Tariffs on Canada mean higher lumber prices. Tariffs on Southeast Asia mean higher prices for fixtures, appliances, and cabinets. We won’t just start producing those things in the U.S. That takes years of expansion. It also takes a firm belief on the part of manufacturers that high tariffs are here to stay.
And they aren’t. That’s not their purpose, as best as we can determine based on public statements. The purpose to reorder the global economy. Tariffs went up around the world for U.S. products to enter other countries after WW II as a way for those countries to re-establish a productive infrastructure, but have remained high. U.S. products can’t get into many countries, and now the goal is to level that playing field.
It might happen next week or one or two years, but it’s inevitable.
If you’re a U.S.-based appliance manufacturer and you’ve been competing with overseas manufacturers who now can’t sell into the U.S., you’re going to ramp up as economically feasible as you can, but you probably aren’t going to break ground on a new plant because of this disruption. It is far too easy for tariffs to be lifted.
Then there’s the political hammer. An election in 18 short months. Tariffs are extremely painful. When there is pain and the pain is relieved, we are happy, we’ll go out and stimulate the economy, and we’ll vote to keep the party in power.
Lumber prices hit a 2-year high in late March. A lot of new home construction has been delayed because of it, and since that high they have dropped sharply, as measured by lumber futures prices. These are wild swings, not long-term trends that you can make investment decisions based on. If you’re doing major renovations, you’re seeing it. If you’re hoping for a slow-down in new construction, that has arrived.
How to invest in real estate while this disruption settles? Stock up on renovation packages before tariffs take affect, or look for light value add multifamily in strong markets.
Market update
Anchorage, AK – It’s not on most investors’ lists but Anchorage does merit consideration. Milken Institute ranked it #49 Best Performing city in 2025 out of the 200 large cities it ranks, up from #117 in 2024. It attributes this rise to wage growth and job growth. Interestingly it achieves a high rank in the “Gini Index”. This measures income disparity or equality in a population.
Anchorage ranks #14 for the Gini Index, meaning incomes are not excessive on the high end and, most important, not insignificant on the low end. The high median household income of $98,000 in Anchorage also indicates a lower income disparity than populations with low household income. It also ties with a relatively low poverty rate of 9.5% compared to 11.1% for the U.S.
With a population that has grown 10% over the last 20 years to 398,000, it has maintained strong jobs growth, averaging 2.3% over the last four years. When you’re looking for emerging markets, a jobs growth rate over 2% for at least the prior two years is a strong indicator.
Anchorage is for outdoors people. It’s a sportsman’s paradise with unmatched hunting and fishing opportunities. If you want to get away, Alaska is the place to go and Anchorage offers comfort and proximity.
Anchorage did not start out as a fishing village as most other towns and villages in Alaska, but in the early 20th century it was a railroad and transportation center, then an air transportation hub. Roads were a scarcity in the early 1900s so everyone flew planes. Then came an Air Force base and an Army base in the 1940s, still there today.
Then came oil, after the Prudhoe Bay discovery in 1968. That changed everything and still today produces income for all Alaskans because of drilling that sends oil through cross-state pipelines to the ports near Anchorage. Anchorage thrives today because of the resiliency of the oil and gas industry.
If you think oil prices are about to go through the roof, Anchorage would be a good place to invest. But that’s not what most people think. Oil isn’t going away but it doesn’t seem likely to explode in price any time soon either.
If you want rent growth, though, Anchorage is hard to beat. Year-over-year increases in the last three years have been 14%, 5%, and last year was 7.8%. This will slow down almost certainly but this is extraordinary growth. We can attribute it to strong population growth and nominal increases in rental units available.
The employers other than oil and gas are generally public entities including health care, government, the airport and military bases, but also include tourism and fishing. These aren’t going anywhere. Surprisingly even though Anchorage’s population is over 50% of the state’s population, Anchorage is not the capital. Juneau is. That doesn’t mean government employment isn’t a big part of Anchorage, though.
If slow and steady, and once in a while nice upside surprises, are where you invest, it is hard to beat Anchorage. Never mind the cold winters. They still get business done all year long.
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Finer Points of Multifamily Properties Creating a sticky tenant
Renters come and renters go. They’re only there until they pull themselves up to that next level and find someplace better to live. Buy the house. Get a better job.
Right?
Maybe years ago but not today. Renters want to be part of a community, to be wanted, to feel safe, to have someone else take care of their surroundings, and to be able to stay for the foreseeable future. Houses are getting more unaffordable for most renters so they don’t see another option.
But surprise, they may have a lot of reasons to stay but they decide to move anyway. You’ll probably never know their real reasons for moving but there are a few things you can do that have proven to keep them at your apartments longer. More reasons for them to feel connected, and even to accept rent increases.
Start by understanding your tenant profile. Are they a young family where there’s one head of household and young kids? Or a professional, possibly an Amazon driver, retail manager, mechanic, nurse, or welder? Do they have decent jobs today but aspire for something better?
Look for ways you can help them. This is more than just a monthly pizza party but it doesn’t have to break the bank. Here are a few ideas.
Tutoring for kids – contact the local high school, ask if they can recommend good students who would like to make some money offering tutoring services to young kids. It’s not baby sitting or child care and hopefully there aren’t restrictive laws in your area but be sure to check it out. Then schedule regular sessions in a community room on your property. Have them at consistent times so your tenants become more aware of it and can plan for it.
Back to school supplies – make up backpacks with some basic supplies and give them out to kids. Hold an event so they can socialize with their neighbors, but possibly make them available confidentially to families who don’t want their neighbors to know they’re taking advantage of this opportunity.
Job skills training – basic things like how to write a resume, how to use a spreadsheet, how to dress for a job interview, how to find inexpensive but real job training programs in the area, how to find financial support for job training. Contact local financial advisors or financial planners and ask them to come out to your property and set them up in a community space. Do this on a regular basis so tenants become aware of it and make plans to participate.
Tax preparation – assistance in preparing taxes. Contact the tax preparation organizations that target the retail individuals market such as H&R Block. Pay them to come out and work on site. You don’t need to be their charity beneficiary. You want quality service. It’s seasonal but highly appreciated January through April.
Financial literacy – budgeting, managing their personal finances, opening a bank account. How many of your tenants don’t have a bank account? It seems so fundamental to most of us but in far too many sectors of our economy it is not. This helps them get over mistrust and see the world of new opportunities this opens for them. This person could be a customer service specialist from a local bank or, again, a financial planner.
Another killer idea I recently heard was to ask one of your top vendors to sponsor these events. The HVAC contractor who you are paying thousands a month for, month after month? Give them the “opportunity” to build a stronger relationship with you by putting up a few hundred dollars toward these activities.
The tenant who experiences this help has a much higher appreciation for the team managing their apartment complex – their home. They want to stay where they are cared for in this way. That’s what is meant by a sticky tenant.
“The need for connection and community is primal,
as fundamental as the need for air, water, and food.“
– Dean Ornish
Who We Are
Cardinal Oak Investments acquires, improves, and manages under-valued commercial apartments. We buy B and C class properties of around 100 units in the Southeast and Midwest.
We look for properties whose amenities, aesthetics, and appeal have fallen into obsolescence, whose care reflects tired management, and whose location is where a stable workforce wants to live.
And we partner with like-minded investors looking for stable assets that produce good cash flow and strong appreciation.
Founded and managed by John Todderud, Cardinal Oak Investments has acquired properties on both coasts and in between creating annual double-digit returns.
For more information, schedule time with me or send an email to john@cardinaloak.com.
Please note: Past performance is no indication of future performance.