All Forum Posts by: Paul Azad

Didn't read your post, but have you thought about investing all your life's savings in the "Hawaii of the Mid-West", Yep, I'm talking about OHIO. aka the garden of Eden, where any single family rental is guaranteed to return >6000% per annum. (Sorry, product of OHIO public schools, they teach Reedin' and Rightin' but no Rithmetic.) 🤠

Obviously to buy and oversee a single family rental would be better to do in your neighborhood or local area, but since you live in Southern California, that's probably prohibitively expensive. My cousins used to live in Newport Beach. Yall's prices are and have always been insane, but have great appreciation, because perfect weather, jobs, etc.

 For a completely passive approach until you can find a more reputable management company, consider buying a publicly traded real estate investment trust like AMH or American home which buys thousands of individual single family residences, with very low cost of capital, manages them completely and you sit back and just collect passive 3.3% dividend per year, and a total return of 15.1% annualized per year over the past 10 years or a compound annual growth rate return of 10% a year at least until you can find a more trustworthy company.

Obviously it's not as good as the returns of direct ownership, but it has some benefits, like zero personal liability, completely passive, comparable return to sp500, vast geographical diversification, etc. 

Once he has wired the 3M to BOFA, he can fund a Merril Edge account, then just drag and drop the funds same day into his new brokerage account for ease of use. 

Then question becomes, when does he need the funds, and how much risk can he bear?

If zero risk, then buy a Tbill ETF, like SGOV, it holds Tbills coming due in 3 months or less, pays a monthly dividend, currently 4.21% and risk of capital loss would only come from US debt default. In which case we are talking ammo and canned veges are money.

If near zero risk, then JAAA, pays me 6.2%, an ETF by Janus that only holds AAA rated CLO debt, ie corporate debt structured in cross-collateralized tranches. 

"As a reminder, no CLO AAA tranche from either the 1.0 (pre-GFC) or 2.0 (post-GFC) era has defaulted. This is partly due to the diverse pool of loans that form the underlying collateral , but also in large part due to the structure itself and the nature of most deals being actively managed – meaning the credit selection and trading skills of the CLO manager can meaningfully impact returns, as well as avoid loan losses."

also the worst year for Bonds since 1777 was 2022 and JAAA was transiently down only 3%, then recovered in 9 months, so couldn't have a better Stress Test that passed

For moderate risk, I do a Barbell approach based on 10yr yields. 50% BDCs, 50% mortgage REITs, and I shift along that based on what i think 10yr yield ie inflation + GDP is doing short/medium term, pays me about 15% to 25% a year. 

for high risk, sp500 etf like VOO or QQQM for Nasdaq, sp500 8.4% since 1801, 13.47% last 10 years, and QQQM 15.7% last 10 years, if you get 9.2% a year then in 50 years money will go up 100x, from 3M to 300M

also please hire a tax lawyer and an estate lawyer per hour to help with that non-investing stuff

There is never a need nor benefit to having another human invest for you and charge you an AUM fee for that. please read short book, the Four Pillars of Investing by Dr William Bernstein for good investing overview

Quote from @Eric Bilderback:

Quote from @Steve K.:

Quote from @Eric Bilderback:

Good call if Eric Trump said buy it you can take it to the bank!  I know you put up a tough front but deep down inside I knew you were all in for MAGA baby!  

 Hey if you can't beat 'em, might as well join in on the scam. 

Because a million dead Ukrainians so Ukraine can become a NATO country on the border of Russia (just like America would be totally cool with Russia or China having a military alliance with Mexico totally reasonable), illegal immigrants welcomed by businesses and their paid for politicians to push labor costs down at the expense of poor Americans, and forcing kids and healthy people to take vaccines that don't work is totally not a scam. LOL. 

How Many People Have Died in the Russia-Ukraine War? - Newsweek

this and other sources put numbers closer to 80k dead Ukrainian soldiers and 800k dead Russian soldiers, 10:1 ratio, and most of the 125 billion we have given to Ukraine comes back to us in form of weapons purchases from US defense contractors so local job growth, which supports local real estate markets. So dead Russians and higher NOI, that's a win win :)  and no I don't feel bad for a country that has 1,700 Nukes targeting me and my family 24/7. 

from reading this thread, perhaps BiggerPockets can make a Columbus Ohio SFR token, on Solana architecture, then get President Cheeto to put it into the Strategic S#*^Coin Reserve with the others, then BOOM - we all Rich Biatch!!! 🤠

I think i'll just stick with quality CRE with good cap intermargin spreads.

core PCE came out last week at 2.6% down from 2.9% the prior month, this has been trending down since July 2022 at 5.5% (when CPI at 9.1%) FED uses PCE not CPI when looking at inflation as CPI is a more volatile and flawed metric, for example the core CPI 3 weeks ago was about 3.3%, but it uses OER or owners equivalent rents for 36% of it's weighting, and that metric is about 1 year old trailing and more subjective data. If you replace it with current rents from redfin/zillow/NAR etc you get a core CPI today of 1.7%, which is below FED target, so both PCE and CPI are going down and ultimately so will mortgage rates

Also Federal policies like Tariffs although immediately inflationary usually cause trade wars (reciprocal tariffs) and lower US exports and decrease to our GDP or even a recession which is much more deflationary, (why 10yr falling the last 1 month)

so in near term, next 6-12 months, 10yr should fall and mortgage rates too, but longer term, next 5-30 years 10yr should rise to push Government to deleverage, all the leveraging up it just did from 1981 until now, this is same pattern from 1945 til 1981. 

DOGE has found about 50 Billion in programs it would like to cut, out of a yearly budget of 7 Trillion and a yearly Deficit of 2 Trillion and yearly Interest payment of 1 Trillion. (Govt spends 19 billion a day). Unless they find 30-40X more they are just rearranging deck chairs on the Titanic. 

Real Estate math is annoyingly confusing as syndicators like to use all sorts of different numbers from MOICs to IRRs to AAR-average annual returns to anything else they can come up with to beneficially inflate their numbers for marketing purposes and to avoid the only metric used when investing in all other asset classes, the CAGR- compound annual growth rate, but it's easy to convert, like pounds to kilograms.

Here you have 100% in 5 years or 20% AAR, or 2.0 MOIC, you take the MOIC or add 100 to the total return 100%+100% = 200% = 2.0, then you do an exponential equation (x to the Y) with x=2.0 and Y= 1/time in years, so 2 to the 0.2 which is 14.87% that's your CAGR {calculator will have an x to the y button for ease, 2 x/y .2}

for example, sp500 just returned 254% over last 10 years, so add 100 so MOIC = 3.54, then to the 0.1 for 1/10 years and CAGR is 13.47%

now you can compare returns from syndications to buying VOO or QQQ etc

Here’s the Shocking Truth About the DOGE Dividend

A Mr. Gammon gives a good whiteboard YouTube breakdown of what I posted a few days ago, that any $5000 dividend rebate would be better spent in decreasing our yearly deficit or national debt than given back to the taxpayers or average Americans. I would love to get back some of the vast amount of money I've paid to the IRS over the years as well, but with how precarious our financial situation is, being on the brink of a debt spiral that could trigger another depression and at the least far higher interest rates and cripple CRE. I think it's best to find every dollar we can of waste and fraud and pay down our debt as much as possible because our grandchildren will have to deal with it if we don't.

SUPPLY 

"About 2.6 million Baby Boomers die each year, but that number is expected to increase to nearly 4 million by 2037." And a total of about 3.3 million Americans in total die each year. Likely most are over 40 and more likely to be homeowners than younger people percentage wise. Boomers are largest demographic co-hort in US history. Also a buddy of mine lives in a mythical city called Austin, where he swears while sober, said he saw guys 3-D printing houses, well foundation/walls etc. I have not looked into this but, if process ramps up, could cut construction costs, time to market and massively increase supply, too. 

DEMAND

America is decreasing it's previously Laissez-faire approach to immigration.  

So population decline either with Celestial deportation or with a more southerly route may not be good long term for housing market?

I thought it was an "Onion" headline, but it turns out that our Cheeto-in-Chief wants to send $5000 dollar Stimi-checks again, ie direct M2 inflation like he did in 2020, this time to every American "household", about 130 million of those. But now under the guise of "returning the waste and fraud to the American people." This would be about 650 Billion dollars one time so far.

This could certainly potentially worsen inflation again, remember he caused the recent 2021-22 inflation by printing 3.4 Trillion no one needed, followed by grandpa Biden adding his own 2.3 Trillion or so, though he may not remember doing it. If we get a second inflation bump now with a weakening Europe and Asia, he may just bring on the next recession, and that won't be good for CRE at all.

Last week's CPI print was awesome. It showed a headline core CPI of just 3.3%, but as we all know it's housing component is 36% of the number and it uses an antiquated sampling system of owner equivalent rents O.E.R., that is 1 year old data and bad data due to methodology. If you instead put in actual current Rent data, which is much lower, the core CPI is currently 2%, which is the putative FED ie New Zealand target. As future monthly CPI reports print, wall-street and the US treasury market will then trade on this, thus continuing the fall of the 10 year yield, likely to upper to mid 3s, lowering mortgage rates/cap rates. Now the guy who "knows the best words and went to the best schools" is threatening all the pain that we have endured from the FEDs Rate-pocalypse in 2022.

I'm still hoping mainstream media picked up the story from the "Onion" and it's not true. Didn't he and Herr Musk tell us we needed to decrease the debt and deficit? Maybe use that 650 Billion to pay down our credit card balance which is rising at 1 Trillion every 95 days and perhaps then the Bond market would take our own country seriously. 

Maybe Trump and Biden and their rich friends actually want to subject our middle class to a permanent state of Penury, by engineering inflation at every chance?