale By Owner](https://www.facebook.com/groups/326051528838367) Facebook Group

<br>

The easiest way to find relevant Facebook Groups for real estate is to search on Facebook for your local market using the following terms:

<br>

- "investors network"
- "real estate"
- "wholesale real estate"
- "turnkey properties"

<br>

## Subscribe to OfferMarket deal flow:

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Facebook Groups are great for finding off-market listings and wholesale real estate. Discover how to buy and sell in this guide.

Facebook Real Estate Marketplace OfferMarket

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Facebook Real Estate Groups: Wholesale, FSBO - OfferMarket

Facebook Groups For Real Estate: Wholesale, For Sale By Owner

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Private Lending | OfferMarket

Private Lending

Peter Thiel Real Estate Catastrophe Video

Peter Thiel Real Estate Catastrophe Transcript

Key Takeaways from Thiel&#39;s Interview

Who was Henry George?

Build wealth through real estate with OfferMarket

<br>

**Last updated:** January 16, 2025

<br>

Famed investor Peter Thiel recently expressed his concerns that the United States is heading towards a real estate 'catastrophe'. The controversial yet undeniably brilliant thinker cited Henry George's theory of real estate inelasticity. 

<br>

## **Peter Thiel Real Estate Catastrophe Video**

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<div style="position: relative;width: 100%;overflow: hidden; padding-top: 56.25%;">
<iframe  style="position: absolute; top:0; left:0; bottom:0; right:0; width: 100%; height: 100%;border: none;" src="https://www.youtube.com/embed/jsXNST2PC64?si=mZyZLuOrqEpiSrJJ" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen>
</iframe>
</div>

<br>

## **Peter Thiel Real Estate Catastrophe Transcript**

<br>

Henry George is this late 19th century economist who's considered quasi socialist in the late 19th century. He's considered semi libertarian in the early 21st century which maybe tells you something about how our society changed... 

<br>

But the basic Georgist obsession was real estate and it was if you weren't really careful, you would get runaway real estate prices and the people who owned the real estate would make all the gains in a society because there's something extremely inelastic about real estate. Especially if you have strict zoning laws or things like this. 

<br>

The dynamic ends up being that you add 10% to the population in a city and maybe the house prices go up 50% and maybe people's salaries go up but they don't go up by 50% and so the GDP grows but it's a giant windfall to the boomer homeowners and to the landlords. And it's a massive hit to the lower middle class and to young people who can never get on the housing ladder.

<br>

And there's sort of a way that I model what's happened in the US, in Britain, in Canada, a lot of the anglosphere countries is a Georgist real estate catastrophe all sorts of places where the real estate prices the rents have gone up more and more. 

<br>

If we talk about the inflation problem, there's a way you could talk about inflation in terms of you know the prices of eggs or groceries but you know that's not that big a cost item even for lower middle class people. The really big cost item is the rent I think in some ways Trump and JD Vance did manage to shift the conversation a little bit to this real estate problem. And again I don't want to you know blame it all on immigration but if you just, you know, add more people to the mix and you're not allowed to build new houses because of zoning laws or it's too expensive or it's too regulated and restricted, then the prices go up a lot. 

<br>

And it's this incredible wealth transfer from the young and the lower middle class to the upper middle class and the landlords and the old and there are reasons you might not want to do that.

<br>

## **Key Takeaways from Thiel's Interview**

<br>

- The imbalance between the supply of housing and the demand/need for housing has created a phenomenon where housing prices are increasing faster than wages, making ownership of real estate increasingly difficult for younger generations.
- Local, state and federal governments needs to make housing easier and more cost effective to build. The most glaring opportunity is zoning law reform.
- The wealth effect of owning real estate is undeniable, you should own real estate, purchased at attractive value, to avoid this risk of facing extreme rent inflation, the largest component of your living expense.
- If we don't address and solve this problem, there will be powerful and dangerous social and economic consequences.

<br>

## **Who was Henry George?**

<br>

Henry George (1839–1897) was an American political economist and journalist, best known for his ideas about land ownership and taxation, which he presented in his seminal book, Progress and Poverty (1879). George's work focused on the relationship between land, economic inequality, and societal progress, and his ideas became the foundation of the economic philosophy known as Georgism.

<br>

### **Key Contributions and Ideas**

<br>

**1. The "Single Tax" on Land:**</br>

George argued that land, unlike labor and capital, is a fixed resource, and its value is created by the community rather than by individual landowners.
He proposed a "single tax" on the unimproved value of land as a way to address economic inequality. This tax would replace all other taxes and fund public expenditures, thereby discouraging land speculation and making land use more efficient.

<br>

**2. Critique of Inequality:**</br>

George observed that technological and industrial progress often resulted in increased wealth disparities. He attributed this to the monopolization of land and natural resources.

<br>

He believed that equitable access to land was essential for reducing poverty and ensuring fair distribution of wealth.

<br>

**3. Land Value and Social Justice:**</br>

George emphasized that the value of land increases due to societal development (e.g., infrastructure, population growth) rather than individual effort. Therefore, taxing this value would prevent individuals from profiting at society's expense.

<br>

**4. Influence on Urban Planning and Public Policy:**</br>

George's ideas influenced urban planning, public finance, and social reform movements in the late 19th and early 20th centuries. Several cities experimented with Georgist policies, and his work inspired figures like John Dewey, Leo Tolstoy, and even parts of the New Deal.

<br>

### **Legacy**

Henry George's ideas remain influential among economists, urbanists, and social reformers who focus on wealth inequality and land reform. Although Georgism never became a dominant economic system, his insights into land value taxation continue to inform debates about property taxes, housing affordability, and economic justice.

<br>

---

<br>

## **Build wealth through real estate with OfferMarket**

<br>

If you've found this helpful and would like access to more rental property investing insights, sign up for OfferMarket. Membership is free and comes with the following benefits:

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Peter Thiel Warns of Real Estate Catastrophe

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