All Forum Posts by: Paul Shannon

I'm assuming these properties are in an LLC? If so, you may want to check with Lima One, Corevest, or Visio. They all underwrite these types of of cash-out refis. However, their underwriting guidelines have changed in the short-term, so unsure about their appetite currently.

I think Q3 will be better than Q2, but not by much.  I agree that it could take until the end of 2021 or beyond for demand to come back and our economy to roar again.  I also think that's depended on businesses at least staying open and gradually loosening restrictions.  Not the alternative of shutting them back down again in the fall and keeping schools closed.  That would be disastrous for GDP and job losses and further dollar devaluation through money printing.  

Deflation, Inflation, hyperinflation.....don't know.  But I do know that there is a consequence to the life raft we've provided our businesses in the name of being compassionate towards our most vulnerable's health.  Building cash.  

Looks like the ibuyers are back at it:

https://www.forbes.com/sites/d...

100% on occupied units as of today.  Having a difficult time filling vacant units though. 

Any real estate investment is only as safe as the LTV used to buy it and the amount of reserves stashed away to weather inevitable storms. Regardless of the cause.

I'm being cautious, but also opportunistic.  As of today, C class properties are probably the riskiest, b/c unemployment has hit that demographic the hardest and rent collection is suspect.  But they were riskier to begin with.  I would steer away from markets that have been hit disproportionately by COVID, as specially tertiary markets, in that asset class for the time being, but for those with guts, there could opportunity. 

I think Real Estate is very safe and will be only stronger in the medium-term.  What's not safe is investing in a 60/40 stock/bond portfolio and expecting past results.  40 year bull market in bonds is over.  They pay no income anymore.  They are in a bubble.  Where does a retiree go to generate steady income in their portfolio?  

How about real estate?  What can provide inflation protection and has relatively low volatility.  How about real estate?  I think I just came up with my new private money raising pitch. 

There's good debt and bad debt.  

Bad debt - think credit cards and car payments.  Usually things that are depreciating assets.....get rid of it.  

Good debt - appreciating assets like real estate.  If you borrow money to buy a house that's going to produce income to cover those debt payments, the operating costs of owning the asset, and have money to cover capital replacements/reserves, it makes sense to leverage. 

Vinyl is set and forget and indestructible.  For $1-1.50 more per square foot installed than carpet, all-day everyday.  It will save you money in the long-run.  Only time I consider carpet is if I plan to sell.  

This is a personal risk tolerance question more than anything.  A general rule of thumb I've heard is you should carry limits of insurance that match your net worth.  A typical general liability policy will insure up to $1M.   If you had a $2M net worth, it would make sense to carry a $1M umbrella.  So if you have $50,000, I would personally not see a benefit.

Cash is king in a recession.  It doesn't earn a return sitting idle in a bank account, so so most people want to put it to work and leverage it.  However, It's nice to have those reserves when markets do unexpected things.  You have a fortress of protection around your portfolio to handle whatever is thrown your at you.  Once you've dodged those landmines, you come out the other side with a war chest to take advantage of opportunity.  

This is an interesting question.  As it relates to commercial office buildings, I've thought about this. My wife has been working from home since the start of COVID.  All Zoom calls, conference calls, has her two screens set-up in our office.  She was commuting an hour every day downtown and an hour home.  

So, if I were a CFO/COO of a company, I'd be looking at productivity. My guess is she is slightly less productive at home than in the office. However she's picking-up two hours a day by not commuting. If she therefore works 20% more productive from a time standpoint, but is 10% less productive from an efficiency standpoint, there is a net gain of 10%. Even if that was a small net loss, wouldn't it be worth it to get rid of that massive commercial lease rent payment? It also solves some of the environmental/pollution issues we are trying to solve as a society.

I think the trend long-term is going to be much less commercial office space.  The unused space could be converted to residential or something else.  There could be opportunity there for those that have the vision to see it.