All Forum Posts by: Dean Ng

Their DRE license has been suspended multiple times due to failed audits and co-mingled funds 

OneRent DRE record

Onerent Inc and Fred Glick H-12487 SF

Onerent, INC. and Fred Glick H12487SF (ca.gov)

Onerent, Inc. and Fred Glick H-12730 SF (ca.gov)

 That's the problem, I don't trust most contractors in general.  There is  one roofing company I trust but they don't do repairs.

There's also the fact that this property is expensive and I think these roofers show up and immediately see dollar signs.  That's another reason I considered paying for an inspection. I found some inspection companies that don't do repairs so there's less conflict of interest.

The drone guy was less expensive, but considering how much less work he would do, he's actually more expensive relative to hours worked.  His business is 5 years old, and has mostly 5-star reviews, which I'm suspicious of.  (I don't give much weight to online reviews especially when most of the reviewers each have a history of only a couple of reviews.)

The other guy is the estimator for a 25-year roofing company; I think they're more credible but you're probably right about them being more picky about everything.

I had a property tented for termites, which broke some concrete roof tiles.  I got free repair estimates (inspections) from two roofing companies.  The first estimator, who climbed on the roof, said there were 70+ tiles broken.  The second guy, who used a drone and didn't climb on the roof, said there were 15-20 broken. 

That's a big discrepancy.  I don't know who to believe, so I'm considering paying for a RE roof inspection.  There is a company in Calif called HomeGuard that listing agents use for pre-sale inspections.   Would a paid roof inspection be more credible than a "free estimate" from roofing companies?   HomeGuard is not cheap so I want to make sure this is worth spending money on.

I've been looking for a RE attorney in the SF/SJ Bay Area.  It seems many aren't interested in small tasks, because most don't even respond to inquiries.  What are some resources to find an attorney?

This is untrue.  It's possible with derivatives and hedges to reduce losses and volatility.  I've invested in the stock market for decades and when the SP500 was down 38% in 2008, I was up 2%.  When it collapsed 34% during Covid, I was down  only 6%.  All with the help of derivative contracts.  This is how many hedge funds operate, and it by itself isn't a sign of fraud or deceit.  There are numerous ways to make a stock portfolio less correlated to the stock market.

@Brian Burke

That's very useful information.  In terms of debt funds, I'm not considering them because their yields are only slightly higher than low-risk alternatives like GSE bonds and AAA CLOs.  There are also many cases of RE investment funds going belly up or turning into Ponzi schemes. 

@Carlos Ptriawan

NICHX doesn't seem very liquid.  It has no secondary market and the investor can only redeem once per quarter, assuming there isn't a flood of redemptions.  Short-term TDs would be more liquid since I can keep rolling them. 

Covered call ETFs correlate strongly with the stock market.  I'm trying to diversify away from stock market.  

I was planning to borrow against my investment portfolio at 5%, then invest that money in fractional TDs.  By employing leverage, there's risk, which is why I started this tread (to find out how risky TDs really are).  There won't be any issue with cash drag, because when the TD pays out, I can pay off my loan and wait for another TD.

Your last comment was interesting:  You said you don't like volatility but you went all-in on RE?  Do you hold physical RE?  When I think of big swings, I think of RE, especially leveraged RE.  I owned multi-fam from 2004 to 2011 so I've experienced some wild swings; that's why I'm looking at TDs now.  Being a landlord wasn't for me, but TD investing might be OK because it's just a secured bond

@Jeff S.

The fractional TDs I'm considering buying are existing, performing short-term loans (6-18mo hold time) that a HML originated and are now selling (presumably to free up capital to make new loans). They yield 10.5%. So based on what you know, if a beginner were to snatch up several of these 10.5% TDs over time, and experienced typical losses for a beginner, what would their net be? 9.5%? 8%? That's what I'm getting at.

Yes I understand how different "characters" of income are taxed differently.  In that regard, long-term stocks are taxed at the lowest rate, because if I don't sell, there are no capital gains taxes ever.  (There are ways to monetize the unrealized gains without selling.)  TDs are essentially a bond and are taxed at the highest rates.  There are also note funds, but I'm not considering them because they're unsecured and pay only slightly higher than what I can get with safer  publicy traded funds.

So on the risk scale, with T-bills being a 0, S&P500 ETF being a 7, and a Meme stock being a 10, where would you put TDs with the parameters I specified in my first post?  Let's say we enter a moderate recession someday.

I come from the world of stock and bond investing, and am looking to diversify with fractional trust deeds purchased from a HML. I'm considering 1st position TDs with <70% LTV. The RE used as collateral are either SFH, multi-fam, or small commercial (like a small retail store), and all in Calif. Can someone with a lot of experience in TDs and stock-index ETFs compare these two investments in terms of risk-adjusted returns? If a beginner buys TDs as described in this post, and they yield 10.5%, what type of losses should be expected over the long run? I've done a lot of reading and no one ever discusses losses, but surely there will be some? And given that risk-free Treasuries pay 5.3% now, is a 5% premium over that worth it?