1/ Real estate strategies.
Core: 7% IRR, low risk, focus on cash flow, long term strategy
Value Add: 15% IRR, medium risk & leverage, focus on forced appreciation
Opportunistic: 20%+ IRR, very high risk & high LTV but short duration, focus on development with construction risk
Core: 7% IRR, low risk, focus on cash flow, long term strategy
Value Add: 15% IRR, medium risk & leverage, focus on forced appreciation
Opportunistic: 20%+ IRR, very high risk & high LTV but short duration, focus on development with construction risk
2/ I'm getting a few private messages about real estate, which I believe is good.
The classic public portfolio of stocks and bonds, at least in the US, is likely to disappoint the buy & hold investor. Stocks might do 3-4%, bonds half of that.
The classic public portfolio of stocks and bonds, at least in the US, is likely to disappoint the buy & hold investor. Stocks might do 3-4%, bonds half of that.
3/ Coming from the stock market game, real estate is looked at as a single door purchase. That cannot be further from the truth.
Buying an apartment, off the plan, with a view to rent it, is not really investing in real estate. I'd called that "getting suckered" by a developer.
Buying an apartment, off the plan, with a view to rent it, is not really investing in real estate. I'd called that "getting suckered" by a developer.
4/ Some of you might be thinking it sounds awfully crazy to invest into development strategies.
In some ways, you are right. Risk is high & there are many moving parts to keep control of.
On top of all the other risks, you also have construction risks to consider.
In some ways, you are right. Risk is high & there are many moving parts to keep control of.
On top of all the other risks, you also have construction risks to consider.
5/ However, any day of the week, I'd rather invest in a development project over a venture capital fund or an actual startup.
Developers with solid track records, who are 20 for 20 & finished projects even during downturns, make a lot more sense than throwing darts at the...
Developers with solid track records, who are 20 for 20 & finished projects even during downturns, make a lot more sense than throwing darts at the...
6/ ... board to see which startup lands — if any?
That is a metaphor for throwing millions at VC fund "ideas" to see if any, or at least one, works.
We've seen great VC investors during this tech boom, but as the cycle turns, things will look a whole lot different from now on.
That is a metaphor for throwing millions at VC fund "ideas" to see if any, or at least one, works.
We've seen great VC investors during this tech boom, but as the cycle turns, things will look a whole lot different from now on.
7/ Public equities & bonds are very expensive with future expected returns likely to be low.
The venture capital cycle seems to have turned with the WeWork drama...
...and cash continues to yield awfully low interest.
The venture capital cycle seems to have turned with the WeWork drama...
...and cash continues to yield awfully low interest.
8/ The last cycle end was marked with a real estate crash. Naturally, everyone is now scared of another one to follow.
However, that is not where excesses exist, in my opinion. Private RE could end up outperforming, but not everything will work.
Deal selection is the KEY!
However, that is not where excesses exist, in my opinion. Private RE could end up outperforming, but not everything will work.
Deal selection is the KEY!
