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Tiho Brkan

@TihoBrkan

16 Oct

How to do a due diligence process for development projects:

1) start with the project overview which explains the key figures & stats

1a) if this isn’t attractive, 90% of the time you’re not going to bother with deeper analysis

2) look at the GP / developer, their recent...

...and long term track record, especially the way they handled the last major recession (2008)

3) understand the location, both the macro (country, state, city) & micro side (borough, suburb, streets) and focus on transport links, infrastructure and surrounding amenities

4) analyse the macro & micro location price trends over the last couple of decades, last few years and especially price trend pre & post Covid

5) now start focusing on the proposed construction projects, doing due diligence on building permit / developer approval first

Read 19 tweets

Tiho Brkan

@TihoBrkan

6 Oct

A friend from Vietnam calls, she is a successful real estate agent.

I used to live in Saigon 5 years ago. She asks how I am? How is everything going during the Covid crisis?

She also asks me if there has been many opportunities in Australia for real estate during the recession?

She remembers that I don’t like buy new off the plan apartments — like the way they sell them across Asia and especially in Vietnam for foreigners.

She knows I’d rather buy distressed and force appreciate them. So she asks me if there are now many opportunities there?

I told her no, not really.

Not a lot of opportunities in Australia that one would normally think would come during a recession anyway.

She asks me why not, obviously completely confused at this point.

I said:

Situation in Australia did not get scary like in 2008.

Read 4 tweets

Tiho Brkan

@TihoBrkan

5 Oct

A lot of success that occurs in life can be attributed to timing — being at the right place and at the right time.

An acquittance of mine told me a story the other about how his father was very successful in real estate until the 2008 GFC came alone.

Result? Lost everything.

Personally, I did some real estate investing after the bust during 2014 onwards — when the boom got underway.

Result? Lifechanging results.

People would like to attribute success to their wits, smarts & intelligence.

The truth is, for the most part, its just luck & timing.

Don't let your ego get in the way. Remain humble & understand that asset prices, the economy, and investing are very cyclical.

Eventually, it all comes back full circle. After all:

"There are two types of investors. Those who are humble. And those who will learn to be humble."

Read 4 tweets

Tiho Brkan

@TihoBrkan

2 Oct

Don’t compete against others.

If it’s not your goal to buy 1 property a year, hit a 7-figure salary or get a 10M turnover start up — then don’t do it!

Just because someone said “it’s a smart thing to do” it doesn’t mean it’s smart for you.

That’s why it’s PERSONAL finance.

Everyone in Australia (CA, UK or US) always tells me the goal isn’t net worth, it’s the number of assets you have producing passive income.

Guess what?

I didn’t follow their conventional wisdom & I did just fine.

I ended up traveling the world for a decade and did it my way.

I didn’t want to manage 12 properties, have massive loans (even if others pay down its debt), nor did I want to have a business start up so I remain stuck in one place.

My financial goal wasn’t “a number” (net worth or passive annual income).

My financial goal was FREEDOM.

Read 4 tweets

Tiho Brkan

@TihoBrkan

1 Oct

1/ As you get better at your niche, you start to recognize the good from the ugly.

Example:

• nonperforming loan
• mezzanine debt opportunity
• London construction project
• interest rate 20% pa
• gross exit LTV @ 78%

What is the real risk here? (continued)

2/ At 78% LTV, you do have a meaningful buffer/cushion from the equity holder + their potential profit.

However, the story gets better.

First, traditionally London developers have had to build a certain part of the residential development in the so-called "affordable" space.

3/ As an example, with a 20 unit building in central London, you might also have 1 commercial space below and 4-6 affordable units which are traditionally purchased in bulk by registered housing associations.

These are usually the easiest to sell & go straight away.

Read 7 tweets

Tiho Brkan

@TihoBrkan

29 Sep

The real estate peeps who think 75% LTV is "safe as houses" are another GFC repeat away from getting taken to the cleaners.

US multifamily dropped -25% around the country during the 2008/09 period. High rises dropped -30%. NYC, Phoenix, LA, Palm Beach, Miami all dropped >30%.

Not predicting a crash is around the corner, just posting the lessons of the previous downturn, which will be useful to some and a "seen it, but don't care about it" to others.

Today, CAP rates all around the world, not just in the US, are at rock bottom historical levels.

Expect...

Today isn't 2008 anymore.

There are no more rate cuts to be made like in 2008. And they have done so much QE1,2,3 & 4 already, that investors are already questioning the confidence they hold in central banks' abilities to stimulate the economy.

Read 8 tweets

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