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Real Estate Investing Strategies For 2025 With Peter Neill

In this episode, we have Peter Neill, co-founder of GSP Real Estate. Peter plays an active role in managing the company and their fund offerings. He works closely with the managing partner and all aspects of the business, especially handling the fundraising side of things. Peter has a background where he was originally a note investor at one point in time, working for a note fund until leaving to start his company. He is in Pennsylvania as a dog lover with his beagle. He graduated from Temple University and is an investor in workplace housing in Philadelphia and Baltimore.

In this episode, before I bring Peter on, I want to mention that what I love about this episode is understanding what Peter does from his business standpoint and what we do is very similar, just that different phases where, as people know, we like to buy and fix and flip mortgage notes where we try to rehabilitate the borrower. Peter does it on the real estate side where he wants to buy the real estate, rehab it, get it rented, and refinance it so he can take that money and recirculate it back out, also known as the BRRRR strategy. I hope you enjoy this episode of Creating Wealth Simplified with Peter. Let me welcome Peter and bring him in right now.

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Peter, how are you today?

Chris, I’m feeling very good. How about you?

Good. We’re recording this in the middle of the week. We’re almost through before we hit the Thanksgiving break. This will get re-published after Thanksgiving but recording it right around that time. People sometimes ask what that information was based on. Peter, as I always like to start, why don’t you tell people what you have going on right now, and then rewind it to tell us how you got here?

Peter’s Real Estate Background

That’s a good way to get started and kick this off. I co-founded a company called GSP REI a little bit over five years ago. We’ve pretty much been doing the same thing since its inception. We’re built to invest in primarily single-family, workforce, and affordable housing. What I mean by that is, typically, it’s single-family homes valued under $250,000. We’re operators. We do everything in-house from the construction to the property management.

Our specialty is buying blighted properties, so fully distressed properties, something we can pick up at a very significant discount to market, go in, and pretty much rebuild the home within the four walls. At that point, we have the option to sell it on the market at a markup from what we paid for it for a short-term profit or we can hold it as a long-term income-producing rental, which tends to be our strategy.

One thing that brought me and my partners together was the long-term buy-and-hold strategy and our like for that approach. That’s essentially what we do. We manage funds. We raise capital from accredited investors and then we use that capital to acquire and then do the construction. We’ll put a tenant in place and then we’ll put long-term financing in. It’s essentially a BRRRR strategy at the end of the day.

We love single-family. We see a lot of demand in that space and a lot of supply constraints, especially in the markets that were in. I live in the suburbs of Philadelphia. We operate in the city of Philadelphia and the surrounding suburbs. We operate in the city of Baltimore, the surrounding suburbs, and some parts of South Jersey. Areas where there’s a need for workforce affordable housing and massive supply constraints.

To speak to your other question, November is my tenth anniversary in real estate. I can’t believe it flew by. I got my start working at Distressed Mortgage Investment Company. That was all single-family-backed assets at the end of the day. It was also my introduction to single-family. While I was there, I was the right-hand man to the CEO who was an investor well beyond second mortgages and first mortgages and that thing. He introduced me to real estate investing as a whole. He had a nice portfolio of single-family homes and small multi-family, similar to some of the stuff that we have now.

That was my introduction to the investing side of it. Going back even further, growing up, my father was a property manager and facilities manager primarily on the commercial side, doing banks, industrial, office buildings, retail, shopping centers, you name it. He did some single-family stuff especially early on. I grew up in the management side of the business and always thought, “I don’t know if real estate is not for me.” When I got that first job out of school, working at the Distressed Mortgage Investment Company and seeing the investment side of the business, it was like, “I like this a lot.” I never look back. It’s been ten years and I’ve enjoyed pretty much every day of it.

You work for a competitor of ours which I joked we’re not a competitor because it’s like comparing Michael Jordan to a D1 college athlete at that point. It was interesting as an engineering numbers guy, I realized how long I’ve been in real estate. I’m like, “Let me calculate how many days I’ve been in real estate and that was a full-time job and stuff.” Now. on a 365-day calendar, I just passed 10,000 days in real estate. I’m like, “That’s a cool number.” You’re doing the BRRRR strategy for people listening who don’t understand the BRRRR. You buy a property, you rehab it, you refinance it, and then I forget what the other R is.

You buy it, you rehab it, you rent it, and then refinance it. You then recycle or repeat that.

The BRRRR Strategy

It’s interesting because a lot of individual investors do this strategy, but they do it at the fund level. What is unique about your fund that is also similar to what’s unique about ours is we’re both doing the same thing in essence but just a different life cycle. Whereas we buy a defaulted loan where we want to rehab the borrower, to get them repaying, to either refinance the property or we sell out a loan or if we take it back and exit the property, the first person we would call is somebody like you, Peter, who is an investor looking for these properties.

That’s one of the nuances that investing people don’t realize. Most people think that a property is going to be beautiful, nice, and clean on the inside. I was shocked. We had two loans recently, both were in bankruptcy. The borrowers had gone two years without paying a bankruptcy, or they structured a payment that started at $100 a month. It was insane. We’re talking half-million-dollar properties.

They finally got dismissed from bankruptcy, meaning that they didn’t have protection anymore. They put the house on the market to sell. I’m sitting here thinking, “I can only imagine,” but both properties were immaculate. Some were newly renovated. I was like, “At least I know where they were taking the money and not paying their mortgage, where they’re putting it at least.”

We have a mortgage side of our business. My partner Wade runs that. There are certainly synergies We’re note investors that don’t mind touching the property a lot of times, especially coming from seconds. Knowing a lot of second mortgage investors, the last thing they want is the property. They want to work out an agreement. They want a payment plan, but with first mortgages, depending on what you buy.

We primarily buy heck of loans where it’s vacant. There’s no one there to get a workout agreement with. We end up taking the property back and then we will touch about 90% of what we own in some way, shape, or form to add value, and then put it on the market. That is a big differentiator because a lot of note investors, the last thing they want to do is touch the property. Essentially, like you said, it’s a similar strategy in the sense that you’re buying a paper at a discount. You’re adding value through this work-out agreement, and then you can sell it as a reforming loan at a market for much more than that or you can keep it as a rental, paying on a payment plan or that kind of thing.

Did you get any loans in the last one?

I was talking away about that. We won $20 million maybe and I don’t have any ones that came out to. We bid the whole thing. It was like $150 million or $190 million. We won $20 million, which is about right. You’re not going to win them all. You probably don’t want to win them all. That means you probably paid too much.

It’s one of those things where if you’re winning too many, then you probably overpaid. We did and it’s a part of the business. It’s not a part of our funds that we raise capital for. They’re all real properties, but there is some synergy there, depending on how we buy and what we’re buying. You could be getting properties at an even better discount, buying them in the paper position.

Pre-REO is a word that I like to use here thrown around. As I said, it’s a vacant property. There’s no possibility of work-out agreements. You’re going to take the property back. If it’s in our target market, which is as I said, Philadelphia, Baltimore, South Jersey, it could be something that fits the rental portfolio. It’s a different way of looking at the paper space that most people don’t.

This is my first go around with these and we put some numbers in. Unfortunately, we didn’t get any, but now it’s good. I’d rather not get everything. As you said, if you went for everything, now you’re looking at the new pool that bids in three weeks or whatever.

They are occupied I believe. Aren’t they?

These are occupied. They were occupied but some of the ones that we’ve looked at, I don’t think they’re occupied. They may be.

They might not. It could be squatters, tenants, heirs, or something like that.

I’m curious because, essentially, if it’s a reverse mortgage, you don’t have to make payments. You get money over time. You have to be over 55 or 60 years old to get them. You have to go through all these programs, but it’s a program for people who are older in life and can’t afford tax insurance and a lot of these mortgages anymore. They have a lot of equity which builds over time. It helps them come through.

Now, they’ve just released, the two combined totals are I don’t know what, $800 million, and these loans are now non-performing because when the borrower passes away, a lot of them are underwater for some odd reasons I don’t know why, or whatever the case may be, government efficiencies of valuing property, I guess.

There’s not a lot of loans. To your point though from before, sometimes they could be putting the money into a property. They’re tapping the equity. They’re making improvements to the property. We’ve certainly over the years been surprised by the condition of the actual property, but that’s not always the case, Certainly, there are horror stories too.

When you do it long enough, you know from looking at it in pictures. It’s the typical however the outside look is probably going to give you the idea of the inside. It spans the spectrum. I remember too back in the day, there was always a percentage of doctors, attorneys, and people who made good money. They were gaming the system. It was a second home and they stopped paying. Nobody ever went after them so they kept up. If you’re doing that business long enough, you hear and see a lot of different stories. It’s crazy.

2025 Real Estate Market Outlook

Shifting gears a little bit, As we wrap up the end of the year coming up in 2025 in regards to real estate, I believe real estate today is driven by specific markets. You can’t look at it on a national level. Philly is going to be very different than Austin, for example. Based on where you’re located in your target markets, where are you seeing 2025 start to pan out? Are you seeing more inventory coming? Are you seeing prices settled down a little bit in rental rates overall? What are you seeing coming forward for next year in your market?

 

I think of it the same way. I hear a lot of people look at macro trends. That’s nice to a certain degree, but you have to know your market and what’s happening in your market. That’s why I tend to not pay too much mind to the national news and real estate news that you hear on television or national articles. They’re taking information from all over the country. Those micro-trends can be so different.

For us, from a macro perspective, I love workforce and affordable housing, single-family and multifamily too. It’s just the deal needs to be right, but there’s such a supply constraint for that type of product. We’re not creating new units on either side of the spectrum, especially in single-family. I think it was less than 3% of new homes built were valued under $250,000. There is a scarce commodity. I like that part of the business. It’s only getting worse.

Nothing is happening on a state, federal, or local level that we’re seeing in our markets or in any market that’s creating this huge influx of affordable units. It has become part of the national conversation more and more talking about creating more units. It sounds good but a lot of it is a local issue with zoning. You probably don’t want the federal government coming in and telling local zoning what they can and can’t do. You’re going to push back there big time.

It creates an opportunity. That’s why I like what we’re doing with workforce affordable housing, especially on the single-family side. When money is created through grants or through the federal government, it tends to go to large institutions that therefore develop large apartments and communities. A lot of times, that tends to be studios, one-bedrooms, two-bedrooms, and a very small percentage is 3 or 4-bedroom. It’s almost unheard of. It’s the smallest percentage.

There’s a massive demand for 3-bedroom or 4-bedroom homes. You have families that need this type of product as well. The other thing is I love the markets that were in. Unfortunately, we didn’t experience the massive appreciation that some of the South, the Midwest, and the Rust Belt have over the last few years. They’re starting to crawl back too. Rents are leveling off, and the value of appreciation is leveling off.

A lot of that has to do with when they get that migration, it not only supercharges the investors in those markets, but then it gets national attention. Investors are coming from all over. I know people in Philadelphia are going down to Austin. They’re going to Atlanta or Arizona, all these different markets. That then creates a lot more supply. A lot of new developments have come online and coming online. There’s still a massive need for affordable workforce housing. There’s still a massive need for the single-family. You look at the gap between new housing starts versus new housing formation.

 

To your point, in some markets in the South and different parts, there’s been a lot more development. There’s been a lot more supply. It has started to level off. We’ve seen some tick-up in supply in our markets but we’re still seeing the appreciation of rents and home values. I think we’re going to continue to because it’s the built environment. We’re investing in urban metropolitan areas, even in this rounding suburbs of them.

There’s no opportunity for these large tracks of land being developed as you see in Texas and some of these areas with invitation homes and American homes around those large institutional SFR companies, doing community. There’s not a lot of opportunity for that in the markets that we’re investing in. That’s where we can strive and thrive with scattered sites, single-family redevelopment of individual properties, and small portfolios. I love what we’re doing because it’s somewhat isolated from like the interest rate market. How we’re financing single families is different. We’re not using commercial loans like how you would finance multifamily.

They are good rates on 30-year fixed, 30-year am-type products. We have options for different things because of the markets we’re in and because of the supply and demand. As interest rates have gone up over the last few years, we saw our pricing go up with it. Rent prices absorbed it well. Home prices absorbed it well. It’s crazy. I see houses every day that I think, “That thing is going to sit,” and it doesn’t. A freakin weekend goes by and they’re getting above the listed price offers still and people waving inspections. It’s still very hot in our markets. I think it’s going to be for some time. It’s just a lot of supply constraints.

Even if you see houses every day, it will not sit there and not change its price. Sometimes, only one weekend passes and a house get way above the listed price. Share on X

Why Peter Likes “Get Rich Slow”

The way I look at things when you talk about go-to-market and supply constraints. I always joke because take Washington DC as an example. IRS complains about the amount of affordable housing. The first thing people always knock the developers or whatnot. They’re their worst enemy because they’ve got this stupid rule that you can’t go above seven stories or whatever the height is throughout the entire city.

You got the federal triangle, which I can see there. When you get to the outskirts of the city, when it’s a diamond shape, or when you get up to the top diamonds or even some of the other locations, which allow high-rise, allow somebody to go 20 to 30 stories in certain areas, it’ll bring in some new development or so forth versus if you want to have it because all it does now is there’s limited supply and high demand, and pushes the workforce housing further and further outside the city.

I look at your strategy as a traditional real estate strategy of get rich slow. You’re in an area that appreciates over time. It’s urban and not going to explode like Boise Idaho did or Austin or some of the other places. Usually, when those places do explode, they also pop. In Austin right now, I’ve seen people who have $1.5 million to $1.6 million homes. With the interest rates where they’re at now, they’re lucky if they can get $1 million for that home, or try to push that number.

The one thing that people still need to understand, whether it’s workforce housing or any type of housing, is how much somebody can afford. That’s what it boils down to. Companies do not pay somebody like, “I’m going to pay you this much more because housing went up in this area this year.” I wish it worked that way but unfortunately, it doesn’t work that way.

You’re 100% right. We do a lot of networking and building relationships with cities, and municipalities, and go to a lot of those meetings, conferences, and forums. There’s a massive disconnect and a lot of people will look at developers as evil developers or investors raising prices. There are certainly some of that out there but at the same time, people don’t understand that price is up across the board. The land price is more, construction is more, and management is more. All of this stuff costs more than it did a few years ago.

Deals depend on that at the end of the day. A lot of times people don’t realize that. Affordable housing is a crisis. It’s been a crisis, it’s a crisis now, and it’s going to continue to be. Maybe the next generations will be more willing to participate in local government and planning commissions and allow for some looser zoning. A lot of these supply constraints are created through zoning. You can’t build duplexes or triplexes. As you said, you can’t go up a certain amount.

It creates an opportunity. From your side too, it’s a get-rich-slow strategy, but you’re going to cashflow along the way, which is nice. You always have the gentrification, which is a dirty word. It’s something that you could potentially benefit from as an investor in certain areas. You’re benefiting the community in a lot of ways and making positive impacts, but that needs to be slow and gradual over time. Communities don’t want to come in and displace anybody.

There are a lot of opportunities if you know the right areas to be in. One of the things we tend to do a lot of is investing in hospitals. Hospitals want to be in good areas and they do a lot of community investment. These are little things to look out for when you’re in urban areas. People ask me all the time, “Why are you investing in war zones?” We don’t want to do that either. Just because it’s affordable housing or attainable housing doesn’t mean it has to be a war zone.

That’s the misrepresentation in Baltimore and certain areas in Philadelphia. It’s like, “It’s affordable so it must have heavy crime rates, bars on windows and doors, and you are afraid,” especially in certain parts of Baltimore where you get a very bad rap. I’m an hour from Baltimore. I’ve invested in Baltimore. There are areas in Baltimore that are good and are still affordable. There are other areas that you don’t want to be near in some of those areas. There are still areas that are urban, affordable, and workforce. A lot of people from the local community live and work there and they take care of each other.

It creates opportunity. I talked to investors and they poo-poo Baltimore or liberal runs cities. I see that as an opportunity. When you get on a plane and go to an event across the country and your Uber driver is like, “I’m buying homes in Baltimore,” that’s when you should be worried. That’s when the pricing is going to be baked into the market. You’re not going to be able to find as good a deal. People ask me all the time, “How come you don’t go down south?”

A lot of it has to do with doing what you know and where you know. We’re vertically integrated and we want to be. There’s a time and a place to not be vertically integrated and leverage the expertise of a property management company. To be successful in affordable housing and to operate in those areas, you need to have control over the construction. The GC cost, managing them, the time frames, and the crews can make or break you.

To be successful in affordable housing is to operate in those areas and take control of the construction. Share on X

You hear hard stories in that space. A lot of times, you bought the property and went on Craigslist to find a contractor that night. You don’t plan. It’s like, “No water. I’m not surprised.” The same thing with tenant screening. It’s like, “How did you screen tenants?” “I just took the first person that came along.” No wonder you had a problem.

A lot of times, when I have those conversations with people, you have to look at it as a business and not just a portfolio. That’s a good way to not just look at this business, but real estate in general if this is going to be your full-time gig. Even if it is a side hustle for you or something you do part-time, you probably want to look at it that way.

The way we look at the businesses is we look at it as a business and not just a portfolio. That’s where being able to scale comes into play as well because there are a lot of benefits to that. One of the reasons why people like multifamily so much is that the economy of scale works the same way as single-family too.

As we wrap up this episode, thanks for having it on. If there’s one piece of advice you could give to people out there who are looking to invest either actively or passively, what’s something that pops into your head that you saw somebody do something like that and you’re like, “If they only knew this?” There are probably a million of them. I only ask for one.

When you said that, a million things were flowing in my mind in different ways. There are so many different buckets in the space or as I like to say flavors of real estate. Within it, there’s the capital, the acquisitions, the execution, and all the tentacles that are involved there. If you haven’t picked up on this by now, then let this be the last time you need to hear.

What worked over the last couple of years isn’t going to work over the next couple of years. You have to do things differently. Real estate is constantly evolving. There are a lot of different pieces of the puzzle that are making it evolve and change. You couldn’t lose money in multi-family a few years ago. The tide helped everybody out.

Adapting To The Changing Market

Even if you tried, I don’t think you could.

You hear those stories where it’s like somebody went to a weekend seminar and they became a syndicator and they bought a building with 97% vacancy, and then somehow got down to 82%. It’s like, “What the hell did you do?” Over the last couple of years, you had to try to lose money in multifamily. That’s not the case. It’s not going to be the case. Projects are going to take longer. Underwriting should have changed by now, and it’s going to continue to evolve. I would say that you might need to reevaluate your strategy.

Don’t overlook affordable housing. I have data that we use in our presentations. It’s easy to look this up. Affordable housing tends to outperform every other real estate asset class. A lot of people shoo it off because of the tenants, the areas, or the reputation of it. if you’re doing it right. it’s probably going to beat out any other type of asset class that you’re investing in because it has a massive demand in any market. If we are heading towards a recession or downturn, it tends to have even more demand.

Affordable housing tends to outperform every other real estate asset class. Share on X

I would say you have to look at what you’ve done, and then plan for what you going to do. I always come back to supply and demand at the end of the day. It’s looking at investing as a business. To your point, I like to look at it from a micro perspective. Where exactly am I investing? What are the supply constraints? Where is the demand? Fill that need and you should be able to find success doing it that way.

I also want to add that it’s in every facet of your business too. Raising capital today is very different than it was several years ago. Managing is very different. Everything is very different. There’s a great article that somebody in multifamily wrote about management from a few years ago and the way the markets were allowed for all your sins to be forgiven. Today, you need to manage your assets. I’m a big football fan, so the analogy that pops into my head is when you have Tom Brady or Patrick Mahomes on your roster, that general manager can still have a lot of screw-ups, but those things get forgiven.

I used the Patriots as an example because I’m from England. The moment Tom left, all of a sudden, they had to play on an even playing field and now our management because we got lucky, we have to execute on every front. Everything gets amplified because it was easy and now it isn’t. It’s like, “I can’t do what I’ve been doing all these years. I have to change my strategy.” A lot of times that doesn’t happen. When it doesn’t, it doesn’t lead to success.

You hit the nail on the head. I’m such a believer in that, and coming from a company that was around for a long time and continues to be around for a long time, and then starting this firm, we’ve been in business for a little over five years. In raising capital and dealing with investors, you get that question all the time. “Why should I invest with you guys versus somebody who’s been around for 15-20 years?”

My questions to those companies would be how have they evolved into real estate. When they started, I’m sure the strategy they were deploying back in those days and the team that they’ve built around it, how has that evolved to fit the strategy that they’re the point today? The larger you are, the harder it becomes. You can look at it as a ship. If you have a tiny little boat, it’s easier to turn it and move and have it flow, whereas if you’re steering the Titanic or a big cruise ship, it’s harder to do that when you have employees and you have all these people to do one strategy and the market changes.

Sometimes that’s good advice to an investor. When they’re analyzing companies and partners to invest in, how have they evolved their strategy? you’re 100% right, especially on the fundraising side of the business. Things have changed so much over the last ten years. It’s insane, with social media and AI. Back in those days, finding an investment on Facebook, you’d be left off. Nobody talked about it. It was unheard of.

 

I can still remember meetings I had back in those days where it was like you were getting left out of the room. Nowadays, I don’t know an investor who hasn’t at least called and had conversations. That’s how they’re finding deals on LinkedIn and all. Every part of the business has evolved and that’s great advice to know. If you’re doing it yourself, how are you evolving? If you’re investing passively with others, that’s a good question to ask them, how have they evolved over the last couple of years?

Peter, thanks for coming on today. If people want to reach out to you, what is the best way for people to connect with you?

GSPREI.com is the best place to find me and find out more about the funds, the company, our strategy, and what we do. There are plenty of articles and podcasts. Once this is available, I’ll put it up there. You can contact me through there. My emails, calendars, and all that stuff are there.

Peter, thanks for joining us on this episode of Creating Wealth Simplified. As always, make sure to leave a review, like, and share this with a friend. Thank you all. Take care and we’ll catch you on the next one.

Thanks, Chris.

 

Important Links

• Peter Neill on LinkedIn
• GSP REI
• PNeill@GSPRei.com

 

About Peter Neill

Peter Neill is the Co-Founder of GSP REI. Peter plays an active role in the management of the company and its various fund offerings. He works closely with the company’s Managing Partner overseeing all aspects of the business including acquisitions, construction, property, and asset management. Mr. Neill is responsible for fulfilling the company’s fundraising goals and manages the company’s marketing and branding, including Investor Relations.