"Time To Sell!" Ben Mallah's Shocking Prediction For Home Prices, Falling Rents, & The Trump Economy

In this podcast episode, Ben Mallah offers an unfiltered look into the current real estate landscape as he navigates through the complexities of selling off assets, tax challenges, and strategic portfolio management. He discusses the hurdles investors face in today's market, including soaring interest rates, overvalued properties, and the heavy burden of deferred taxes. As he prepares for a significant exit from much of his real estate holdings, Ben shares insights into what drives the housing market, the impact of rising costs on rental income, and the long-term implications for property values and investment strategies.

The Tax Burden and 1031 Exchanges

A central theme of the conversation is Ben's looming $15 million tax bill, a consequence of years of property ownership with low cost basis due to previous 1031 exchanges. He explains how a 1031 exchange defers taxes but lowers the basis for future sales, meaning the government eventually collects its due unless the owner dies. With his decision to move on from active investing, Ben is focused on strategically selling assets while using 1031 replacement properties to defer taxes where possible. However, he highlights the difficulties in finding suitable replacement deals in the current environment because prices remain stubbornly high, and returns compressed due to elevated interest rates. He also describes the concept of a reverse 1031 exchange, allowing him to secure replacement properties before selling existing ones to comply with strict timelines and avoid tax penalties.

Challenges in Finding Deals and Market Staleness

Ben expresses frustration with the current market, where deal flow is low and many properties are overpriced relative to achievable returns. He is actively seeking about $100 million worth of real estate but struggles due to widespread high pricing—often around $150,000 per unit for multifamily properties—despite the fact that these deals rarely cash flow well at today's higher interest rates. This situation has caused market "staleness," where sellers hold out for unrealistic prices, buyers hesitate due to poor economics, and the next deal to solve problems seems elusive. He observes that many buyers who jumped in at peak prices are now "stuck," unable to refinance or realize gains, and hopes to see more distressed sales emerge as owners face mounting financial pressure.

Impact of Rising Interest Rates and Loan Maturities

Ben dives into how the rise in interest rates from historic lows has severely impacted property cash flow and loan servicing capabilities. Many commercial loans originated at low rates three, five, or seven years ago are reaching maturity and borrowers are faced with refinancing at significantly higher rates. In some cases, properties barely break even or generate negative returns, especially with interest-only loans ending, forcing owners to either pay much more or walk away. He predicts an eventual wave of distressed properties as banks run out of viable extensions and owners default, leading to potential foreclosures and sales at fire-sale prices, particularly for assets that do not generate strong cash flow today.

The State of Commercial Real Estate and Retail

The conversation turns to the retail sector, which remains popular among certain investors despite challenges. Ben notes retail properties with established tenants and solid cap rates around seven percent still have buyers. Unlike other sectors, retail's losses come primarily from vacant spaces, which investors can capitalize on by quickly leasing out empty units and increasing income almost overnight. However, complicated lease agreements with corporate tenants can pose challenges, including restrictive clauses about views or property modifications that require careful navigation. Ben also discusses the decline of malls and office buildings post-COVID, with many malls being repurposed or demolished and offices seen as largely worthless due to the shift toward remote work.

Residential Market Outlook and Florida Real Estate

Ben shares his perspective on the 2026 housing market and highlights Florida's residential sector, which he believes is slowing after significant price gains. He points out that some areas, especially condos, have seen declines of up to 20% from peak values. Rising property taxes and insurance costs, driven by natural disaster risks like hurricanes, add further strain on homeowners and investors. He notes many renters are opting to rent instead of buy given current mortgage rates that hover around five and a half percent, making renting comparatively cheaper once all ownership costs are factored in. Ben anticipates a potential market correction if interest rates remain elevated and economic conditions weaken, but also notes some regions remain attractive due to demand and limited supply.

Family Business and Passing on the Portfolio

An integral part of Ben's approach involves grooming his children to take over the family real estate business. He stresses the importance of responsibility and hands-on experience over formal education, emphasizing how his kids have proven themselves through real operational roles instead of just theoretical knowledge. Ben relates the story of pushing his son into property management early, instilling discipline, and making sure they understand both the risks and rewards involved. He contrasts this with what he perceives as the limits of employee loyalty and commitment compared to family involvement, stressing that ownership stakes are key to motivation and growth. This transition is part of his larger plan to "set up the kids" with a robust multifamily portfolio while he steps back into a more consulting and advisory role.

Investment Philosophy: Multifamily Focus and Avoiding Risk

Ben explains his current selective investment stance, where multifamily properties remain his preferred asset class due to steady demand for housing. He deliberately avoids office buildings, which he sees as obsolete, and is scaling down his exposure to hotels because they are more operationally intensive and volatile. He also expresses caution regarding retail and industrial but shows openness depending on specific deal merits. Strategic renovation and value-add improvements are approached with a strict ROI mindset, knowing that every dollar spent must translate into increased net operating income to justify the investment. Ben's philosophy revolves around prudent risk management, staying away from "dogs" or properties that require excessive fixes or have uncertain upside.

Managing Expenses and Renovation Strategies

Ben discusses cost-saving approaches in property management and renovations. His son and team often perform renovations in-house or under payroll to avoid contractor markups and overhead costs. He highlights buying materials directly and supervising work carefully as ways to reduce expenses while maintaining quality. The conversation touches on how renovations should be tailored to the market and property type—sometimes a simple roof replacement is all that's required, whereas other properties need kitchen upgrades, new appliances, or updated flooring. He stresses analyzing how renovations impact rents and property value, with the ultimate goal of improving profit rather than aesthetics alone.

The Role of Technology and AI in Real Estate

Ben acknowledges the growing role of AI and technology in streamlining real estate operations, particularly underwriting and contract review. His son uses AI tools to quickly analyze contracts and get insights that accelerate decision-making. They also utilize AI-assisted design and staging to visualize renovations and improve marketing. Ben believes AI can help identify promising deals faster by filtering large datasets and extracting those matching investment criteria, saving time and effort for investors who would otherwise sift through numerous listings manually.

Real Estate Market Dynamics and Distressed Assets

Throughout the episode, Ben returns to the theme of distress and opportunity. He predicts an inevitable influx of distressed properties due to the convergence of higher interest rates, loan maturities, and owners unable to refinance profitably. Banks have so far delayed forced sales and foreclosures, but these extensions cannot last indefinitely. He anticipates the "dogs" or worst-quality assets will surface first, often in secondary markets or prone areas like flood zones. Although some properties look cheap on the surface, hidden maintenance issues and negative cash flows make them unattractive. Ben hopes to capitalize on these eventual opportunities but remains patient as the market slowly adjusts.

Thoughts on Inflation, the Economy, and Government Policy

The conversation touches on broader economic factors influencing real estate and personal finance. Ben criticizes government inefficiencies and the lack of manufacturing focus in the U.S., lamenting the reliance on importing goods. He also notes that inflation and rising costs squeeze everyday consumers, leading to reduced spending on necessities, as evidenced by higher food and car prices and slowing sales. Regarding property taxes and regulations like those affecting storage units, he emphasizes the need for balance, cautioning that eliminating or drastically cutting property taxes could harm local government services. Ben stresses that careful, moderate solutions are preferred over sweeping reforms.

Lifestyle Changes and Personal Reflections

Sharing candid thoughts about aging and lifestyle, Ben reveals his desire to reduce responsibilities and simplify life as he approaches retirement. Despite still managing a vast portfolio, he wants less daily pressure and more time to enjoy his interests like boating. He speaks about downsizing his home, moving out of big family houses, and limiting his asset classes to what his family can manage. Ben also touches on health challenges and weight loss struggles, showing a human side beyond his business acumen. He discusses the cost and upkeep of luxury items like his new yacht and cars, explaining how such assets contribute to his quality of life.

Real Estate as a Family Legacy

Ben's overarching goal is preserving wealth and easing the transfer of assets to his children. He stresses the importance of strategic planning to minimize tax hits, maximize inherited value, and ensure his family is financially secure without his constant involvement. Consulting and advisory work are seen as his future focus, shifting away from active deal hunting. Ben encourages aspiring investors to get involved in real estate at some level as a foundation of lasting financial stability, emphasizing that the business is constantly evolving and requires ongoing learning and adaptability.