All Forum Posts by: Shafi Noss

Expensive markets often work better if you're doing value add, commercial, or are looking at long term appreciation. It just happens that most people are thinking about rentals and whether it will cashflow right away. Just depends on your strategy. 

@Chris Seveney A bit surprised to hear that on the risk, would've thought performing and non-performing notes would have pretty different profiles, and non performing would have higher risk than traditional RE by which I assume you mean simple buy and hold. Interesting to hear that's not the case. 

A few followup questions, you said there was less risk because of no leverage, and also that it's difficult to scale because cash is needed. If you raised cash that would be similar to leverage, right? So if cash was raised is the post-raise/leverage level of risk on performing and non performing notes still similar to past leverage traditional buy and hold?

Also on scalability, I understand your point about scalability being limited by capital raised. My understanding is that for nonperforming notes, value is added basically by buying at a discount and bringing the note back up to performance, or foreclose and take a spread on the asset. Is the time spent to do those less than in other areas of real estate or just once they are stabilized?

How does the range of risk, return, liquidity, time commitment, and scalability compare to other styles of real estate investing?

One of my investors in an actuary in NH. She is competent and may be able to provide some local contacts. 

This guy has good data on new construction: https://edzarenski.com/2021/01...

St Louis Fed has good historical data in general. The Stessa newsletter also does a nice job aggregating market information in a consumable format. 

I do some lending and developing in different areas, but live in the DMV. Would be good to get out and meet people again. Happy to connect with either of you. 

@Eric James This is a great discussion. 

I think @Russell Brazil makes a good point that real estate prices are a big component of inflation, so the key question is how does real estate appreciate compared to other goods?

It might be useful to look at the Case-Schiller Index, the S&P 500 of real estate, and adjust for inflation. This graph goes a step further and adjusts for M2 inflation, as well as median income. It's at least a start at tackling the question. 

Source: https://adjusted-for-inflation...

The other part of this discussion is whether leverage changes thing. I think it's fairly obvious that the answer depends on how much inflation there is and how much interest is charged. If you assume RE matches other goods in appreciation, and an interest only loan (amortizing gives the same results but is just more complicated to write) this equation calculates the increase in buying power as a result of leverage: 

*I wrote this here earlier but realized it was hard to read, will simplify and replace soon. 

Like Kerry said, the point of a refinance is to either get more cash with a bigger loan than the one you have, or get a smaller payment with a lower interest loan than the one you have. 

A refinance replaces any existing loans with a new one. HELOCs and home equity loans both lets you borrow extra on top of a current mortgage. But a HELOC lets you borrow and pay back at will, and a home equity loan is a lump sum but usually cheaper.

I'm working on a few new construction projects right now. My experience so far has been that the critical areas and finding a good GC, make sure there's room for delays in your financial projections, and be sure to get things started with the city permits as soon as possible. 

Recently supply chain snarls have caused long lead times for windows, so making sure those come in on time may reduce your project time significantly.