All Forum Posts by: Tom Conant

Jahan Habib Aaron Klatt ahh so that’s how the tagging works. Great input guys. I see what you mean by being more bearish yet still investing. I guess in a sense you’re still following your valuation tools, just offering much lower consideration in proportion to the market value of the underlying asset. I think that is the way to go. It’s also interesting to see how you believe NE real estate has stagnated.Haven’t done my research yet but I a few of these different posts have me thinking places like Portland Maine, Worcester mass and New Haven CT may be good places to investigate for low ball high potential investments? Thanks again everyone, Tom

Another question of mine then would be, as experienced investors yourselves, do you find that good deals are becoming harder to find? Or are they simply just existent in other places? To quote that song my mom likes, when one door closes one more always opens, or something like that. Thanks again for all the feedback! Tom

I totally understand what you guys are saying. I get that you can’t time markets and there is no sense in trying to predict the next 2008. But do you not agree that there is quite a bit of unsustainable RE investment out there? I know that most people on BP would be able to withstand many degree of financial stress. Your portfolios are padded with cash flow positive investments that can hold up to 50% decline in rates. But what happens to the thousands of joes and Judy’s out there that were tricked into thinking RE will give them the life they’ve always dreamed of? Now don’t get me wrong, anyone can be successful in Real Estate. But there is a reason not everyone trades stocks and not everyone has their realtors license. This stuff takes time and knowledge of markets, right? Maybe I am confused because I am applying financial metrics used to measure the value equities and other securities to real estate specific scenarios. Thanks Tom

Russell. Thank you for the insight. Wouldn’t you agree it would be wise to attempt to figure out when each side is going to be right? Some might consider that gambling, but I call it being analytical. I would love to hear your thoughts. Thank you, Tom

Thanks everyone, I love this discussion. Thank you for taking part. Sam and Caleb, to follow up your responses, I would agree that a good deal is a good deal and that there are still good deals out there for people who do their due diligence (that’s a mouthful). But what happens when the money owed on a property becomes higher than the intrinsic value of a property as growth slows? Contractions in this invested of a market is very scary in my opinion. Remember how big money was taking their money out of the market as we were hitting all time highs every day for the past year? Well guess what, I read an article the other day about how they’re putting their money back in now. While that sounds like a hedge maybe or they really do think this market is made of steel, I don’t know. But what it looks an awful lot like is when I use my Bovada sports gambling account to bet against the crowd. So in the RE world, we have people like us on this forum discussing these things and thinking about the best deals while, gurus everywhere and I literally mean everywhere (there is probably a get rich quick guru in your city in the next month) are convincing people that they can make money on almost any deal. That is what scares me about the intrinsic values of these houses. People think a 5% coc return is perfectly fine when I 10% correction would put them in the red. This time the problem is much more organic than 2008 in my opinion. How do you bail out a bank when the people have no tax money to bail them out with?

Steve, Thanks so much for the thoughtful response. It was the sort of verification I expected. I hate to say it but my thoughts are pretty grim. But maybe that’s the finance aide of me and not the entrepreneurial one 🤷🏻‍♂️ I honestly think that the metrics used to value conventional securities are somewhat accurate. We simply live in a world where 2 percent inflation is the new benchmark. While it sounds crazy to anyone with a logical mind, the market hitting all time highs every day (kind of like how a casino slot machine blinks and blasts music at you - thanks CNN and Fox!) isn’t a surprise at all. Look at the bureaucratic environment. Our federal govt has essentially rebuilt the foundation of our economy to include exponential growth. In my opinion, the only countries that would survive and actual economic crisis are the ones that have gone NERP or ZERP because of the fact that they’re growing organically instead of artificially. Don’t even get me started on wage/inflation disparity and how corps and educational institutions are allowed to rob people. But as far as real estate goes (and also, bitcoin. Bitcoin is literally the modern day tulip crisis unfolding before our eyes, wish I bought at $650.00 like I wanted to. Sucks to be a broke college kid) I think that there are way too many retail investors being fooled by these ‘successful gurus’ that hold one weekend fast tracks to ‘financial freedom’. I was born in 95 in AZ and my father way a cop, okay. When I was 5 years old he lost sooooo much money in the stock market crash around the turn of the century that we had to move to RHODE ISLAND. But I love rhody so it’s all good. But the question I beg to ask is, why was my police office father spending hours a day betting his life savings on the stock market? When he could have had a steady cash flow positive Income, benefits and retirement? Because he wasn’t truly educated in the stock market but a few books and a guru told him he could get rich? This is the problem though. The same exact phenomenon is unfolding right now in retail RE. Banks have become more strict on hard money lending criteria? Hmmm I wonder why. Maybe because the underlying assets behind EVEN THE MOST STABLE ‘assets’ are really just ticking time bombs. ‘But Tom, what about the inflation you mentioned??’ Ahh right, hasn’t the government come out and said they want to stagnate inflation and lower the federal funds rate? Yup - Ms Yellen. It just hasn’t happened yet. And why? We’re at all time highs in the market, right? The real estate market is booming, cap rates are ridiculous, right? Prices are going up and so are wages, right? So Yellem, why hasn’t that QE rate come back down? Ohhh that’s right, because the second these rates drop, so will the prices of EVERYTHING. Except what all these poor retail RE investors owe on their 20 different mortgages. Unless have built in 30% downside risk into your cash flow statements (income and balance don’t mean much) I believe that your property is vulnerable. But the hype is ‘all time highs’ baby. So I guess buy on. I do think that their are still really good investments out there, I just think they’re a lot harder to find. Gotta be a wolf, not a hyena. To touch upon the idea that millenials are now having children, yes I totally agree. I haven’t looking into age demographics but isn’t the generation above millennials massive and my generations not that large proportionate to the generation to generation growth seen in previous evolutions? On the surface that spells stagnated proportionate growth (which would play into my argument I think) to me but idk. Sooooo tell me if I’m a crazy conspiracy theorist (like I feel like I am lol) or a reasonable concerned young person with an interesting perspective🧐 Thanks for reading my ridiculous rant, Tom

Brickkkkk, gotta love the brick esthetic. Isn’t that why the song ‘brick house’ came out? Anyway, you mention that the market keeps growing, percentage wise what’s your downside risk in the event of a market correction. Looking at your number and using the rusty calculator in my head it’s around 30% to remain cash flow positive? That’s awesome 👍🏻

Wow, Houston gets that cold???

Hey Everyone, As a recent college grad with a finance degree and a knack for real estate investing, it is striking to see what is going on in the housing market. Before I delve into why I believe this, I wanted to run it by the best RE resource on the planet. All of you guys. What do you think? I think that previously used metrics to determine quality long term investments don’t add up anymore. For instance, there is no sustainable economic phenomenon that can prop up this economy or real estate market, right? It’s all wrapped up in retail debt which in my opinion is wayyyyyyyy scarier than the 2008 fiasco. Thoughts please! I am really excited to hear what you people have to say! Thanks for taking the time to respond. Tom

You bought this place on Cape Cod Massachusetts for 132,000???? Sounds like a deal to me! Nice find. Great presentation. As a young player in the game it great to see well thought out investments. Gives me confidence that I can succeed too.