All Forum Posts by: Roxie Kim

Margins were pretty slim since this was an MLS listing. Adding the rehab costs would have brought down my cap rate to just under 5% using an expense ratio of 55.6%. Not terrible......but not worth the trouble, IMO. Someone with good local connections might be able to make it work. But then again, someone with good local connections could also probably find a better deal to begin with.

I recently backed out of a multi-unit in Bakersfield due to issues similar to what you are going through. After getting a closer look at each unit, I was appalled by just how messy the tenants' places were and how much deferred maintenance there was.  But to be honest, I believe the main issue was the fact that we weren't local and we would be relying on a PM to maintain the place. If were were planning to live on or near the property, we probably would have gone ahead with the purchase and fixed each problem one by one and managed the property just the way we would have wanted.

Interesting.... It sounds like even now, firms are taking liberties in defining what are reasonable steps in determining if its investors are accredited. Just imagine how bad things will be with this additional option.

I'm invested with two private placements and each of their checks for my status included sending over bank statements, as well as tax statements to show ownership in my real estate holdings. It didn't enjoy putting the documentation together, but quite honestly, I had more peace of mind knowing these firms were being meticulous about this.

All I've done is defined duration? I don't even know what that means... If you think the ten-year maturity period is insignificant, that's your prerogative. The only reason I'm continuing to harp on this topic is that during periods of rising interest rates, buying a 10-year treasury is NOT an investment I would recommend for any purpose including capital preservation because the chances are high that you're going to want to use that money when the next real-estate cycle begins.

You're saying that you think the ten-year treasury is risk-free because principal is assured after ten years. I understand...you and I just have very different definitions of risk because in the real world, principal is not assured.

Haha, BTW, very nice private message you sent me there Kon Zel. You're a real potty mouth, aren't you?

On a related note to the ten-year treasuries discussion.... This fund has a lot less interest rate risk than 10 year treasuries as most of its holdings are floating rate securities based on the LIBOR plus a set spread. So as interest rates so up, so will the coupon on this fund's holdings and the NAV per share of the fund will not go down. In fact, it will probably go up. I'm pretty familiar with this phenomenon as I work for a private equity firm that does something very similar to this fund (albeit with more than double the coupon rate). However, just because interest rate risk is mitigated via floating rate securities does not mean this fund does not have its own set of risks......specifically as they pertain to the market value of its holdings based on certain ability to pay interest and principal pricing models and subsequently the NAV/share of the fund. OK, NOW I've veered off course....

I disagree. I think the fact that you have to hold the treasury for ten years in order for it to be risk-free is not irrelevant at all. That's why the interest rate on the ten year is higher than for treasuries that are shorter term.....to account for the interest rate risk. You claim the ten-year treasury is virtually risk free,....all I'm saying is that I agree, provided you are sure you will keep it for ten years. If not, then the only way you will be able to sell that note is either at a discount or a premium, depending on which way interest rates went since purchase.  Why do you think the coupon on the 90-day rate is so much lower? Oh yeah, that's right...because that's the security that TRULY has no risk....as it will mature in 90 days.

Yeah, I know that....that's why I said it's only risk free if you keep till maturity. I understand that the principal underlying value will, absent a government collapse, never be impaired. I'm not advocating a bank loan over a treasury because those two cannot be compared. So if you're are absolutely, 100% sure that you will not need to redeem before the 10 years is up, then I would agree, that it's a risk-free investment. However, in the real world, a ten-year crystal ball just does not happen. Given the current direction of interest rates, I can pretty much guarantee that a 10-year treasury purchased today will be sold at a discount if you tried to sell it in 3-4 years. 

 It's only risk-free if you are 100% sure you will keep it till maturity. What if rates go up and you need to sell?

There has been a tremendous amount of development in 'A' rental units here in Los Angeles. Neighborhood looks beautiful with all these magnificent, modern-looking apartment structures here in Koreatown, Los Angeles. But with this type of saturation in high-end units, which I hear is happening in other metropolitan cities, a cool-down is all but inevitable. Through multiple layers of hearsay, I have learned that the major player here in my neighborhood has stated that he will no longer develop rental units and instead focus on commercial. 

 As someone who works indirectly in Sarbanes-Oxley, I wholeheartedly agree. The amount of oversight and procedure based controls for exchange-listed investments is staggering. But this is done to protect all the non-accredited investors who buy these investments. Syndicated deals, private equity LP funds, private credit, or any other form of alternative investment or private partnership are geared toward accredited investors who are expected to do their own due diligence.