All Forum Posts by: V.G Jason

 It's a term game.

you don't park in cash if you're trying to catch the underlying. This is what makes RE great; in regards to appreciation, etc., buying right is imperative.

@Shane Finnegan your strategy is sound I suggest you do what I've mentioned several times on this board. Put 70% of that cash in distressed and fix up then rent, by buying deep in good areas like Nashville, put 30% in short term mortgage notes.  I know the latter is like a CD, yet higher, but great hedge to taper your entry into RE again on the event the rehab takes time, market turns bearish short term yet define your directional position.

I've done this in Nashville, among other areas, and my cost basis is so low and my capital has recycled. It's excellent and all-weather way to do it. 

Another strategy which is leverage based. Is be 20% levered not 0%. Diversify in some STRs at 0%, LTRs at 50-60%. Keep cash against other forms of assets if it's truly retirement such as gold, equities, btc. Just a thought. 

Bitcoin still going strong. As long as M2 is up and to the right, it'll fight any resistance like we saw last week when Trump/Elon briefly hit the markets. It's a great global pulse.

With that said, consumer staples & discretionary is in healthy ratio to remain neutral. But asset manager & s&p ratio is the widest it's ever been.

Just tells me their plays are not a lag and unfortunately could materially be a drag. That's a key indicator for the s&p.

I'm still here expecting a possible swan in all of this uncertainty. I'm net neutral everything now. 

Think buying opps say where ive said it BTC, gold, real estate properly priced and levered. I'm not veering from that I know bonds are getting attention and rightfully so but rather allocate to those 3.

 Fast solutions always have slow problems.

I get it, you want to leave your industry that you're in but this impulsive act of getting highly over levered to be in position to leave the job will make you need it more. 

Really think this through. 

Yes, finally the overbidding is done with so I am back here. 

One piqued my interest, but unfortunately, I did not win it. 

This is also on par with LTRs. I took this from Colin-- this is correct. Each local is in different stages of this, but most are where the line is drawn. 

All the great lakes & NE areas are showing a positive response to the market. 

I'd say they are more a function of the local fundamentals; low inventory and in some areas the lower barrier to entry. Those are the outliers not the norms. 

The norms are heavy saturation, mark to market entry and re-finance at higher asset values against persistent rates. If we go into July 4th with rising inventory, we'll see dual listings(for sale/for lease) and by top of November listings will still be higher yoy and withdrawn. Then re-listed in spring 2026, creating an even larger y/y. Again, Colin's little chart will  really show the beauty of asset rotation.

This is all cyclical, this exact list was inverse 3-4 years ago. It's just how it goes. The real emphasis here isn't this info, it's what not in this info and how to react to it.

What's not in this info is what I already mentioned-- supply is actually higher, but not present due to underwater status and demand is actually lower due to not being qualified. That's a wider supply:demand gap than conveyed. There are other areas too.

I mean there's a few ways this goes; fed funds cuts rates(no saying 10 year goes down) due to market/economy/inflation turmoil, govt induces some federal housing help, lenders allow some re-structuring(perhaps allowing mortgage wraps with conditions?), lots of possibilities. I really don't see a positive outcome in the short-term.

Sitting on stacks of USD isn't a problem; it just should be the hedge. 60-80 invested/20-40 cash. Invest primarily in hard assets and a bit of soft. I am not operating without some cash on hand; we have this housing issue that'll likely start in fall and into next year and bond issue that'll materialize here in q3. 

Mean reversion.

On the ground, it appears much worse than it reads. Lots of inconvenient truths are aligning-- much like most of the points by @Luka Milicevic

I think what's missing in a lot of this data is the amount of sellers that would like to get out of their house, but can't list below their breakeven point(net or gross of commissions) and the amount of buyers that may have filled out an application but are far from qualifying.

I feel the latter always outweighed the former in 2023 & 2024; but in 2025 the former is taking the lead. The only reason a 1% drop is qualifiable is simply because of that point-- people can't sell below what they got in at cause they don't have the cash to cover and/or bring into the new property. If they could, meaning they did not buy or re-finance in 2022, you'd see it get into correction, not crash, territory as in high singles, low teens deficits. Of course, all locals are different.

The great @Collin Hays beautiful picture in another thread really encompasses this, and it doesn't just apply for STRs. It's almost every asset class we are seeing; energy, ags, city/state infra, commercial, etc.

Limited to no capex is a farce. Most of these new builds are built poorly.

Don't think buying this is headache free, far from it. Unless you're spec building and understand the elements of it, new builds aren't some physical unicorn. And definitely not some magic pill to investing in RE on easy mode.

Buying a new community with 300-500 new builds but no unique-ness is just buying into a saturated set up. Real estate will always price location, then uniqueness(assuming not distressed). Don't deviate from these two. Almost anyone that says otherwise is likely selling new builds. 

The best bet is not be over-levered or all cash. Be 1-1.33 DSCR, ideally 1.2 ish range with capex as a top line not bottom line item. 50% net cash flow= reserves, 50% net cash flow= investment #2. If I had to pick entirely levered, or entirely cash. I'd pick the former for path of progress areas, and latter for clearly primo areas.

Reality still needs to set. These prices are just so far from intrinsic that it's going to take a impeccable timing-- enough cash, a rate drop(due to a recession) & enough risk to assume something at 20% will work again. The reality is likely more cash down and this cannot be stressed enough--- buying right. 

Take the 3 scenarios, with one solid house for $300k in Knoxville, TN. 20% down versus 100% down versus 1.25x DSCR. 7% interest rate, and capex as a top line item. No HOA.

1) 20% down- $2,100 PITI. $1,700 Rent. Negative -$400/mo.

Total down is $60k plus $5k closing costs, and since capex was top line item call it $15k. Total out of pocket= $80k

2) 55% down- $1,400 PITI. $1,700 Rent. Positive $300/mo. Net $180/mo after tax.

Total down is $165k plus 5k closing costs and capex being 15k. 

Total out of pocket- $180k

3) 100% down- $500 in T&I, $1700 Rent. Positive $1,200/mo. Net $800/mo after tax. 

Total out of pocket is $320k.

Anyway you slice it, it's hard. Buying right is the only solution. Leverage isn't the most amazing strategy it use to be. Take into account the risk-- with all cash in one house, or even 55% down. Likewise, the risk for being completely over levered and not having sustainable cash flow to manage. I aim for option 2-- with a 28%-40% downpayment. I have found that's my really good middle ground.