International Real Estate

International Real Estate

International Real Estate

Lender · Honolulu, HI · Member since 2015 · 1 post · 3 votes

I'm currently in Seoul and wondering if there are others as well, if so let's connect

Even for other US citizens traveling abroad, I'm curious to hear stories of your experiences you found to be new, exciting, interesting and how they are different from the US

For example, I stumbled across a term here called 전세 ( Jeonse) that is unique to S. Korea. It refers to the way apartments are leased. Rather than a monthly payment, the tenant will make a lump sum payment equal to 60-90% of the market value, depending on where you are. Overall, now that interest rates are low, they trend more on the high side

The tenant then get's to live there where their monthly expense is usually just the utilities (or monthly payment to the bank for borrowing the money for the large "deposit" or a portion of it). The landlord gets to invest the deposit money and keep all the interest earned from it. The tenant is protected by having a "lien" on the property

During these times of lower interest rate, 월세 (Wolse) is also used because the owner makes a higher return than other investments, which is like the traditional monthly rent with the deposit around 10% of market value. Then there are hybrids in between with a larger "deposit" and lower monthly payment (which for the tenant could mean a lower overall monthly payments even with a bank loan taken out for the deposit)

When asked around about why they don't just buy the apartment, people just said it was the Korean way. Others have said there's some tax implications when you own multiple properties. There was a sense that the younger generation is fearing a housing bubble as real estate prices keep rising so fast

I guess will will see as household debt here keeps rising and when interest rates start to go up. Something to think about for you speculative and cash flow investors out there. What are your thoughts?

Any interesting stories from other places around the world?

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Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes

@Eric Gabriel @Alex Franks @Kevin Yoo @Daniel Ryu @Geoff Bailey @John Van Uytven

Thanks for giving me a heads up on this forum Dan & John.

I love the jeonse ("junsay") system here in Korea. My wife and I are active investors in the Korean market leveraging jeonse, investing both in Seoul and in Sokcho, which is on the East Coast of Korea surrounded by Korea's most beautiful mountain range. Over the past few years we've been able to acquire quite a number of properties, and participated in dozens of real estate transactions. We're also active in the Seoul Real Estate Investing Meetup, the #1 REI club in Korea (in English anyway!).

To comment on Eric's system, I think it's a brilliant way to invest here, for the reasons he mentioned. The thought of doing it his way had crossed my mind before, and it's an excellent one, but I hadn't done it and it's interesting to hear it's paying off for him.

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John Van UytvenPro Member
Property Manager · Oconee, IL · Member since 2014 · 536 posts · 202 votes
10y
Hello @Geoff Bailey
Welcome to BP. Yes, there are investors in Seoul. I moved back to the US.
@Daniel Ryu and I started the Seoul REI Meetup.
Other active members include @Sandra Roddy and @Jacob Michaels
Plus @Frankie Woods lives in Korea as well now.
You can check out our meetup here http://www.meetup.com/Seoul-REI-Meetup/
Good luck and remember
*DFTBA*
Don't Forget To Be Awesome
0 Reply
Daniel Ryu
Investor · Suwanee, GA · Member since 2014 · 579 posts · 347 votes
10y
@Geoff Bailey
Welcome to BP!
@John Van Uytven
Geoff's a part of the Meetup ^^
1 Reply
Eric Gabriel
Investor · Charlotte, NC · Member since 2015 · 67 posts · 20 votes
10y
Hi @Geoff Bailey!
I've messaged @Daniel Ryu a few times. I'm determining whether to invest in the US of Korea. My wife and I are testing the Junsay method. As you might assume, we are leasing a condo/apartment with a deposit of $50,000, and subleasing it to a tenant that is paying $500/mo. There are no other expenses except the HOA/management fee that once subleased is paid by the tenant ($80/mo which covers water, garbage, and grounds maintenance).
After the year/lease, we either get our money back or the owner has to give us the title to their property. The owner pays for all the repairs and taxes, and assumes all the benefits/risks of appreciation/depreciation. It's similar to a lease option, but the difference is there are no monthly holding costs for me (the investor) such as taxes, insurance, or repairs.
I know if I buy a house for $50,000 in the US, I might get $700/mo. But after expenses I might net $250, and if not rented the holding costs can take you out. It happened to me once in Anderson, Indiana on 2 houses. My goal is to invest in simple, safe, and strong investments. Maybe I will help others too once I finalize my first test. I've been here 8 years and have leased several condos/apartments so I know a thing or two. We've put a deposit down of $350,0000 on our current residence. You save faster when you don't have a mortgage or rent.
A sweet deal for US investors is we can make up to apx. $98,000/year in FOREIGN INCOME (exempt from US taxes), which needs to be claimed on your US tax returns. As foreigners, we pay a 17% flat task tax on all earned income, if we choose, or we can choose a progressive tax which is I think 6%-32%. Don't mark my words, I'm not an accountant and I'm not sure what the rental income rate is. I read somewhere 15% of gross rents.
Additionally, a US citizen can come here and take advantage of the great affordable health care. Without insurance a dental scaling cost $60, I dental implant cost $1000-$1500. Most medical is 1/3 the cost of US hospitals. Medical tourism is picking up an will eventually be booming.
Anyway, the subleasing test seems to be going well so far. We've already gotten our money back several times when putting a large deposit down on our primary residences.
Eric
1 Reply
Daniel Ryu
Investor · Suwanee, GA · Member since 2014 · 579 posts · 347 votes
10y
@Eric Gabriel
Congrats! I'm glad to hear things are working out well.
I've heard a lot of other investors in our group ask about that strategy. The subletting part always seems to be the sticking point but it's cool that you've figured that part out.
Good analysis and I think it will help other investors who are trying to compare the numbers.
You should definitely hook up with Jacob at some point (if you haven't already). You're both using Junsay as a strategy.
Hope to see you at a future meetup!
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Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes
10y
@Eric Gabriel
I have read your post several times with great interest.
So, if I take your $50,000 condo/apartment that you are subleasing in South Korea for $500/month and if you have no expenses, then this comes out to be 12% CoC ROI. Am I correct?
1. Are there truly no other expenses?
2. What is the typical vacancy rate do you think?
3. Is the 12% ROI typical or can you get more or less on the average?
4. As for taxation in South Korea, why would anyone chose any rate but 6% for rental income?
5. Can you as a foreigner borrow money from a South Korean Bank to put down as deposit?
Thanks for posting this very interesting information on real estate investing in South Korea.
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Eric Gabriel
Investor · Charlotte, NC · Member since 2015 · 67 posts · 20 votes
10y
@Kevin Yoo ,
1. There is 1 expense. I had to pay the realtor fee for securing the deposit and do everything legally. Using a realtor is a must to mitigate risk of loss. I have my name on title now. $200 or 0.4% of the deposit amount. Nothing else. That would make an 11.6% Cash-on-Cash Return.
2. 0% vacancy. Why? Because I signed a 1-year lease with the owner and the tenant signed a 1-year lease with me. I subleased on my own, which the owner knows about. However, I still need to figure out how to put my tenants lease on the books as well. I'd like to have my name on title and the tenants name as the responsible party for paying the management fee if possible. I'll figure this out later. Anyway, no vacancy. Most foreigners come her on 1-year contracts anyway.
3. I don't know anyone that does this. Typically people are in love with owning. I'm not anymore.
4. If you make more than $100,000/year in taxable income, it puts you in the progressive tax bracket of 32%. If you make less you're at 6%. I'm not anywhere close to that since I have a business that has the benefit of writing almost everything off. Also, 17% of 100,000 is much less than 32% of 100,000, which would you choose? I'm not an accountant and my numbers are most likely all wrong. At this point, I'm not concerned. The Korean form of the IRS is not like the US version of the IRS. It is developing and growing though as welfare systems are developed.
5. Yes, but the process is a pain in the butt. The documentation required is prohibitive. Having a Korean partner (aka my Korean wife) makes the process way easier, but more complex, which I don't like.
Still more work to do, but getting closer.
The beauty of this is I will get ALL OF MY MONEY BACK AT THE END OF THE LEASE, or I get a condo with 25% equity. The dollar is strong right now, so sending money to Korea is a grand idea. I'm not ready to help anyone else at this point yet. I have to make sure that it works perfectly for myself.
One risk I see is in my area oil prices being low is a bad thing. Oil drilling rigs are manufactured nearby, so the economy is expected to decline next year and the following year. There is a 2-year lead time since contracts are signed 2-years in advance of initial steel cutting, so there is a surety/safety buffer. We basically know that things will be good until the end of 2016, which is when I'll get my money back then I'll reaccess.
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Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes
10y
@Eric Gabriel
1. Are there properties that you can get more than 11.6%?
2. Can you not sign up for more than 1 year? And what happens after 1 year?
3. Interesting.
4. It will take a lot of these to make $100,000 a year.
5. My wife was born and raised in Korea. She has a brother there who owns an apartment. I have contacts that could help. But I want to know how you do. When you are ready to help others, I would like to partner with you and finance your efforts. Our minimum returns that we seek is 12%, however.
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Alex Franks
Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
10y
Originally posted by @Daniel Ryu:
@Eric Gabriel
Congrats! I'm glad to hear things are working out well.
I've heard a lot of other investors in our group ask about that strategy. The subletting part always seems to be the sticking point but it's cool that you've figured that part out.
Good analysis and I think it will help other investors who are trying to compare the numbers.
You should definitely hook up with Jacob at some point (if you haven't already). You're both using Junsay as a strategy.
Hope to see you at a future meetup!
Daniel this was the post I was speaking about. @Jay Hinrichs and I spent a lot of time in Australian forum. Where I had one good contact selling properties in Japan-Korea so always been an interest to me. My wife and I would like to live abroad for a year or two. Always have had an interest in international investing as well.
Alex
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Eric Gabriel
Investor · Charlotte, NC · Member since 2015 · 67 posts · 20 votes
10y
@Kevin Yoo and others,
1. I'm sure that I could get more of a return if I was doing this as a business and had my workflows in my CRM system and my network set-up. However, I only walked into 2 realtor offices and told them (in Korean) what I was looking for. I already had an American tenant lined up who had a 1-year contract and work visa, so pretty close to guaranteed employment.
2. The maximum lease term is 2 years, then it defaults to a month-to-month if nobody does anything after the term expires. Generally, there is a lease renewal and the owner has the option of asking for more money or vice verse. In some cases, the owner might elect to sell the property.
3. I think so.
4. I know, basically, the amount just needs to be reported to the IRS in the form of tax-exempt foreign income.
5. I'll keep you posted. Send me a colleague request and an email with the subject "Korean Junsay Investor" and I'll keep you posted as the opportunity gets legs.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
@Eric Gabriel @Alex Franks @Kevin Yoo @Daniel Ryu @Geoff Bailey @John Van Uytven
Thanks for giving me a heads up on this forum Dan & John.
I love the jeonse ("junsay") system here in Korea. My wife and I are active investors in the Korean market leveraging jeonse, investing both in Seoul and in Sokcho, which is on the East Coast of Korea surrounded by Korea's most beautiful mountain range. Over the past few years we've been able to acquire quite a number of properties, and participated in dozens of real estate transactions. We're also active in the Seoul Real Estate Investing Meetup, the #1 REI club in Korea (in English anyway!).
To comment on Eric's system, I think it's a brilliant way to invest here, for the reasons he mentioned. The thought of doing it his way had crossed my mind before, and it's an excellent one, but I hadn't done it and it's interesting to hear it's paying off for him.
2 Reply
Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
We leverage jeonse in a different way though that is very unusual for investors in Korea.
Generally speaking, we find good value properties in high potential areas with good fundamentals, negotiate down as low as possible, sign a contract with the settlement date stretched as far as possible, and market for a jeonse tenant to come into the property at a date matching our settlement date so we limit how much money we need out of pocket to close on the property.
For example, we recently closed on a property in Hongdae, which is one of the if not the #1 hot spot in Korea for the past couple years.
You would think that prices would be through the roof here.
And you'd be right.
But it doesn't mean there aren't great buys out there.
We found a 2-bd apartment in a newish building on a very popular street, with parking (rare!) and an elevator. Market value is around W250mil (~$215k). We negotiated a fast deal at W190mil within literally an hour or 2 of the seller telling the agent she wanted to sell. It never made it out onto the market.
Jeonse prices for this property are W150-170mil, depending on the month and how long we had to market. Due to the seller being unexpectedly uncooperative, we didn't have much time to market it and settled at W155mil with a tenant soon after settlement.
This effectively means we've borrowed W155mil at 0% interest from our tenant to purchase the property. Of course, there's a lien on the property and if we don't pay the tenant back W155mil in 2 years at the end of the contract, they get to own the apartment. That's the tacit agreement with every jeonse contract and the sole liability (realistically) that an investor like us faces.
We've done this well over a dozen times the past few years with great success, with each renewal bringing us higher market values for our jeonse deposits, and therefore more interest-free cash out of our properties to reinvest in other properties. We have been able to pull all of our invested cash out of the investments within 4 years, often within 2.
With this method and some successful negotiation, we have been able to get returns on our cash (IRR) on our properties of 30-50%.
That's annual return on our cash, so it's been pretty phenomenal for us.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
Let's talk risk.
The risk with jeonse is that unlike weolse (a more normal monthly rent system), jeonse is heavily influenced by market interest rates. That's because traditionally landlords would accept jeonse in lieu of the monthly weolse rent because they would use the lump sum deposit and invest it in safe market investments (like CDs at the bank).
These used to return 5-10%. Now they're less than 2%.
So landlords no longer want to offer the jeonse option to tenants, they only want monthly weolse rent, which gives a return of 5-7% usually.
But many tenants don't want to pay the expensive monthly rent, they want to do a lump sum jeonse so they don't pay monthly rent.
So there's a mismatch of supply and demand.
There's a shrinking supply of available jeonse rental properties and a steady demand for them, so the jeonse prices have been increasing as the interest rates have been decreasing.
1 Reply
Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
To give a real life example, our first property we purchased in Sokcho:
1. Oct 2012: Market Value W110mil / Negotiated purchase price W95mil / Jeonse W82mil@ Feb 2013
2. 2015: End of jeonse contract. New market jeonse for that property: W98mil for 2 years. So we got W16mil cash out of the property (similar to a home equity refi loan, but at 0% interest!) Market Value W130mil
3. 2016: current market value of our property ~W140-150mil
So we have all of our invested capital out of the property, and everything moving forward is profit. Even if market conditions go horrible and we have to let the property go, we'll lose nothing.
If we sell anytime before some unpredictable future market crash, then we will make a phenomenal return on our cash.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
This is just an example of what is possible leveraging the jeonse system here in Korea. And let me tell you that this is NOT the normal way of doing things, so I'm giving you our secret sauce here to help anyone reading understand how to do it.
Anyone else besides me love secret sauce???
Agents will tell you you're crazy and you can't do things this way or that way or negotiate that much off of a property, etc etc.
But it is all possible and we are doing several deals each year like this.
If you want to learn more and are in Seoul, shoot me a message and buy me a fancy cavier with gold flakes lunch
(kidding. just the gold flakes will do!)
or just come see us at the Seoul Real Estate Investing Meetup, run by a couple great guys @Daniel Ryu @Account Closed . We're pretty regular fixtures there and have presented on our strategy a couple times to the group.
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Michael Lee
Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
10y
Hello and welcome to BP! It sounds pretty damn risky to me. You might do well now but you can't tell what the future says is going to happen. It's all about money and the money can be good now but it could be bad tomorrow. I will take my money elsewhere thank you. Bye.
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Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes
10y
@Jacob Michaels
I am having trouble following you.
1. If you agree to a purchase price of W95mil from the seller and then Jeonse to tenant for W82mil then you need to put in your own money of W13mil at time of closing.
2. And since there are no monthly payments, you earn 0% on your W13mil.
Am I not getting it right?
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
Someone asked me about exit strategies so I thought I'd post that here.
There are a couple different exit strategies, the primary one being reselling. Because we negotiate usually far lower than the agents think is possible, it gives us an equity cushion and reduced cash needs that most investors wouldn't get from this strategy. This also means we get cashed out faster than someone would normally, and in the worst case scenario we have less at risk than someone would normally. When we resell and calculate the annual IRR it's usually pretty phenomenal.
The other (safer but not so sexy) exit strategy is that as the value of the property increases, we could change the strategy to a fixed income weolse by getting a loan from the bank that is based on the new higher valuation and would allow us to repay the jeonse tenant and get a weolse tenant in there. Generally in the beginning of funding a new purchase the banks don't loan nearly as much as a jeonse tenant would give us, so we need too much capital out of pocket to purchase. But the numbers make a little more sense after the valuation increases later on. But I've done up the numbers and usually after paying for financing costs, the numbers just don't make that option so desirable at the moment. But I could see someone who is more risk averse look more seriously into that.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
@Michael Lee You and I have different ideas of risky my friend. It sounds like this strategy is not for you.
Our strategy is about taking full advantage of asymmetric risk / reward situations. I'm a strong believer in going after opportunities that have a small element of risk but an uncharacteristically high reward. The great billionaire market trader Paul Tudor Jones talks about a 5:1 risk/reward ratio. He only puts his money in places where he knows he's risking $1 to make $5. This is one of those types of opportunities.
Most investors risk (yes, everyone risks) $1 to make $1.20, or maybe $3 over 30 years. So be it.
To me, that's a risk I can't handle. But exploiting (legally and ethically) safe opportunities in the market to turn $1 into $5 within 3-5 years is my idea of a smart decision.
It probably doesn't make a whole lot of sense if you're not living in Korea, as jeonse is an entirely different type of market than anything you'd be used to.
We only invest in areas with strong underlying fundamentals which work to drive up the value of the investments long-term. And within these areas we look for undervalued properties that serve to give us a built-in equity cushion that greatly reduces the risk involved and lowering the capital needs (which further reduces our risk).
The risk level is actually nominal in comparison with the reasonably expected returns.
Asymmetric risk/reward. I'd recommend it.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
@Kevin Yoo
Yes, that's right. Unlike a monthly rental strategy this is purely an appreciation play.
Now, I know what you're thinking. Investing for appreciation and not cashflow is speculation and therefore risky and not good, and you'd be rightwrong. That's my new word.
You'd be right if you were investing because of market euphoria and you're trying to get in and out and make your money before the market collapses. The Greater Fool Theory. You're a fool yes, but hopefully you'll sell out to a bigger fool before the market gives. Someone's going to get stomped there at some point.
And this is how actually a lot of "investors" are here in different areas that I've seen. Big booms and busts based on fantasy and dreams.
If you're saying it's speculation you'd be wrong in the sense that we're making purchases based on good market fundamentals (population consistency/growth, increasing development of the area, planned development like parks, etc)
And within those fundamentally attractive areas, we try to find attractive properties that we negotiate great prices on. When I say attractive, I mean things like ability to turn commercial, in the direct pathway of gentrification, having unique qualities or amenities, etc. And we negotiate much harder than is customary, so the agents think we're crazy.
So we have a built-in equity cushion in a strong fundamentally attractive area, with (using the FREE jeonse deposit from the tenant) we use a minimal amount of capital to purchase.
This means on the very day we sign for the property, we know we've made money. Often tens of thousands of dollars. When we sign we know that we've made that money already. It's not a hope or a dream. It's a fact.
And based on good fundamentals that investment (with built in equity) is very highly likely to continue to go up.
It's like you negotiating an apartment today in Greenwich Village for $500k that you know out on the open market is actually worth $600k and really based on the direction of the neighborhood will almost definitely be at $700k within the next couple years. And you do it with only $50k out of pocket and borrow the remainder from the tenant for FREE with 0% interest.
Is that risky?
Can you say that because you don't get rent in your pocket you're not making money?
If you can make a deal like that, it's not speculation my friend, it's printing money. And printing it the moral, ethical, legal way.
That's what we do here.
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Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes
10y
@Jacob Michaels Knowing the South Korean market, I understand your play on appreciation and unless there is a war, the demand for real estate will always outstrip the supply in that tiny little country with way too many people. Some more questions.
1. When you sell to a Jeonse tenant, why do you sell it for less than what you bought it for? Is this for a quick sale? I don't see why you cannot sell it for what you paid for it and limit your out of pocket cash?
2. I don't understand how if your market conditions go horrible and you have to let the property go, you'll lose nothing. If the property value decreases, before you can cash out and the first Jeonse tenant wants out, then you have to return all his money and you still have your money stuck in a property that is worth less than you paid for.
3. Are there more deals then you can handle in South Korea? I am asking because I would like to invest with you and wondered if you passed up on some deals because you did not have the capital.
0 Reply
Michael Lee
Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
10y
Hello! I appreciate what you had to say Good luck! I am sorry it took so long to respond to you but I am still learning.
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Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
@Kevin Yoo My apologies for the delay. I don't get on BP very often these days.
To respond to your questions:
1. I'm not sure what you mean. We would rarely sell to a Jeonse tenant. Usually if we sell we are selling to some other buyer out there, and it's normally for a premium over what we bought it for. Because we are buying at well under-market prices and have that built-in equity cushion, it would be a very rare situation that we wouldn't be able to sell out and get out at least what we put into it.
2. What I meant was that normally market conditions don't change dramatically in 1-2 years unless you're investing into a huge speculative bubble. I can't fully predict the future, but I can say with some degree of confidence that the market will most likely be like such & such for the next 1-2 years. Beyond that, who knows. 2 years is the normal contract period for jeonse so that's why it's important. And in the recent low interest rate environment there has been an increasing lack of apartments available for jeonse renting, as landlords don't want to receive the jeonse deposit and put that into ultra low returning investments. They prefer the monthly weolse rents, where the return is much higher. Because of that, jeonse apartment supply has shrunk and jeonse prices have been going up much faster than it would otherwise. The impact of that on our investments has been that after each jeonse renewal period we have been able to increase our jeonse deposit requirements, and pull out cash, much like a home equity refi loan in the US. But it's free cash with no interest. And often we are able to pull out close to or all of our initially invested capital within the first contract renewal period. At that point, the investment becomes essentially risk-free for us as we have no money sunk into it. Any appreciation is pure profit.
Now on the other side, In the exact situation you described, you'd be right. If the property value crashed in a drastically short period of time within the first 2yr tenancy contract period (HIGHLY UNLIKELY that we wouldn't see the signs but you never know 100%), then yes, we'd potentially lose some or all of the initial capital we put into the property. The good news is that with this jeonse strategy the initial capital is relatively small (usually ~$10-50k depending on the property and location) and so the potential loss (very unlikely) vs the very likely gain is nominal.
3. Yes, there are WAY more deals than we can handle here. We spot them pretty much weekly, but because until now we have entirely self-funded our acquisitions we are limited in what we can do. Generally we are only able to work on 1 investment at a time, close it out, then work on the next one. The reason is that most properties are not in the perfectly ideal situation. Existing tenant contracts complicate the timing of cashflows, and we always need to be prepared to fully fund the entire purchase price first all cash, and then put a new jeonse tenant in at higher market prices at some point shortly thereafter.
So in an ideal world we'd be able to borrow cash at reasonable rates (6-8%) whenever we needed for short term funding needs.
I'm not sure if this is in line with what you're thinking, but it'd probably be worthwhile for us to chat about it
0 Reply
Jacob Michaels
Investor · DFW / Austin, TX · Member since 2013 · 188 posts · 80 votes
10y
@Michael Lee No worries! I hope my post cleared things up for you.
FYI for those who are interested...These are not scientific numbers but we basically see our investment outcomes like this:
5%: Lose initial capital
10%: Break even
15%: Make 10%+ annual return on cash
20%: Make 15%+ annual return on cash
30%: Make 20%+ annual return on cash
20%: Make 30%+ annual return on cash
And this may even be a bit conservative, considering we don't even consider investments that don't have a very high likelihood of returning 20-30%+ return on cash.
And the bulk of that 5% risk is really whether or not we get a bit overexcited about multiple opportunities and run the risk of a cash flow squeeze and have to forfeit a deposit. It's never happened, and we've got avenues to borrow money to avoid it, but it is one of the key (avoidable) risks for us.
1 Reply
Kevin Yoo
San Diego, CA · Member since 2008 · 301 posts · 108 votes
10y
Jacob,
I would be happy to talk with you. My Virtual Assistant can also set up a Uber teleconference which would be easier for you and for me if we are doing international. Let me know what is best.
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