SOMETHING INTERESTING

If there was one skill set that I could give you, to guarantee your venture into real estate would be a profitable one, it’d be the ability to research. I know, research takes time & effort.

But there are many ways to hack into public vaults of data to ensure your decisions in private real estate are sound & (likely) profitable. Check this thread out for how to use REIT data to make better investment decisions:

MARKET MOVERS

  • There are two types of companies in the future: those that invested in technology, and those that didn’t. Something to pay attention to is how technology is shaping/changing real estate. Redfin has saved sellers over $1B in listing fees and has a growing market share. They’re moving into the rental market also — which means they will not only compete with realtors but with traditional investors alike.

  • Mark Suster thinks the labor shortage is (a) global and (b) not getting fixed anytime soon. From his point of view this is driven by an aging population and a lack of young people wanting to grow into the old jobs. We think that has something to do with it, but also that the game is simply changing — jobs must be fun for the people working them and they need to connect with people missionally. Listen to Mark talk about this at 1:14:19 on this podcast.

  • Greg K says owning some REITs can defend our investment portfolio from inflation. “Duh,” but the reason is not because REITs are special. Real estate is special. Having real estate holdings adds a layer of hedge around your financial empire that keeps pace (at a minimum) with inflation. Also, supply & demand are in your favor on this one. REITs are fine, but if you have 1 hour a month to throw into it— find a great company and just start buying real estate from them (that’s what we did and it’s working out pretty well). Read more here.

  • Investor idiocy at an all-time high {sarcasm}. Investors in search of better fixed-income returns are flocking to buy the lowest-rated junk debt from companies new to the high-yield market (Read more here). The rally in junk bonds is a sign that investors are still betting on a stimulus- and vaccine-fueled U.S. economic recovery. This is stupid...again, better to just buy real estate.

WHAT WE'RE WATCHING

  • Government aid is about to dry up. Delinquency rates are declining, but the tale is yet unwritten as far as how markets respond when government aid is no longer holding the bag (Read more here.). We’re watching this to ensure our occupancy rates can maintain once the aid periods dry up.

  • Wells Fargo registered a private bitcoin fund on Thursday 8/19 with U.S. regulators, becoming the latest mega-bank with an indirect crypto investment vehicle for its wealthiest clients. JPMorgan also registered its passive bitcoin fund with U.S. regulators Thursday. It. Is. Happening. Read more here.

  • People are returning to big cities due to vaccine availability and entertainment/restaurants reopening. Exurbs (outer suburbs) saw the highest price growth over the past year, according to realtor.com®, due to affordability and inventory. But once workers return to their offices in the near future, the exurbs might lose their luster and see a drop in demand. This could mean an upturn for multi-family real estate and (likely) the storage industry. Read more here.

  • Interesting opinion shared on this podcast (35:20): Luxury retail will not die because people still want to see these types of purchases in person before deciding. Takeaway: When hedging a market - go CHEAP, or go lux expensive…luxury real estate will always be good investment because there is no bull market that can slow down the ultra wealthy.

  • Facebook is at it again. The company recently unveiled a new app called Horizon Workroom — it’s like Zoom except virtual reality. Facebook says they’ve been using it internally for about 6 months. We are bullish on Facebook and it’s “metaverse,” for reasons exactly like this one. They are willing to try things nobody else will try. Listen to an interesting dialogue on this at 25:55 here.

FINAL THOUGHT

"The fourth and final cornerstone of corporate finance is that the value of a business depends on who is managing it and what strategy they pursue. Otherwise called the best owner, this cornerstone says that different owners will generate different cash flows for a given business based on their unique abilities to add value." (Tim Koller, Richard Dobbs, Bill Huyett, and McKinsey & Company Inc., Value)

You’re not investing in companies. You’re investing in to the founder / CEO that runs them, and the people they trust to execute the vision. Keep this in mind when making big bets.

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