All Forum Posts by: Rick P.

Can’t speak for anyone else but really enjoyed the social justice/victimization thread. Now that will help ya grow a portfolio!

-RP

@Danny Grey

One guy in here who gets it.

Way to early too tell how severe the pullback will be. The government is moving the goalposts on a nearly daily basis. Will the $600/wk Fed unemployment benefits be extended past July? If so, we can kick the can down the road some more and housing can be ok. If not, then there is going to be definite pain out there. Opening the nation up isn’t going to cure things. You can’t snap your finger and have people back spending money. This is a deflationary tidal wave on steroids. White collar jobs will get hit. Salaries will be cut. People will save more if they still have gainful employment. Anyone telling you after 6 weeks that everything is fine is just talking their book. We just don’t know how things are going to go. Real Estate doesn’t respond like AAPL or AMZN during an earnings report. It takes time.

Now for the reality of where we are now. High end is going to get hit if for no other reason than there is next to zero international travel right now. The Russian, Middle Eastern, Chinese & S American buyers who flock to NYC, MIA, LA, BOS etc are going to be absent for the time being. Not to mention dollar strength has crippled some of their currencies. Does that mean prices drop, probably. It does mean that transactions will all but certainly dry up. People at this level don’t have to sell. There remains definite supply issues at lower priced housing but this is and always will be a local story. If the pace of people departing NY NJ CT IL MA etc accelerates even more after this, there will be plenty of markets that don’t miss a beat.

What we do know is the hotel, office & retail sectors face significant headwinds. CMBS just getting pummeled and it's not going to stop. What large company isn't thinking about their footprint right now? Do you really need 1.2m sq ft in Midtown Manhattan? Could they get by with 600,000 and letting people work from home? This is going to play out in every metro market around the world. If less people work in these city centers do we end up needing less hotel rooms? I would guess probably so but we can only guess at this point. I think my biggest takeaway from the past 6 or so weeks is if there is even a 5-10% Long Term change in how people live and work, we're talking about some major shifts in diff RE markets. Good luck to all and stuff safe.

-RP

I don’t really think the number alone tells the story. I know people who have put together $500m+ in deals. They’ve gone that route, marketed well & raised tons of capital on the backs of a great bull run. I also know of people have $50-150m in RE and they did it with their own money. Brick by brick, step by step. Not people who were born with a silver spoon either. While both are impressive, I respect the second avenue more than the syndicator/deal maker. Just personal preference. No rights or wrongs here. For most of us, me included, we’re going to need outside capital @ some point.

-RP

@Rudy Curtler

Apologies. I was referring to a couple of Publicly Traded Companies. When I think of passive income in RE my thoughts go to buying the equity, debt or preferred shares of RE companies or investing in someone else’s deal/syndication where all I’m doing is writing a check.

ELS - Equity Lifestyle Properties is Sam Zell’s manufactured home & RV resort company.

PSA - Public Storage

-RP

2009 Purchases of ELS & PSA

Midwest investor here. Like the sports analogy. For any baseball fans out there I like to think of it as ‘Small Ball’. Little more strategy needed to make outsized gains. Solid cash flow if you can rehab and manage better than competitors in same market. Allows you to get by with stagnant to declining populations. Not gonna hit Grand Slams unless ya caught the lows in ‘09-‘12 and stumbled upon a gentrifying neighborhood. If you caught Logan Sq or Avondale in Chicago coming out of last Recession you killed it. That said, can’t lump all Midwest markets together. Spots like Columbus, Indianapolis & Minneapolis have seen legit population growth.

@Jay Hinrichs

Perfect guy for the ME generation. More or less a charlatan but I respect the get up & go. He’s really built a brand and a good portion of his overall message is very inspiring. I find him funny and entertaining in a Beavis & Butt-head kinda way.

- RP

@Jay Hinrichs

I hear that. I really hope we can find a middle ground here where we can insulate the 50% of our population who is most at risk while slowly getting everyone back to some sense of normalcy. What I’m worried about is if we will see some kind of multiplier effect here amongst the healthy sub 50 set. For example, for every 1 month of being locked down are we going to see peoples behaviors change for 3 or 6 months or more after. It can be little things too. There’s a local diner I’ve been going to 3-4x a week for past few years. Now I’m back in a rhythm where I am making breakfast for the fam every morning. Like most, I’m going to enjoy the freedom of relaxed restrictions when they come but I’m guessing I’m not at that diner 3-4x a week anymore.

-RP

@Jay Hinrichs

It was no doubt deflationary for a short period of time. Stocks and housing got whacked and plenty of people got hurt. However, we didn’t come close to a point where the market cleared. We blew an even bigger bubble. Additionally, current debt levels at the corporate, local, state & federal levels are now larger by an order of magnitude. At some point a market needs to be left to function. I am by no means saying that there shouldn’t be govt support during this period. What I am getting at is the most likely result will be mountains of more debt for everyone going into the next crisis after this. We haven’t even seen the wave of corporate defaults. We haven’t seen the mortgage defaults. We haven’t seen the municipal layoffs which will just be staggering. To live in interesting times..........

-RP