All Forum Posts by: Trevor Ewen

I have a friend in New Jersey looking for a $150k private loan. He is willing to pay a high interest rate in the 13-19% range. 

1. Loan can receive first lien on two, fully-owned properties that would (together) appraise more than $1MM dollars. There is no additional financing on either property.
   
2. He has poor credit, which is why he is seeking the loan. But, both properties have tenants and produce reliable cashflow.
   
3. Term is likely in the 24-36 month range, but that would be negotiated with the borrower.
   
4. He will pay for attorneys to paper up the deal so everything looks good from the lender's perspective.

To give you an idea, I have already offered $40k at 13% for a 13 month term. I am unable to go higher than that due to my own liquidity constraints, but I think the deal is strong and should be considered for anyone who likes this market, in particular. The homes are in Weehawken and Union City. The Union City property is a multi-family.

Please inquire with me to start, and I will have you on the phone with him if it makes sense.

@Louis Gaeta

Welcome! I agree with @Aubrey Tatarowicz. The first one is the hardest, gets easier from there.

I started investing out-of-state in 2014. Typical of cashflow investors, I targeted markets with higher rent / value ratios and decent regulation for landlords. As of this year, the strategy has performed well. Key thing is to buy with a margin of safety and understand that state regulation is not likely to favor the smaller landlords like yourself / myself.

Decent management will be your secret weapon. A lot of people love to brag about the extra percent they made on purchase, but it doesn't matter if you can't keep the place occupied. Aim for tenant stability and buy assets that are relatively stable. Managing a rehab long distance is not fun.

@Jon Hundley

The biggest opportunity is definitely in lead generation. Since it's hyper localized, the success I have had comes from analyzing local municipalities and their auction markets. I would keep it very tight. Work hard to get insights that no one else is paying attention to. If it's a "hott" area, you will get outbid, regardless of the analysis.

@Jason Merchey

I wrote this post 6 years ago, but I still think the points have merit. Just keep in mind that the 'recent' data is not so recent.

Short points:
1) Great for passive exposure to the real estate sector. Should be (at least) a small allocation in a portfolio.
2) Does not come with all the upside of private. Higher correlation with the market. You're investing in a corporation, etc.

One other thing to take not of. REITs tend to be over-weighted on large-scale commercial assets. There are some innovative models, but think office buildings, malls, and industrial real estate. Of those three, I am only bullish on industrial at the moment. There are distressed opportunities in the other two, but I don't think we've reached a point of realism on urban realignment and office space. Malls have been in trouble for years, so there's that.

@Scott Wilkonson

I am a software engineer and have done this several times. Most notably, I did one to analyze undervalued properties near military bases. More recently, I worked with a client to create a database of trailer parks across the country & Canada, using different online sources.

My advice is to hyper-target what you are doing and make sure you can take action in the short-term. As the situation on the ground changes (as COVID has made obvious to anyone) insights gathered several months ago may be irrelevant at the current juncture.

I also recommend staying away from people that over-hype machine learning and advanced methods. If they can't produce a spreadsheet / chart of insights, quickly, then it's not going to be of great use unless you are a large entity with the funding and timeline that come with a proper machine learning operation. 

@Yashank Choksi

You'll want to look for the biggest information inefficiencies in a given market. I often hear people (incorrectly) think that they can just evaluate Zillow listings and find hidden opportunities. Zillow is a very efficient data aggregator, so the market will behave accordingly and most things there will trend to the real value given all information.

Where you can find an advantage is having an alternate source of information, and combining it with an efficient source like Zillow. You'd have to be very creative, but you may (for instance) know something about boat owners and the fact that they want a larger driveway (to store a boat). So you build out a model to find coastal areas, lower hurricane risk, and long driveways priced under the neighborhood level.

That was a completely contrived example, but hopefully it gives you some ideas. The informational advantage is going to come from a specific theory and relentlessly seeking data to prove or disprove that hypothesis.

Sadly, these kind of informational advantages tend to help at the margin. As a result, they are most profitable for investors doing a lot of volume in a region. If you're working with flippers or wholesalers that do one deal a year, you'd be much better hitting the pavement.

@Yashank Choksi

Just starting out, there are a lot of opportunities to supercharge the search process for small market flippers and investors. Find a sub 100k population city / county with opportunities for a cost advantage. Build out a sourcing process that collects and analyzes listings. The best data should lead to action, and this is a good way to keep it on the ground and make sure you are helping investors solve problems instead of theorizing for the sake of it. The major markets have too much analysis, and a lot of it has gone out the window in Covid times anyway.

@Cory Cox

That is correct, Expensify is great for photographing receipts and doing expense reports, but it is not sufficient as a double-entry accounting system.

@Cory Cox

Xero is the way to go. I use Expensify on the expenses side. I manage all of our LLCs (including non RE businesses) using it. Cannot recommend it enough.

The case is a real-estate case. We will be working with data from the forfeited land commission in Richland County, South Carolina.

We Will Cover:

1) Design & code a simple data mining process.
2) Finding sources: roadblocks and quality issues.
3) Creating fast deliverables.
4) Move away from one-offs: create a mining program.

We will get into the details. By the end, we will produce a real data set which will be shared with the attendees.