All Forum Posts by: Joshua Myers

I think the most direct way is to buy $1,000,000 of quality real estate (no war zones) with leverage, preferably on 15 year mortgages. Rent it out and use any extra cash flow to pay everything off faster. Depending on your current financial situation you can house hack, BRRRR, or save/flip/wholesale to get down payments.

How fast this all happens probably depends most on what/where you buy.

3 Votes

Originally posted by @Jay Hinrichs:

Originally posted by @Nick C.:

2008 was a once in a lifetime event, anyone waiting for that to repeat itself is going to be disappointed. Hopefully once this pandemic is over we can say the same thing - it was once in a lifetime, and there aren't more viruses to come anytime soon.

Mortgages have been underwritten pretty well the last 10 years, or homes were bought with cash. Most sellers don't need to sell and don't want potential COVID carriers in their house, so there will be less inventory for sale. When it does clear up there will be a flurry of activity, from sellers who waited to sell and buyers who waited to buy.

the real risk to real estate that I can see is squarely on investors NOT homeowners to a great extent.. it will be certain commercial type props and landlords that carry too much debt with to little reserves. or landlords that face lenthy vacancies or no pays.. those are the ones that I think will be at risk and may cut bait and run

I think you're probably right about this. There is still a TON of leverage in the system, but more of it has been taken on by investors. Whatever the fallout ends up being, I think it will hit flippers and STR investors more than LTR investors or homeowners. I wouldn't want to be 1/2 way into a low margin flip with a 100% LTC hard money loan, or stuck with 10 mortgages on STR's in Vegas/Orlando right now.

2 Votes

Originally posted by @John Craven:

@Joshua Myers, good question. This cabin would be a long-term investment. I would plan on keeping the property so long as it is generating revenue.

Can you ask the seller for a credit at closing, based on lost rental revenue over the next couple of months, that you can add to your reserves? That could get you closer to the same scenario you were looking at when you went in to contract.

0 Votes

@John Craven I've been thinking about the original question you posted. What is your investment time frame for the property? You asked about the next 3-6 months, but I assumed that this was a long term buy and hold investment.

0 Votes

Originally posted by @Marcus Johnson:

@Edwin Williams

Nope. I have a long list of people who want to reserve a vacation on out lake property. What you have to remember is if your lake home is in a rural area, the fear of COVID-19 is minimal because they aren’t having the same problems as large cities are.

Looks like you've got a good setup for the current situation. Still, I'm wondering how common your situation is in the scheme of things. You have a place that is a good escape from the city or other areas with high population density, and your guests might be able to avoid air travel. I'm guessing the vast majority of STRs don't fit this profile. They're in urban areas or vacation areas with plenty of tourist getting onto planes and then packing next to each other in the city or beach. I think it's reasonable to assume some owners in these areas will be in distress over the next 6-12 months.

0 Votes

Originally posted by @Caleb Heimsoth:

Originally posted by @Joshua Myers:

Originally posted by @Caleb Heimsoth:

@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.

You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.

That's a bold prediction. I'm pessimistic about the outlook, but throwing out a hard time frame like that takes some real confidence. What specific economic data and which earnings reports are you using to come up with 1.5 - 3 years as your best case. And what are your base case and worst scenarios?

I couldn’t find the Forbes article that outlined all this but 1.5 - 3 years was best case scenario. Worst case was more like 12 to get back to where we were in February.

It’s going to get worse before it gets better. We’re just at the beginning, it’ll take til Q3 2020 to fully understand the economic impact.

More related to real estate investing all the major banks reported earnings this week and profit dropped ~ 50 percent on average compared to Q1 last year.
you can read on BP how lending is tightening and that’s only going to continue. As that continues prices will decrease (will vary by market). Unemployment will spike Q2 2020 and then decrease.
there is ways to predict all of this, just have to look at the data. Multiple indicators predicted a recession for this year 2-3 years ago (as an example).

Yes unemployment numbers are pretty shocking and banks have increased loan loss provisions (along with scheduled changes to accounting that had an impact on headline earnings), but there's a really big difference between saying that the economic data is ugly (and getting uglier) and putting a hard timeline on how long the recovery will take, especially when we're talking about individual markets. You say yourself that we won't understand the economic fallout until Q3, so it's hard to justify putting a timeline on any recovery.

I'm very pessimistic about the scenario, but I don't think we should be pushing hard timelines when giving buy/sell advice to fellow investors. No one, not the FED, not university and bank economists, and not even contributors to Forbes can accurately predict how long this thing will play out.

1 Vote

Originally posted by @Caleb Heimsoth:

@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.

You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.

2 Votes

Originally posted by @Nick Gann:

Originally posted by @Brian Ellis:

Over 6.6 million have filed for unemployment...

BUT, the government is adding $600 to unemployment benefits on top of the stimulus. People who work 9-5 jobs are probably going to take home more Money without lifting a finger, I can’t see how rents won’t get paid. Plus, everyone is learning that they can save money now.

I see some retail space and Airbnb taking a hit, though.

That's one of the weirdest parts of this, they won't be deciding to go back to work for less money, that's for sure. Although it looks like there's a likelihood of inflation eating into that higher number.

I've seen a lot of people saying that they're expecting inflation to kick in soon. From your post it sound like you're expecting it to accelerate and erode the the extra unemployment benefits in the next couple of months. I'm confused why everyone is jumping right to this when this experiment has already been run in Japan, Europe and even the US in the last downturn. These interventions were all taken in in much better underlying economic scenarios with very low accompanying inflation or deflation. Even with the FED expanding its balance sheet they can't completely replace the reduction in private money supply. The overall supply of money and credit in the system has been reduced drastically and will probably fall further in the coming weeks and months with private lending drying up dramatically. More importantly, the velocity of money has nose dived.

0 Votes

Originally posted by @Brad D.:

Originally posted by @Joshua Myers:

Originally posted by @Brad D.:

Originally posted by @Joshua Myers:

Originally posted by @Brad D.:

@Joshua Myers apparently reading comprehension is not your thing, but I'll try one more time for anyone else who might enjoy exploring new ideas as much as dopamine rage hits:

I think active trading is for fools and professionals. Professionals who make this their life's work will always have a HUGE advantage over people who dabble in this. They have better technology, education, and of course 'Information.' You buy the rumor and sell the news. Most think they have access to 'rumors' but unless you have unique 'information' you don't have the rumor, you have the news.

Almost no one can beat the S&P 500, as Warren Buffet and others have said. So, if you are not going to make this your life's work and focus, you are better off not actively trading, and being in index funds long term. Additionally, for most people who do attempt to actively trade, there is a huge opportunity cost here, where there intelligence and effort could be spent better focusing on something like real estate, in their home or selected markets, where they have the chance to truly be an expert, and have that advantage over even the Harvard MBA's at Blackstone in terms of boots on the ground. You can have a chance against a 160 iq wall street pro in your selected real estate market; you almost certainly have no chance against him in the market. Wall street is wealth transfer from the masses to pros. Real Estate is now moving toward that as well, but less so.

The raw IQ requirements to make it actively trading are far beyond me. If you are in that elite crowd and are truly plugged in, respect to you.

So long term in the index funds for most is fairly orthodox, as most agree. Where I deviate personally, and I understand this is not orthodox, is getting out at times like this current situation. I got out Feb 26 and will sit on the sidelines until the situation seems to have bottomed out, maybe August or later, we'll see. Had I sat all of 2008 out, I would have been much better off.

So if your argument is only that I am wrong getting out for 6 months or a year once every 10-ish years rather just staying in, that is a fair argument and the orthodox opinion. I disagree, but may be wrong. It's a case where I am faced with "What are you going to believe, me or your lying eyes?" I choose to believe my lying eyes here.

I have an MBA, Masters in Finance, and passed all 3 levels of the CFA program. I also know several people working for pension funds, mutual funds, etfs, commercial banks and financial advisors. But I appreciate the education you just provided. It's always nice to get thorough explanations from people with limited knowledge and insight.

While the merits of an MBA are increasingly dubious (unless it's Harvard, Wharton, etc), your MBA can still help you on the career track. However, credentials are not IQ.

In one world credentials and experience are everything. I own a Recruiting Agency, direct hire, perm placement. Let's say I need a BSCE and MSCE, 10-15 years exp, 5 years management, plastics, no gaps, no tenure less than 3 years, with ties to the SE: If I find someone who has all of this, they're in the door; if they interview well, they may get a job even if they are fairly mediocre. If the most amazing genius in the world comes along and has a BSME and MSME, he is not getting an interview. That seems unfair, but that's how it is.

The situation I'm describing in the previous post is the exact opposite of this.

No, I'm being serious. It's really nice to get advice on equity investing by someone who owns a recruiting business. I love when people with a surface level understanding of things give others an education by talking down to them. It's very inspiring.

Let me see if I remember.First, don't actively trade because that is just for fools. Instead you should try to time the market and get out for 6 months once every 10 years. Second, if you have money in stocks right now you should sell them because the market is going to go back down. This is really helpful advice because you followed it up by saying that no one can beat the market. Finally, someone who has studied this stuff for years doesn't have the qualification to opine on it, but someone who runs a recruiting business and admits that he doesn't study this at all has it under control. That's a lot to process. Good thing I've got some time while I shelter in place. Either that or I'll work on the puzzles I got in the most recent Mensa newsletter ;)

Do you work in finance now?

I'm retired, FIRE style. Now I'm a full time private investor: Fixed income, real estate, equities, and private business... in that order.

Do you have any qualifications to be educating people on equity investing other than being a recruiter?

0 Votes

Originally posted by @Brad D.:

Originally posted by @Joshua Myers:

Originally posted by @Brad D.:

@Joshua Myers apparently reading comprehension is not your thing, but I'll try one more time for anyone else who might enjoy exploring new ideas as much as dopamine rage hits:

The raw IQ requirements to make it actively trading are far beyond me. If you are in that elite crowd and are truly plugged in, respect to you.

While the merits of an MBA are increasingly dubious (unless it's Harvard, Wharton, etc), your MBA can still help you on the career track. However, credentials are not IQ.

The situation I'm describing in the previous post is the exact opposite of this.

3 Votes

All Forum Posts by: Joshua Myers

Joshua Myers has started 11 posts and replied 145 times.

Post: Fastest Way to Make $1 Million?

Post: 2008 vs 2020 - apply lessons learned?

Post: Smoky Mountain Vacation Rental

Post: Smoky Mountain Vacation Rental

Post: Finding Airb&b Owners.

Post: Smoky Mountain Vacation Rental

Post: Smoky Mountain Vacation Rental

Post: Current Concerns - Investors

Post: Corona Virus Impact to Las Vegas Market

Post: Corona Virus Impact to Las Vegas Market