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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)
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
• 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!
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?
After all, without (massive) leverage, their deals don'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.
WTF?
After all, without (massive) leverage, their deals don'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'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!
For us, this isn'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!
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've managed to achieve ROIs from 25% on the low side to 50 or even 100% on the high side.
When co-investing in other projects, we usually make at least 15% p.a. on the mezzanine debt side.
When doing our projects, we'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't mean you have to use it (all the time).
Instead, understand your local market cycles, pay attention to market sentiment & watch asset valuations.
Real estate has fantastic advantages and one of them is the use of leverage.
But that doesn'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't leveraging projects (to the eyeballs), so one needs a decent stake of capital. https://theatlasinvestor.com/
Please understand, we aren't leveraging projects (to the eyeballs), so one needs a decent stake of capital. https://theatlasinvestor.com/
