All Forum Posts by: Paul Azad

level 1) your question , which is better, answer: Depends, please read Brian Davis excellent article, 

Real Estate vs. Stocks (What 145 Years of Returns Tells Us) (biggerpockets.com)

level 2) what should you do next 50 yrs, answer: Whichever one gives you an EDGE. you need to study both, then find which one you really can't stop thinking/dreaming about, then study/breathe/chew/swallow/digest everything about that one and better yet a narrow focus within, so you can develop an informational EDGE.  Publius Ovidious Naso or "Ovid" once said 2000 yrs ago "Ipsa Scientia potestas est." "knowledge, itself is power."

not sure what to do buy VNQ/VOO (50/50) US REITs/SP500, over last 20 yrs they have returned 11.5%/9.5%, good luck :)

i don't do/invest in residential real estate but perhaps it would be possible to learn SFR by getting job in property management, also get RE agent license, then once you have learned a fair bit, form a syndication with yourself as GP, get your college friends, their families, and anyone you know to invest as limited partners, then buy a rental house for cash, and you take 20-25% equity and provide the property management for a % of the rent, whatever is industry standard. This way you don't need any loans, you get to grow your equity/experience/income with every house, and the passive investors get your time/dedication/growing expertise/energy/and an inflation resistant investment.

people want good investments, the Horse, but they mostly judge that by the earnestness/ambition/expertise of the Jockey. good luck :)

THE Syndication NEED: US stock market return since 1801 is 6.7% real, 6.9% if you exclude Alexander Hamilton's first and second US Banks which both failed but were publicly traded, so let's use 6.9% Real, and 8.4% Nominal with the inflation, this comes from Dr Jeremy Seigel at UPenn data set. Now if you don't like long-term data, let's use last 20 yrs only, from JPMorgan Wealth Management Teams in house data, which covers a boom a bust and a boom and a pan-demic, typical for a US 20yr span. 

which gives us 9.5% nominal (REITS beat SP500 by the way), but the key number is the orange bar, 3.6%, That is what the average wealthy college educated client of theirs dose, hundreds of thousands of clients. Only 3.6%, This number is quite low and this is why I and many investors look towards Real Estate, REITs, and particularly private RE syndications as a way to get better, inflation beating returns. Obviously finding high quality real estate GP syndicators with good long term track records is quite difficult, but definitely worth it. Many of us who are busy professionals can't and also don't want to manage real estate directly. (toilets/termites/tenants) It would decrease my time at work where I generate significant seed capital, and that lost opportunity cost would exceed the real estate profits at least in first 20 yrs of my career. Now a great option for the original poster and i think from what Melanie wrote as well is to invest in liquid REITs. You can see from above chart, they beat the us stock market, and from the older NAREIT study they have returned 13% since 1976 versus 11.4% for US tock market same 50 yr period. Contrary to Melanie's awesome performance, most individual RE investors per multiple academic studies do worse by 3-4% per year than the REITs do, and many reasons for this, REITs have access to lower cost of capital, lower property management costs (Realty Income-O-, spends 0.6% a year on all management), and many other reasons, but big problem, REITs as very liquid, then people can buy high and sell low causing poor returns too, as above. 

I find RE syndications to be a very good blend, between managing RE and passive REITs, they keep me locked up for 10+years minimum, so I don't (as a glorified Chimp with Wi-Fi) trade out of them at the wrong time when market gets scary, but they also generate REIT beating returns and as an LP in 35-36 deals I have no active role, so I can focus energy/time at my job, creating more investment income, and the tax benefits are beyond sexy.

But the one I invest with, runs all deals as a 506B SEC reg. I think, so can't advertise anywhere, or would be called "conditioning the market", and has only grown by word of mouth, friends, families, relatives etc. I don't want a 506C, accredited investors only, as many of the 50+ friends i have brought in wouldn't qualify especially when they were young and starting in their careers, and only had big grad school loans and not close to the >1mil net worth requirement (congress about to raise to >3mil), but they had good income and desire to invest to provide for their kids. 

to OP, Forest, ask people you know about RE syndications, ask CPAs who have thousands of clients, ask RIAs registered investment advisors, who have tens of thousands of clients, a reputable GP will provide records, access to other investors, allow you to come to shareholders meetings, will explain their compensation, will talk w you about Deals that went bad or didn't perform up to expectations, believe me we all remember every detail of those and will explain why and what they learned from it. Every GP, real estate investor, makes mistakes, doesn't time the market perfectly etc, looking for the perfect is the enemy of the good. 

good REITs right now, take a look at ADC - agree realty, does multi-tenant triple net large shopping centers and has better growth outlook than Realty income-O-, 6% vrs 4%, which is also great company, both stand to benefit from low supply of retail space, last 5-10 yrs construction-wise, and thus better rents going forward, and interest rates should fall near term, lowering Cap rates and increasing underlying asset values and sales proceeds (only hold REITS in a tax-sheltered account, 401k or IRA, due to high taxation of the dividends-ordinary income) Good Luck

"Exactly expecting private note funds to put out into the public their loss's is not going to happen anytime soon.. Only the wins generally speaking."

Seems like a great way to narrow down the list then, the best GPs, managers, CEOs, will openly discuss their losses and mistakes and what went wrong and what they learned from it so less likely to happen again. Warren Buffet is a master of this. When I invest, I mostly want to know about the failures and losses and what they did to mitigate them as any fool can make money in a Bull market but what you want is someone who loses less in a Bear or bad real estate market. That's the true Alpha. 

Real Estate Agents and everyone else in a free market is paid exactly what they are worth. That's how worth is defined, a tautology. The 1.8 Billion dollar verdict and now the 418 Million dollar settlement just breakup a classic Cartel, hence the ruling that it was an anti-trust violation. The buyer side agents now have to get their buyers to sign a document either obligating the buyer to pay their fee or not-obligating them to pay their fee. Many buyers will not sign the first form, so buyer agent will have to get fee from seller or seller's agent with no promise of getting that when first adopting the buyer client. 

who knows how it will shake out over time, but other trust busting verdicts/government actions usually lead to more efficient transactions for the consumers, ie. lower prices of fees. Like UBER/LYFT dropping taxi-cab fees by >50-75%, or pharmaceuticals coming off 17yr patent protection and costs dropping >90%, or de-reg, de-monopolization of energy in Texas etc on and on.

The verdict/case has also generated enormous interest/buzz among the average public and interestingly a new found awareness that the commissions are entirely negotiable or even avoidable which when you read the 108 page summary report of the settlement, the hundreds of plaintiffs had no idea of and claimed they were lied to by their agents. The plaintiffs in the much larger 42 Billion pending lawsuit also will likely make same claim, and may be warranted. This public exposure to the commission process may be the most damaging aspect and may dwarf these verdicts longer term. 

BREIT by blackstone is private, not publicly traded, and is only sold by blackstone chosen financial advisors, it has 4 different class shares and most have huge load fees (1.5-3.5%) and yearly AUM fees (1.25%), and if you sell <12 months from any share purchase they charge you an exit fee of 2% of NAV price , so be careful with that one

I've invested in many syndications for passivity/market beating returns/tax benefits 

currency debasement running at 15% a year since GFC(2008), (ie M2 money supply growth) so you have to get >15% just to tread water in USA now

congrats Ms Chatman, wish you all the best. Will the rising property insurance rates in the Gulf Coast hinder the economics of fix-flipping properties in your area? From getting loans to insurance costs etc, are their fewer people moving to the gulf coast due to these issues? Generally the southern US is a great place to invest for me, but I only do multi-tenant retail, good growth, better regulatory environment, great people etc.  good luck on your journey

sell it yourself, FSBO, hire attorney to help with paperwork, list on FSBO website, they often have fixed fee packages. have one price if buyer has no agent and another price 3% higher if they do have one so they are paying for their own agent, like in other countries

if market is good agent is not of much help, if market really bad agent is not of much help, Also act like every real estate agent does, in every academic residential RE study does with their own properties versus their fiducial clients, and list the property for more and list it for longer than they recommend to their clients. 

Spring is best time to sell, I had 13 offers on my last home in first 48 hrs, and saved >100k, why give away your hard earned equity that you took the risk on?

Seems like they are running a Pawn Shop, homeowners in Austin/Miami/Tampa etc who need cash bad sell a "HomeShare", percentage of their equity in their home for a discount, with a term of 10 yrs, if the homes go up in value as they have since 2011/2012 then NADA gets the original equity already at a premium price plus any appreciation for the total percentage they bought from the homeowner, but since Austin now down 20% in last 12 months and other hot home markets may also continue to fall, and NADA does not engage in price discovery (ie shopping for best value) as they want to obtain a "Market Value - ETF like" of the cities they invest in. They undoubtedly overpaid for the homes which were bought by the least savy homebuyers who have now got into trouble/overleveraged and need to cash by selling a portion of their equity in the first place, thus NADA's positions will likely fall faster than the overall market as they have this intrinsic flaw of no price discovery in their methodology. 

so either NADA makes out like a bandit by fleecing stupid Americans (not a unique business model) or NADA bought overpriced homes near the PEAK, since they just started business in late 2021, and they will incinerate your investment better than Cathie Wood, I'm getting my popcorn ready to watch this %&*@show   :)