New York Investor

I Look at a Hundred Deals a Day. I Pick ONE.

[New York Investor @WallStreetShark]

@grok @grok tell us more about # 2

[New York Investor @WallStreetShark]

News on Wall Street

@grok make a tread on this post with the top 10 news on Wall Street on AI

[New York Investor @WallStreetShark]

@grok @grok expand on 1 and link to blog

[New York Investor @WallStreetShark]

@grok @grok create 10 separate posts on this thread for each of your top 10 list, expand and lint to a blog post

[NPL Loans @nplloans]

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#fixandflip #newcosntrcution #rehabloans #nplloans

[Andrew Lokenauth @FluentInFinance]

Age at first $1 Billion:

23, Mark Zuckerberg
31, Bill Gates
32, Taylor Swift
33, Rihanna
35, Jeff Bezos
36, Kim Kardashian
37, Lebron James
38, Beyonce
39, Jay-Z
40, Kanye West
41, Elon Musk
42, Steve Jobs
42, Michael Jordan
52, Warren Buffett

1 important lesson from each:

[Christian Arce @ChristianAArce]

How to access 1MM to 10MM dollars for your next multifamily acquisition? https://t.co/Je0786qAWH watch. #RealEstateInvesting #Chicago #Miami #NewYork #Houston #Atlanta #Nationwide #realestate #ChicagoRealEstate #realestate #commercialrealestate #multiunit #NationalPrivateLending

[The Kobeissi Letter @KobeissiLetter]

The top 10% of stocks in the US now reflect ~75% of the entire market.

This is, by far, the most concentrated stock market since the Great Depression in 1931.

In the Dot-com bubble of 2001, concentration of the top 10% of stocks peaked at ~72%.

Even prior to the 2008 Financial Crisis, concentration of the top 10% of stocks peaked at ~66%.

On average, the top 10% of stocks reflect 64% of the entire stock market.

Is a correction overdue?

[Chris Powers @fortworthchris]

Morgan Stanley holds the 2nd largest trading loss in history - $9B on credit default swaps.

Now imagine, in 2006, joining the team responsible for this loss. 80 people when you start and you’re one of a couple of people left standing by 2008.

You’d see and learn A LOT.

Tomorrow’s guest, Simon Wagner, was in the eye of the storm. He realized he could buy portions of these distressed debt tranches for pennies on the dollar.

Get ready for a remarkable story of turning a few thousand dollars into a portfolio of over $250M in assets - including one of the largest real estate portfolios in Ireland.

[The Real Estate God @TheRealEstateG6]

HOW PRIVATE EQUITY FIRMS ANALYZE DEALS:

Most important metrics:

1. Stabilized yield:

Since we focus on value add, the entry cap doesn’t matter, as long as we can service our debt

Stabilized yield matters since it shows the intrinsic cash flow of the deal

Stabilized yield is the post-renovation NOI divided by all the costs in the deal

We typically need to get to at least a 150 bp spread between stabilized yield & market cap rate for a deal to pencil (ex if MCR is 5%, need a minimum 6.5% SY)

Ex: buy for an in-place 4 cap, increase revenue to get to a 6.5, sell for a 5 cap. If you buy for $10MM with an NOI of $400k, put in $2MM in renos & bump the NOI to $780k, you stabilize at a 6.5 yield ($780k/$12MM)

Property is then worth $15.6MM ($780k/5% market cap), for a profit of $3.6MM

Speed matters as well (quicker is better for IRR)

Stabilized yield is more important than IRR because it displays the intrinsic value of the cash flow

Whereas IRR is a bet on the state of the capital markets (debt available) at sale as well as cap rates at sale, which makes it a guess 

2. Basis (you can show us any IRR you want & we’ll toss it if the basis is bad):

What does this mean? It means that you want to look at comps & make sure that in any deal you buy, you’re paying less than market average

So if you take 10 comps & average sale is $100k/unit, you want to be buying for under that

Otherwise (barring the property being markedly better), you’re not getting a good deal, you’re simply paying “market”

Furthermore that means, in order to sell for a profit, next buyer will actually have to pay you “above market”. A dangerous bet to make - you’re essentially betting on a “greater fool”, which brings us to the next metric

3. Exit basis:

Heavily tied to #2 - you don’t want deals where the projected exit basis is significantly above current the market basis

Ex if the current market basis is $100k/key, you’d want to buy for $60k/key & pencil a sale at $80k/key

That gives you a lot of breathing room & allows the next buyer to make money as well

Easier said than done, but this is how disciplined underwriting works

4. Unlevered vs levered returns (IRR):

This is just a gut check to make sure that our leverage isn’t out of control  

You want to check to make sure that the levered returns aren’t drastically different than the levered returns

Otherwise you don’t have a good deal, you just have a lot of leverage

5. Equity Multiple:

Only check this to make sure that they’ll be enough profit for the deal to be worth it (no point in 20% IRR & 1.2x EM - waste of time)

6. Cash-on-cash:

A lot of amateur investors emphasize cash on cash returns but it’s a far less important metric than stabilized yield because it’s reliant on the debt capital markets at any point in time, which isn’t intrinsic to the property

So it’s “downstream” of the yield

It’s also less important for quick flips (what PE firms do) as a lot of units turn over during stabilization, which results in choppier revenue for those years

We essentially ignore this metric & expect cashflow to be low during the hold

7. Components of NOI:

Then you look at the cash flow itself

What’re the components of the rev? What’re the components of the expenses? What risks could cause major fluctuations in either? Are you willing to accept these risks? How do these risks compare to other deals?

Go into each deal with eyes wide open

There’re risks to every deal (unavoidable) need to make sure the deal makes sense on a risk-adjusted basis

So this isn’t really a metric, but the deal needs to be actually viable on a risk-adjusted basis & the property has to be actually good real estate

Investing in only *great* RE has allowed us to outperform

I’m hosting a free live training on 2/27 showing how I turned $800k to $4.1MM in just 22 months with one deal

Will be going over the entire process step-by-step & you can ask any questions you want

Spots limited, first come first serve

Signup below

[Wall Street Mav @WallStreetMav]

Nothing suspicious about a group of Syrians walking across the U.S border wearing 5.11 tactical gear.

More of Joe Biden's illegals for you to support.

🤦‍♂️ 🤡 🌎

[The Kobeissi Letter @KobeissiLetter]

BREAKING: Nvidia stock, $NVDA, REVERSES to trade 7% higher and has erased a 6% decline in a matter of minutes after reporting earnings.

This reversal marks a $250 BILLION swing in market cap in just under 15 minutes.

This is a $1.7 TRILLION company reporting 240%+ revenue growth and swinging 10%+ in minutes.

Absolutely insane.

[Christian Arce @ChristianAArce]

All too often people quit when the going gets tough—often when just one more step would have carried them triumphantly to victory.
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#NapoleonHill #thinkandgrowrich #goals #motivation #inspiration #success #perseverance #persistence

[Triple Net Investor @TripleNetInvest]

Shaquille O'Neal explains here why he doesn't drink in public:

"My father used to tell me, if you mess the money up, your mama ain't gonna have no house... your mama ain't gonna eat."

Say what you want about Shaq but you can absolutely tell he was raised the right way

Even in his 50s, he talks about the values his parents instilled in him as a child and still lives and breathes those values

He comes off as a very wise man who thinks about more than himself

One thing that especially stood out to me was how he referred to his wealth/empire as his "mother's empire"

We absolutely need more public figures and role models just like him

[New York Investor @WallStreetShark]

@WallStreetSilv

[Jim Cramer @jimcramer]

Be careful, we are finally overbought...

[New York Investor @WallStreetShark]

@realEstateTrent Risk comes from not knowing what your doing.

[National Private Lending @NPLending]

Wishing you a warm and happy Happy #4thofJuly 🇺🇸
May this day be a symbol of peace, prosperity, and happiness in your lives. God bless America and the people who live in this beautiful country!

"As long as the flag soars, you are free. Happy 4th of July!"

#America #USA

[Christian Arce @ChristianAArce]

Funding your Real Estate Deals, Real Estate Talk with Christian Arce Talking about everything that is going on today and how to fund your real estate business https://t.co/a1dFxV1NSI 👈 #realestateinvesting #lending #fixandflip #rental #business #businesscredit #landlord

[New York Investor @WallStreetShark]

Cut negative people out of your life… life is too short.