1/ We invest in real estate in a very different manner to others — focusing only on what we can control & where we have an edge — and we hardly ever use leverage.

And yet, we achieve returns far higher than others. Here is a quick thread on why & how we do things.

(Continued)
2/ Let us remember that RE has several wealth generators (different ways to skin the cat).

• market appreciation (supply & demand)
• forced appreciation (value add & development)
• positive cash flow (supply & demand)
• debt paydown (cost of capital)
• tax advantages
3/ Our principal focus & edge is forced appreciation only.

This is something we can control (construction). Our family business has been in & around construction for almost 3 decades.

Furthermore, to reduce risks even further, we do NOT use leverage.

Yes we do all-cash deals!
4/ 98% of real estate investors are thinking...

WTF? https://abs.twimg.com/emoji/v2/... draggable="false" alt="😂" title="Gesicht mit Freudentränen" aria-label="Emoji: Gesicht mit Freudentränen">

After all, without (massive) leverage, their deals don& #39;t often even hit a double-digit mark. How would they ever raise capital?

Furthermore, others say we are leaving money on the table by not borrowing cheap capital.
5/ These are all valid points.

For us, this isn& #39;t a sprint, but a marathon.

A lot of investors have forgotten the pain during the GFC of 2008, the massive RE crash in Hong Kong during 1998, or the global RE bust in 1991/92.

Today, central banks are increasing risks, again!
6/ When doing our own direct value add deals, we either do projects all-cash ourselves or with 1-2 co-investors. No gearing!

When investing in developments, we focus on higher priority capital stack positions, such as mezz & senior debt (if possible/attractive). Also no gearing!
7/ So what are the rates of return we average?

When co-investing in other projects, we usually make at least 15% p.a. on the mezzanine debt side.

When doing our projects, we& #39;ve managed to achieve ROIs from 25% on the low side to 50 or even 100% on the high side.
8/ Yes, you are right.

Real estate has fantastic advantages and one of them is the use of leverage.

But that doesn& #39;t mean you have to use it (all the time).

Instead, understand your local market cycles, pay attention to market sentiment & watch asset valuations.
9/ We are always looking for new co-investors who want to participate in our unique deals (from luxury single-family rehab to developments).

Please understand, we aren& #39;t leveraging projects (to the eyeballs), so one needs a decent stake of capital. https://theatlasinvestor.com/ ">https://theatlasinvestor.com/">...
You can follow @TihoBrkan.
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