All Forum Posts by: Sam Josh

@Adiel Gorel

A friend wants to lose weight, 35 lbs. If he tries he can let that weight out in 12 - 18 months in a healthy fashion, not 6 days or 6 weeks. Odds are he may only lose 10 lbs or 15 lbs and give up. I’d give him better odds if he had only 15 lbs to lose. I think the wounds of Covid to the economy are the same. They are sharp and deep. Nothing is going to recover overnight. The economy will take 6 - 12 months of recovery time and recession is already happening.

@Ricardo P.

People should ask tough questions to themselves like what if all my sources of income stopped for 6- 12 - 24 months and only had my expenses, will I survive?

90% people will fail on that test. Fact is Covid-19 stats on # of cases and # of fatalities are not getting better anywhere, Small Biz is getting crushed everywhere. Large corporations are working through furloughs and layoffs. Those have not even caught speed but they are coming. Several tech startups here in SF are closing doors as we speak. Even a giant like AirBnB had to raise emergency capital to stay afloat and pay a whopping 10% coupon on it. Unemployment may top 20% which dwarfs the 12% number from 2008 or the 6% in 2003. People are not going to pay rents like they paid in April and that’s because most people got paid in March for at least half of the month. Sectors like Tourism, Dining, Travel, Big Oil will see a huge downdraft, lots of bankruptcies and layoffs. Sorry wish I had better news.

@Brian Burke

It would be great to know why this crisis can use the same playbook that worked for many of us in 2008.

That was a financial crisis caused by a dislocation in the financial system and was resolved via financial means. It largely impacted banks and housing and then spread to other parts of the economy. Unemployment at the time peaked at 12%. I recall people in tremendous financial pain but I don’t know of the 2008 crisis killing people.

This is a pandemic driven recession which has impacted everything but not banks and housing yet. That itself is upside down and makes the application of the 2008 playbook less compelling. Unemployment is already trending higher than 2008 levels.

Despite all this I think the one thing I see more this time is people are overly confident this will be a short term hit and opportunity is just round the corner to grab. That is not the sentiment I saw in 2008. There was a lot more fear and uncertainty among investors.

@Savannah Kennedy

It is survival mode vs expansion mode! Investors will hunker down and some will exit the business all together.

In my opinion RE investing typically has been a wealthy man’s game or rather those with cash to invest. But post 2008 crisis, the combination of low interest rates, low unemployment, high property appreciation, proliferation of syndicates, YouTube videos touting RE riches and more chatter around blogs, RE sites etc, all of that had made RE investing a lot more popular among various tranches of the middle class. That has exploded the number of investors in the field.

With COVID-19, things are changing. The investor pool will shrink because of unemployment, low to no property appreciation and lack of liquidity.

Case in point, a buddy of mine from the SF Bay Area has purchased 6 OOS properties in the last 18 months all purchased from the equity of his primary home. Major expansion mode but now in a catch 22 because he is losing his primary job, home prices will not appreciate for a while and his OOS tenants are not fully committed to paying rent. Is he going to go out there and invest now or figure out how to pay his mortgage and survive. That’s just one example.

What is different this time vs 2008 is the uncertainty about overseas investors coming in and buying US RE. They may come eventually especially in big cities like NYC and SF, but it will be a longer time.

To me the worst of unemployment is yet to come. The impacts of those will be felt hard by tenants and landlords alike. The exit out of COVID will eventually happen but at a lot slower clip than people think.

@Alex Ramirez

Ideally not a good idea to pressure a spouse who may be interested in other things to learn RE. But you may want to see if there are aspects of RE she may be interested in. Her knowledge does not have to overlap with yours. I know a couple where the husband is strategically and financially savvy, so he scouts for deals, runs numbers, gets the financing, does the closing. The wife is operationally savvy. She searches for tenants, runs the checks, managed tenant issues. I know the husband can’t do much operational work and the wife is not strategic or has much financial know how.

@Calvin Lin

The true gravity of the crisis did not hit until mid March. With most restrictions coming in after March 15 or later.

Hence April rent collection is quite misleading. I think May will be a lot more indicative of the rent stress and it will be worse and June as well.

I won’t say it’s rigged. The level of sophistication in equities is very high, many more variables at play and plenty of smart highly educated brains are chasing that asset class vis a vis Real estate.

I see it two ways. I don't think my long term investment picture changes which is all done via 401k, IRA instruments. I was not touching that portfolio on its way up and not touching it on its way down. All my investments are in world class companies who have lots of cash on the balance sheet and long reach records of existence and execution. Several of those I have worked at or worked with in the past to understand them inside and out. I would invest in them otherwise. Definitely not because they are "hot" or because a friend of a friend or Jim Cramer or CNBC thinks they are a good investment.

I also have a short term “play” portfolio. There I have been hedging since early part of the year with a sizable short on the SPY. I have covered on it since but now gone back in with a smaller short position because I feel the market has not priced in a fear based capitulation. I feel that’s coming but who knows. I am not building any long positions for now.

As an investor do you think the current COVID-19 crisis & its aftermath will create an unprecedented opportunity to expand your real estate portfolio? If not why not?

The common theory is people “wait” for a crash but when it comes, they are unable to act because of fear or lack of liquidity or often both.

Along those lines, How are you feeling, Fearful or opportunistic? If it’s the latter, are you resourced/ready to take advantage.

@Joshua Myers

Yes. That is how quickly things turned around.

@Joshua Myers

Telling you like it was. I recall rejecting opportunities in November 2011, because I felt this was all going to last longer. I used to be shown prime properties in prime locations and I’d see no buyer traffic. Then in a matter of months, there were multiple offers on properties and 20 - 30% above listing closures. Of course I did not feel too smart about rejecting deals in November the prior year. Now to be fair, that Downturn lasted 3 - 4 years, mostly due to a dislocation in the mortgage market and the financial system. So there was perhaps pent up demand. The announcement of Facebook IPO in Feb 2012, also helped people think that good times are upon us. How this COVID plays out is anyones guess. Fact is as we speak prices are not yet moving in the area. Inventory is tight. Largest area employers have already announced they are not laying off. Startups have started shedding however.

Coming back to this thread, I take the side that this crisis ends. When / how, I don’t know! Might take longer than we think.