Just follow Sam Zell and do what he does. He is the number one commercial real estate investor ever. Mr. Zell is Chairman of Equity Commonwealth ticker (EQC). He has liquidated most of the properties the company held and the balance sheet holds net cash almost equivalent to the stock price per share. This signals he is waiting for the commercial real estate markets to implode and THEN he will get his staff busy bringing in proposals for deals. He's experienced and shrewd. In investing one has to buy real estate when nobody wants it or can no longer hold on due to high debt payments.
"We eat our own dogfood" he said. Sounds to me like this narrative is being peddled for all the people who are hoping not to lose the foolish money spent and/or unjustified equity gained from property holdings in this run-up.
I’m surprised they have had deals where you lost 50-100% of your investment. That’s strange in CRE. That would have to be a foreclosure of deed in lieu
Real estate agents are perma bulls until the last overpriced property gets sold, then they flip. We could have multi year property value declines. The cheap money created panic buying, creating rapid price increases. If sales slow or even stall, property values will cool and may decline. Without the inflationary effect on the assets will the public still feel pressure to be buyers. Will there be other investments more attractive?
As always, Adam does a great interview, but Ian comes across as always talking his own book, which is natural, but not convincing. Most people think there will be a recession and don't think it will be a speed bump. The one area that I would have liked to see better covered was the potential for a lot of commercial tenants being zombie companies that can't pay their rent...
Real estate profits aren't solely based on inflationary rent growth as this guy seems to keep emphasizing. Like any equity ownership in business, real estate profits are a function of pricing power (rent growth) less overhead like taxes, maintenance and lending costs. Yes, real estate is "tangible" which means the overhead is also tangible. Labor costs like property management, handyman and repair services will increase as will raw materials needs to keep real estate in rentable condition. Combine increased costs of RE ownership with the illiquidity of your capital and you're really taking on some risk by investing in real estate going into an inflationary environment. There are also significant political risks as real estate is an easy target for taxation, discontinuation of tax advantages, or even rent caps.
Selling a K-1 partnership property that's been heavily depreciated over the term of ownership will result in a lower cost basis, i.e. a higher capital gains tax bill upon future sale. Tax loss harvesting is only useful if you gift your properties to heirs AND we still have step-up cost basis rules in place in the future. There is political momentum building against this step up basis tax avoidance strategy that may not exist in the future, rendering all your depreciated tax losses merely a deferred capital gains tax in the future. Adam, you're too polite, but I get it, you're just being the good cop. The RUclips commentary peanut gallery is the bad cop.
Individuals DON'T "ignore" real estate. People are absolutely obsessed with real estate...so much so that prices have been driven to sky high valuations relative to underlying rents and earning power of residential occupants. Just ask, what is the average allocation percent of a median US household to real estate? Well, if they own their house, likely a vast majority of their saving are invested in to residential real estate. Ignore...please! This whole interview is a sales pitch with weak historical context.
He's betting that the rule of law will stay intact. When the economy, financial system and USD crashes, society will take a turn for the worse... renters are NOT going to pay their rents. What is the contingency plan against that?
what are crowd street's fees? I am sure they are substantial. They must have tremendous overhead for this type of structure with a lot of the money going toward advertising. How much investor money actually goes toward the investment? Their equity multiple is weak and the IRR isnt great considering only a 2 year hold. I cant imagine losing all your money in a deal in this market which is one of the hottest CRE markets ever. That takes special skill
PSEC is so much better structured and managed than "Crowdstreet" - they have no problem lending short duration secured and borrowing long duration unsecured. The management of PSEC Princeton, Harvard, and others. The stock is liquid (which means you can get in and out at will) and yields 9% against a NAV that is $2-3 above the trading price. You can roll your dividends in a drip with a 5% discount. Crowdfunding has a poor track record (see Patch of Land which was founded by a guy that went broke buying Red Mango franchises).. Crowdfunders put the risk on you, they take a cut of your cash to manage your money, and you get paid last! PSEC is a BDC which means you get paid as the company earns money.
Fundrise is a private real estate crowdfunding firm that allows unaccredited investors with a minimum of $50. I'm subscribed to an income plan and average around 2-3% appreciation and 7-8% cash dividends since 2018. Can't recommend Fundrise enough to the average joe wanting to put their money to work in something uncorrelated and much less volatile than equities, bonds, and digital assets.
Just follow Sam Zell and do what he does. He is the number one commercial real estate investor ever. Mr. Zell is Chairman of Equity Commonwealth ticker (EQC). He has liquidated most of the properties the company held and the balance sheet holds net cash almost equivalent to the stock price per share. This signals he is waiting for the commercial real estate markets to implode and THEN he will get his staff busy bringing in proposals for deals. He's experienced and shrewd. In investing one has to buy real estate when nobody wants it or can no longer hold on due to high debt payments.
Invest in REITs and you don't need to be an accredited investor. You also have liquidity.
Thank you!!
The only thing commercial I'd invest in is trailer parks and coin laundry.
Thanks great chat.. .God bless
He doesn't think we are going into a recession. Wake up Ian.
I agree. I can't see how we avoid recession. Energy cost going up, food, rent and housing. The consumer just getting squeezed.
Good info. Thanks.
Unfortunately I’m no where near wealthy enough to participate in this if I wanted to.
I’m short real estate and hope it tanks, even though I own it.
RE is the last thing anyone should be buying right now. BIG crash coming.
Buy Silver and Platinum. Neil's World .
What is the entity form that acts as the purchaser, an LLC? Are K-1s issued for Federal income taxes and the taxes at the state level?
"We eat our own dogfood" he said. Sounds to me like this narrative is being peddled for all the people who are hoping not to lose the foolish money spent and/or unjustified equity gained from property holdings in this run-up.
When the we are allowed to by in to private equity groups with less than a few million, the pump is done which leaves the dump
I’m surprised they have had deals where you lost 50-100% of your investment. That’s strange in CRE. That would have to be a foreclosure of deed in lieu
Still watching Frank G Melbourne Australia 🇦🇺 ❤️
still would love to see you interview Catherine Austin Fitts
Real estate agents are perma bulls until the last overpriced property gets sold, then they flip. We could have multi year property value declines. The cheap money created panic buying, creating rapid price increases. If sales slow or even stall, property values will cool and may decline. Without the inflationary effect on the assets will the public still feel pressure to be buyers. Will there be other investments more attractive?
"Real estate agents are perma bulls until the last overpriced property gets sold, then they flip." 100% truth !
As always, Adam does a great interview, but Ian comes across as always talking his own book, which is natural, but not convincing. Most people think there will be a recession and don't think it will be a speed bump.
The one area that I would have liked to see better covered was the potential for a lot of commercial tenants being zombie companies that can't pay their rent...
Real estate profits aren't solely based on inflationary rent growth as this guy seems to keep emphasizing. Like any equity ownership in business, real estate profits are a function of pricing power (rent growth) less overhead like taxes, maintenance and lending costs. Yes, real estate is "tangible" which means the overhead is also tangible. Labor costs like property management, handyman and repair services will increase as will raw materials needs to keep real estate in rentable condition. Combine increased costs of RE ownership with the illiquidity of your capital and you're really taking on some risk by investing in real estate going into an inflationary environment. There are also significant political risks as real estate is an easy target for taxation, discontinuation of tax advantages, or even rent caps.
The United state is renters
Selling a K-1 partnership property that's been heavily depreciated over the term of ownership will result in a lower cost basis, i.e. a higher capital gains tax bill upon future sale. Tax loss harvesting is only useful if you gift your properties to heirs AND we still have step-up cost basis rules in place in the future. There is political momentum building against this step up basis tax avoidance strategy that may not exist in the future, rendering all your depreciated tax losses merely a deferred capital gains tax in the future. Adam, you're too polite, but I get it, you're just being the good cop. The RUclips commentary peanut gallery is the bad cop.
Individuals DON'T "ignore" real estate. People are absolutely obsessed with real estate...so much so that prices have been driven to sky high valuations relative to underlying rents and earning power of residential occupants. Just ask, what is the average allocation percent of a median US household to real estate? Well, if they own their house, likely a vast majority of their saving are invested in to residential real estate. Ignore...please! This whole interview is a sales pitch with weak historical context.
He's betting that the rule of law will stay intact. When the economy, financial system and USD crashes, society will take a turn for the worse... renters are NOT going to pay their rents. What is the contingency plan against that?
Great point
The 👍 is for you Adam ,this guy have too keep his job I understand, here a Boston the 80 % houses the last 2 years ( junk)
sorry-have a guest with a balanced perspective! This is too skewed to the upside .
what are crowd street's fees? I am sure they are substantial. They must have tremendous overhead for this type of structure with a lot of the money going toward advertising. How much investor money actually goes toward the investment? Their equity multiple is weak and the IRR isnt great considering only a 2 year hold. I cant imagine losing all your money in a deal in this market which is one of the hottest CRE markets ever. That takes special skill
PSEC is so much better structured and managed than "Crowdstreet" - they have no problem lending short duration secured and borrowing long duration unsecured. The management of PSEC Princeton, Harvard, and others. The stock is liquid (which means you can get in and out at will) and yields 9% against a NAV that is $2-3 above the trading price. You can roll your dividends in a drip with a 5% discount. Crowdfunding has a poor track record (see Patch of Land which was founded by a guy that went broke buying Red Mango franchises).. Crowdfunders put the risk on you, they take a cut of your cash to manage your money, and you get paid last! PSEC is a BDC which means you get paid as the company earns money.
98th, 7 June 2022
I think this guy is a little niave. Not a good guest.
Fundrise is a private real estate crowdfunding firm that allows unaccredited investors with a minimum of $50. I'm subscribed to an income plan and average around 2-3% appreciation and 7-8% cash dividends since 2018. Can't recommend Fundrise enough to the average joe wanting to put their money to work in something uncorrelated and much less volatile than equities, bonds, and digital assets.
I've been wondering about fundrise. In fact, I signed up several weeks ago but still haven't actually committed any funds to it.
Buy Shitcoin.