All Forum Posts by: Paul Azad

for Zero Risk to capital, move cash to your brokerage and buy USFR, paying 5.4%, must pay federal tax but no state taxes, it holds short term US treasury floating rate notes, no FDIC needed as FED can print more money to pay you off

for Mild Risk to capital, buy BKN, BlackRock municipal bond fund with 20% leverage, pays 5.5% tax free, and if 10 year bond yield falls 2% over next year, likely with rate cuts coming, then this will appreciate by about 15%

for Mild to Moderate Risk to capital, buy EDV, Vanguard 30year zero coupon US treasuries, pays about 4%, taxable and if 30year bond yield falls 2% over next year, likely with rate cuts coming, then this will appreciate by about 60%

Don't put into stocks if you need the cash in <3 to 5 years due to stock volatility

Diversification is the only protection for Black Swan, large scale negative events. but can this happen again, Absolutely.

This pandemic was predicted and modeled mathematically for decades to occur either naturally from deforestation and human contact with rare animal species and insect species, or in the situation of COVID 19 from direct human manipulation, of viral genetics.

I remember the reports of the first cases coming out from Wuhan in December of 2019 ,and obviously since everyone knows there are only 4 comprehensive bio safety level four laboratories on the planet, Moscow, Paris, Fort Detrick-Maryland and of course Wuhan Institute of Virology, and given that there are over 100,000 small town with wet meat markets throughout China, one doesn't even have to ask the question "what are the odds?" and that's before knowing the genomic sequence and seeing its clear human manipulations.

So, will this happen again? Yes. The question of how soon, the answer is much sooner than any of us wish to believe, As humans expand into new territories both geographic and genetic. We actually got quite lucky as COVID wild type strain mutated fast enough to become less harmful and so only 1.2 million Americans have died and only 7.1 million people around the world have died from it, so far. It could have been much, much, much worse. (my wife's uncle got turned away from a large hospital in Dallas, overwhelmed/understaffed, and died that night at home from Covid)

Governments are just people like us doing the best they can with limited information. And so they will undoubtedly overreact and underreact to the next pandemic. So diversification of asset classes with alternative uncorrelated assets is probably wise, and perhaps carrying lower leverage on STR/LTR going forwards.

You only need to be accredited to buy into a Reg D 506C limited partner position in a syndication, you don't have to be accredited to buy into a Reg D 506B limited partner position in a syndication if they have open, one of the 35 spots allowed for non-accredited investors per 506B syndication. For example you buy into a syndication with 100 investors in a 506B, 65 or more must accredited. I don't think the sub-type of asset class matters, ie multi-family/industrial/data center/SFR/MHParks etc. I think i remember reading that you can also demonstrate accreditation status by working in some capacity for the syndicator, or also by working "meaningfully" in real estate anywhere in some capacity, and these don't have a dollar value ie. the 300k joint filing or 1Meg net worth threshold.

but the amount of due diligence required to invest in a private syndication is/should be a lot, which always are more opaque than a public RE investment, like REITs, is something you may want to avoid until you have been involved in RE directly for some time

consider mortgageREITs, eg. AGNC paying me 14% dividend and should rise >10% over next year as long bond yields fall due to falling inflation like today, or rate cuts, or recession. or equityREITs, like BSRTF, owns multi-family in Texas/Arkansas/Oklahoma, in good long term growth areas

good luck :)

Hi Scott, consider USFR for zero risk cash, earns 5.4% holding 8 week Floating rate note US treasuries

or for mild risk cash, consider BKN - BlackRock's Muni fund, earns 5.6% tax free, which for you would be >9% tax-equivalent yield, and if rates fall, the BKN etf will rise considerably, which though will be capital gains taxable :(, It holds intermediate term Municipals that are all GO, general obligation, so they can always tax us dumb schmuck citizens to pay off the notes instead of defaulting, so low risk but not zero risk for cash. ie (Orange county '90s)

Inflation has already resolved, the 3 month trailing core PCE is at 1.5%, well below FEDs 2% target, so they will likely start cutting soon as the 12 month trail falls in line, that's why Powell changed his verbiage so much last Wednesday, and FOMC minutes speak of 150 bp cuts before the end of December as their expectation per their Dot Plots, the only question remaining is consumer spending,(>60% US economy), if falling like McDonalds/Starbucks/Uber saying then unemployment will accelerate and then possible recession, then 10yr yield falls even more, and bonds values would rise like Mike just said above. But falling 10/20/30 bond yields don't translate into rising CRE values as down GDP means more store closings, lower NOI, lower office rents/industrial etc, etc.

e.g. I'm an LP in 24 retail big box centers, we just lost 3 Conns Home stores out of 174 closing in 15 states plus closing their 280 Badcocks furniture and more stores too. This was due to finance arbitrage like many retail bankruptcies, They were selling furniture/TV/appliances for 2 decades financed at 3-4% and borrowing at 2-3%, now their billions in floating rate notes are at 7-8% but only getting the fixed 3-4% for the washing machines etc They lost 77 mil last year and rising fast so had to Chapter 11 to stop the bleeding.

Next 1-2 years will be very interesting in markets/CRE etc.

The FED Should start cutting rates Soon, out of choice or out of necessity. If out of choice, the 10 year yield should drop another 75 to 100 basis points, bringing the mortgage rates down, and if we go into recession then they will cut out of necessity bringing the 10 yr yield down 150 to 250 basis points at least, and also leading to rising unemployment and declines in property values, although HCAD will take their sweet time to adjust as always. 

Until that happens, with either scenario, a way to increase your cash returns could be to buy EDV, it's a Vanguard exchange traded fund that holds 20 year and 30 year zero coupon US Treasuries, such that whenever the 10/20/30 year bond yield goes down, its value goes up. For example, 30 year dropped about 50 basis points from 7/24 - 8/2 and EDV just went up about 14%, and last Nov/DEC long bonds dropped 1% and my EDV went up 30%. It should give a good return, over next 6-9 months with either a gradual FED rate cutting and a great return with a Recession. 

another option is AGNC/NLY. 2 mortgage Reits that own billions of agency MBS, so as rates fall, their underlying bond assets will rise in value dramatically causing stock their prices to rise, and they pay hefty dividends while you wait, AGNC paying me >14.4%

if staying in cash consider USFR pays 5.4% taxable, or BKN 5.6% tax free as munis

GO TEXANS! CJ!!!

"Which again, people should later ask how such happens in a "free market system".... How does coordinated events on such scale happen? Group think.... really... At some point people gotta start admitting what's right in front of everyone's face. Watch this week and then tell me how "non-political" it all is......."

James, I don't know if the large market movements/rotation need a "coordinated" explanation. My buddy is at a hedge fund and the same Greed/Fear that drive a retail investor often drive his decisions too. He describes it like a big game of musical chairs with having to be in positions which are winning because his competition is in those positions and then try to guess when to get out before everyone is trying to get out at the same time so as not to be left without a "chair" or taking the loss. 

Friday, unemployment data/PMI data shocked the market a bit, when just 2 days earlier Jerome Powell said the labor market "was normalizing". Then last night Asian markets digested that their largest export market (USA) may be slipping into Recession, so Nikkei _Japan down 13% worst loss in a day since 10/1987, Korea/Thai etc all down big, so now SP500/Nasdaq/Russel/Bitcoin/Ethe all down big as they digest the near term risks, price in higher risk of recession/unwind the Japanese Yen carry trade/rotate from over-valued AI stocks with no near term profitability/Buffet dumping Apple/BOFA etc/and digest domestic politics ( I agree with you that Dems have low chance of winning, whoever runs, due to low turnout from bad economy/inflation damage) but no "coordination" is really necessary to explain the market movements.

 Are you concerned that if last 2 weeks turn into a risk off market downturn like 2022 and 2020, that BTC will drop as it did both those times as it is still one of the most risky of Risk On Assets? And if we are sliding into recession not just a soft landing, that Small Caps/commodities-minerals/BDCs (with falling net interest margins as 10yr falls and rising defaults) may all be a dangerous place to be? 

10 yr down 70bips in 4 weeks, 20 just today, and if Sahm rule violation/longest inverted yield curve ever/and M2 - 4% drawdown all have >95% correlations each with near term Recessions, then maybe long bonds may be safest place to be for a while. I've been buying EDV heavy for last 10 months whenever 10yr above 4.5%

forward PE 16 on sp500 puts fair value SP at about 3800, so could be really bad for still frothy MAG7, so your MAG7 puts should really perform

 Chris, you are a scholar and a ninja assassin. You do the most damage with the least exertion, beautiful, ....yeah Elevate owns some of the worst properties in the worst parts of town here in Houston. Their "Selena" which is foreclosed by Arbor is in east houston near ship channel and definitely in "theHood", their "Sophia" is in Greenspoint aka "Guns-point" and you can't get food delivered there without a police escort. The company has properties all over the place from South Dakota to Florida to Oklahoma, so good luck to any investors. 

REXR - (Rexford) they are a niche (sub-specialist) in industrial warehouse/distribution/manufacturing in the southern California only urban or Infil area, they are not international like PLD - prologis, their MOAT is that SO-Cal has geographic limitation to new inventory, so they have rent pricing power that industrial in rest of country doesn't, also 26 million people in so-Cal and the 2 busiest Ports in country, their earning/revenue projections next few years are best in class, and they are cheaper on price to book than PLD or others, I own some and will buy a lot more in upcoming Recession, likely in next 6-12 months, when publicly traded equities will likely slide by 20-30% although their assets (physical buildings) are only going up in value

VICI- (casino REIT), used to be part of Cesars palace, then Caesars spun them out in 2018, to do sale leasebacks of their properties to take all that physical capex off the books. They are growing, they bought MGM, Venetian, a slew of bowling alleys, and many small casinos. They are cheap, and will get cheaper in coming recession, as tourism to Vegas will decline, and they have superior growth and great management, that know what they are actually doing

ADC -(Agree Realty), they do what I do privately, but on a bigger scale, run by Joey Agree , very smart, they have excellent growth, multi-tenant, triple net retail, and grocery anchored Retail, they will benefit from massive secular tailwinds, as there has been under construction in retail for years, due to fear of E-commerce, higher construction costs/insurance costs, post GFC under financing-construction, etc, so existing inventory is commanding higher rents, we are bumping new leases by 7-11%, they will get this endogenous earnings growth for years

these should perform well over next 10 years, never buy anything in Real Estate for less than 10 years, to allow to go through cycles, and if you can buy in 401k/IRA so dividends can be re-invested tax free

good luck, you have to monitor your E-REITS like you would any other stock, closely, as they move with sentiment not just on NAV like private Real estate, so you can't just dose em w 200mg of propofol and walk away, not that you'd ever do that :)

good luck

1. 'Investing in Real Estate Private Equity' by Sean Cook is a great intro level book, that assumes you know nothing about the syndication space but it doesn't treat you like an idiot either, it takes you along and educates you

2. higher level is "CRE analysis and investments" , a textbook by Geltner et al. which I loved, breaks down all aspects of CRE, how to underwrite etc.

3. lots of online stuff helpful too, like The Real Estate Syndication Show, recent episode below

Over 100 Passive Investments and Lessons Learned with Joe Fairless (youtube.com)

4. For information about the legal implications of syndication investing and structures. look at Mauricio Rauld, a recent video:

How to Become an Accredited Investor | Updated 2024 (youtube.com)

5. an obviously read all the threads on the BP thread for syndication investing under forums/real estate strategies/ syndications etc

good luck