All Forum Posts by: Amit M.

Direct real estate worship is passive…haa…haa. As @Jay Hinrichs said, it really depends on the quality of the location, and consequently the quality of tenant you can obtain. I’ll also add that it depends on the real estate cycle you’re in. Everyone was gangsta 2013-2021 when the market was going up, up, up…when there were always tenants looking for rentals…when rates were rock bottom and it was easy to obtain a loan…everything was going your way. Now much of that is reversed (severity is dependent on specific locations) and vacancies are going up too. Syndications are blowing up. So real estate is generally a lot harder now then during that growth phase.

Personally I’d like to see someone systematically track private syndications (as best as can be done). You always hear about them during up markets. And then many promoters get strangely quiet once the market turns. IMO now is the time to put out active info and stats on syndications as well as DSTs. I want to know how they’re doing during difficult markets, and not only in good times.

But getting back to direct rentals ownership, no question it is harder now than a few years ago. And now is the time when one appreciates high quality locations, fixed rates, and not being over leveraged. 
Good luck everyone. 
———-

my2c

@William Bohan as others outlined, there are several logical options, all with pros and cons (of course.) Another option is to just keep what you have. Do you live in that area? Do you believe in it’s mid to long term growth potential? If you live there you probably have a good handle on the subtle market dynamics.

One significant risk of buying any property out of state is that you have a lot less knowledge and first hand experience with all the nuances of that specific market. You simply can’t ignore the risk of investing in an area that you’re not intimately familiar with. And now with rates being high, plus many areas overbuilt with new apartment buildings, I’d be careful with unknown areas, and also what you read in the media about “hot” areas, up and comers, etc.

I was in a similar situation to yours a couple years ago. In my case I sold off appreciated properties in a location I deemed as having limited future upside, and used the proceeds to eliminate all debt on the better located prime properties I wanted to keep long term. I’m in CA also and paid cap gains on huge profits to the tune of 28%, which included CA state cap gains. I was lucky to split the sales over 2 years, so the first ~80k gain is tax free and 80-480k was at 15%, which I was able to take advantage of twice. (Over 480k was at 20%.) So that helped.

I personally wanted to be more conservative as I pretty much reach “the number” that I needed (note that what “I needed” is different from what “I wanted” or what I was expecting by default.) In my case I was lucky that I still kept half of my portfolio, so didn’t get out of the RE game altogether. But always remember that RE is a risky venture, and you could go through years of less than stellar performance. So think twice before taking any outsized risks, as you already achieved a nice equity base, and you don’t want to end up screwing the pooch by taking unneeded risks ;)

Good luck and keep us posted on your decisions…

syndications

getting

spanked

————

3words

carlos 

basically 

right

————

3words

diversity

of

opinions

————

3words

Crickets???

What in the world is going on with all these Marcus and Millichap auctions!?! I'm getting blitzed with all sort of cheap NN and NNN offerings. One year ago dollar generals were $800-,1200k. Now? Some are dimes on the dollar. Same goes for other offerings incl. McDonald's, Starbucks, strip centers, some empty and some not. But all of them seem to be selling for a fraction of what they would have sold prior to the interest rate hikes. And last M&C email said an REIT was liquidating holdings, so it's not just mom and pops going under.

To those directly in the NNN space, is there some great reckoning going on? All I know is that when I last considered NNN in 2021/early 2022 the prices were way higher. Basically couldn't touch anything decent for under $1.5mil. Now it seems there's plenty of properties being discounted 30-60%. Comments?

@Russell Sherman yes you have some tough decisions to make. I was in a similar position, and went through the same scenarios ;)

1- basically decide if you want to sell it for sure. As @Kenny Cho stated you have prime real estate, and that in itself is a good hedge and generally safe asset to keep long term. I basically did that- I sold part of my portfolio in lesser areas that appreciated a lot in 2021/early 2022, paid cap gains, and used the proceeds to knock down all my debt on the prime rentals I wanted to keep long term. But of course in your case it’s only one property, so all or none is more extreme.

2- if you do sell, I think would split the proceeds in 2 or 3 directions. Maybe defer some $$ and try out DSTs. And the rest cash out and go into stocks (gradually, dollar cost average to minimize risk), safe savings/treasuries, and some maybe in private RE syndications. Keep in mind that both DSTs and syndications carry risk, especially now imo with the market going down/sideways. Personally I hope I can keep my prime properties in perpetuity, but I realize that at some point I may need to sell them off. Then I’ll be forced to make the same decisions, and absent any clear winner, I’d probably diversify in 2-3 different directions, hoping to generate a similar return that my rentals had, without taking on too much risk.

Best of luck, and let us know what you decide to do!

P.s. where in Mexico are you based? My wife and I toy around with getting a place in Bucerias (near puerto Vallarta)…but for now we’re annual visitors :)

Look I’ve lived in SF proper for 29 years and the picture is complicated. 

SF has a lower per capita murder rate than most large USA cities. It’s the “quality of life” crimes that are out of control….homelessness, car break ins, etc. And the local gov here is too stupid and tied up in its own BS minutia to solve it. It’s like, the year is 2020: defund the police! defund the police! defund the police! The year is now 2023: call in the national guard! call in the national guard! call in the national guard! I kid you not, at the mayors request governor Newsom recently sent the national guard to the tenderloin to help control the fentanyl/homeless crisis in that area. So yeah, local politicians here are looking like king size idiots.

The actual neighborhoods SF is famous for are doing quite well with active daily street life (working from home helps) such as pac heights, mission, north beach, Hayes valley, Russian hill, inner sunset, noe valley, nob hill, etc. etc. The city is still one of the most beautiful in the USA and the only one with significant European style walkability and architectural and natural charm. (Yea there are small levels of homeless walking around but not the crazy encampments as in the tenderloin.) Homes and condos still sell at a premium in the good neighborhoods and many wealthy residents are set up nicely and have no intention of selling. (Remember that many people have tons of equity and really low fixed rates to boot.)

Do I think SF RE is going to double in value like it did for each of the last 3 decades? No. But I think appreciation will still be solid down the road, so keeping quality properties here is still a great proposition. But I’m not sure I’d be buying here any time soon…I’m just glad I got in years ago and now I can coast for awhile and enjoy my daily lattes and neighborhood walks.

@Mike Jacobson hi Mike. It’s been awhile since you updated us on your dst performances. Curious how they have been working out for you since your last update?

Cheers