Interesting Side Investments
Just curious...what are some interesting ventures/undertakings you or someone you know has gotten involved in with their extra cash other than just putting it into the markets? (equity stake in a restaurant/bar/nightclub, invested in a film/tv show, etc.) I would even be interested in stories where people have left their job to pursue whatever it may be. I'm in an interesting situation where I work in a decent ECM group in NYC (~60 hours a week, so I have time to myself after work/on the weekends) but indefinitely pay a really low COL with little to no debt due to an arrangment with a relative so I'm looking to do something with a little more excitement than the markets with extra money I've been saving. Also just genuinely curious to hear what some people have gotten into.
Thanks
I have heard of people leaving finance to open restaurants and I have heard about some people investing as silent partners into bars and nightclubs. Film/TV I have not heard of but I heard that someone actually invested in a record label (really niche, focused on distribution).
Restaurants/bars/nightclubs can make sense if done with the right people. The failure rate is extremely high, but if you manage to get into the business with people who have a successful track record and the relevant network, I'm sure you can make a lot of money, but major obstacle is why should these people be interested in doing business with you?
Investing in graveyards: anyone have experience? (Originally Posted: 09/10/2017)
Has anyone here have experience investing in graveyards?
I know very little about this property type, other than that the tenant retention rate is very high and that the tenants are not very demanding. I've also heard that this can be a dead end business.
M3 capital partners evergreen fund have invested in NorthStar group. From their website:
The company typically targets “combination” facilities, characterized by a large cemetery with a funeral home either on-site or in close proximity. At the time of Evergreen’s initial commitment to NorthStar, we believed that cemeteries and funeral homes presented a contrarian investment opportunity, where cyclically low valuations reflected a relatively capital-starved environment in the sector. In addition, Evergreen was attracted to the lack of correlation to broader economic cycles and the high barriers to entry of this niche sector.
Strategy
Acquire, own and operate “combination” facilities characterized by a large cemetery with a funeral home either on-site or in close proximity, and grow market share / provide additional cash flow stability by advancing a “pre-need” marketing program. In addition, NorthStar capitalizes on the growing cremation trend by investing in Smart Cremation, its wholly owned subsidiary focused on the cremation market.
Portfolio
26 cemeteries and 29 funeral homes in ten states (Arizona, California, Florida, Hawaii, Illinois, Ohio, Oklahoma, Oregon, Tennessee and Washington), together with 15 cremation locations (six stand-alone, four integrated and five virtual).
Sounds a little morbid imo
Must be fun being that Asset Manager.
Wait, is this a joke or not?
I assume this is a joke because the description is chock full of pretty decent puns, but I imagine it's a decent investment in all actuality. Steady cash flow, at least.
Big fan of long term real estate... not a lot of tenant rollover.
I don't know... Millennials have all their grandparents rolling over in the grave nowadays.
OMs would be easy to write; investors are just dying to be in this space.
The market is pretty dead
It's really a covered land play, right ?.
I never get how mature cemetaries stick around. How do you pay for anything after the plots are sold off? No one is paying maintenance fees on great aunt Franny’s headstone, so what pays for the lawn care once it’s full?
For the really historic ones, there is generally a foundation of some sort that keeps things running via donations, tours, etc. Generally speaking, the plot owners are responsible for the upkeep of their family's plot(s), but if the family has died out then it is really up to the management of the cemetery to maintain things (hence the need for a foundation).
(Source: my grandfather is on the board of one of these)
For other ones, the initial plot costs (can be tens of thousands of dollars) should cover the upkeep for a long long time. There is a pretty interesting public company called SCI that owns and operates a lot of these. They sell prepaid funerals that you can make a monthly payment on, and then they invest the float. Super odd business, but they've done really well. https://finance.yahoo.com/quote/SCI/
With the shift by many people to cremation, a lot of the profits in Funeral Homes have gone up in flames.
Jokes aside back in my appraisal days I appraised a bunch of them. It's similar to golf courses/hotels in that it involves a heavy heavy business component. The real money was in the business component far less in the dirt. Additionally, at least in the portfolio I did they weren't make much on the gravesites, but the mosoleums, and internment walls did very well.
It's a heavily regulated and taxed industry which creates natural barriers to entry.
For valuation i used 20% IRR unleveraged and the owner told me after the appraisal came in very high. (This was 2012 or so but still), There's a few public traded corporations you can look into.
Sooooo can you sell the air rights?
Investing in Parking Spaces? (Originally Posted: 11/06/2017)
Story:
"Buying individual parking spaces is a little known but extremely appealing real estate play for small investors like Ms. Jones. The obvious selling points are comparatively low prices, steady income, next to no maintenance, and wear and tear limited to the odd oil stain on the cement. Moreover, a growing number of parking apps is making it easier to rent out these spaces on a yearly, monthly, daily and even hourly basis."
Any monkey's own any parking spaces that they rent to others? Could be a nice way to have a steady income stream without a substantial capital investment.
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Residential Investing (Originally Posted: 10/25/2012)
Residential and commercial are different worlds, for sure. Most people here seem to be interested in high finance opportunities, and not anything to do with a single-family mortgage.
I am a bit curious, however, and just wanted to toss out the idea to get a sampling of opinions on investing in residential property. Obviously it's the most accessible real estate investment there is.
If you've bought a house with the intent of it being an investment, what are your thoughts on the experience? Has it taught you anything at all about "real estate" in general? Has it been satisfying in any way?
It's not something I have considered a good opportunity to pursue, but that's mainly just because of the opportunity costs associated with all the time and money.
I purchased and lived in a duplex in college (FHA), and bought a four plex last year. They have been good investments but they were niche opportunities (both on campus and had differed maintenance). The projected returns are very high (35%) considering the interest rates are 4%, high LTV, they are occupied 11.5 months annually, and rents have gone up damn near 10% Yoy. I "managed" them myself for a year and realized that I'm not in the property management business for a reason, so now I pay a 9% management fee and still seeing significant Cashflow over PITI.
They have been fun side projects for a recent grad, but I prob. won’t buy another. After all, once you build up some equity - keeping track of 15 residential properties and paying a 9% management fee seems a bit more expensive/time consuming than just buying an conevtnional apartment and paying a 2.5% management fee.
Not sure I would want to invest in single-family, unless I was a firm buying bulk portfolios from fannie mae for $.50 on the dollar.
Great story. What's your reasoning for not wanting to invest more in single family?
Thinking about getting an investment property. Why do you say you are not in the business of managing these properties? Is it that difficult?
I haven't done it, but mostly becuase I used my first bonus to pay off debt. Might try with the second bonus depending on the size.
I know plenty of people that have though and they made way more flipping houses than at their day job.
Bx and a lot of other big firms have sectioned off hundreds of millions lately for the purpose of buying houses in pheonix and other markets that got destroyed. But if you're not buying thousands of properties at a time it's less entertaining... As was hinted at above, If you build up a substantial portfolio it's not easy to manage and you pay people a lot I manage etc...
This is all interesting stuff. Have you seen what firms like Waypoint are doing? General thumb rule I've heard is they are buying 6-7% cash on cash yeild, with additional levered upside and capital appreciation. The execution will be interesting to watch.
Aside from the capital appreciation in single family homes, you are almost better off targetting 2-4 multi's. You are going to be doing just as much work securing a multi as you are with a single family, but you are going to have 2-4x the rental income. You also have more risk with single family homes because your income is obviously dependent on one source.
I am targetting multi's in the US and I live in Canada, I have never even physically seen my properties down there.
Found this residential REIT article quite interesting: http://business.financialpost.com/2012/11/10/no-better-time-to-buy-reit…
Yes I want to share regarding that I have purchased land and house and invested on real estate of mypointcook. Its great land and I am feeling so happy with those services and you can get any range of house and land for real estate.
Investing in Lawsuits (Originally Posted: 04/08/2013)
Source: http://dealbook.nytimes.com/2013/04/08/new-firm-plans-to-invest-in-lawsuits/
Ignoring the obvious moral implications of betting on due process, does anyone else have any thoughts here?
interesting
Graham and Dodd are spinning in their graves.
I'm a lawyer and I have no idea how they make money. Someone explain?
From what I understand Gerchen goes to a company, who is usually paying a billable hour, and tell the company that Gerchen will pickup its legal bill if the company enters into a contigency fee agreement with Gerchen. Gerchen's profit is the contigency fee less the legal fees?
As I understand, they purchase equity stakes in the final settlement / judgment proceeds. In exchange for paying some of the legal fees, they get a stake in the upside should the trial succeed.
Resurrecting this thread ... anyone have thoughts on this area? You think Analyst comp is similar to PE?
Investing in the Casino Industry (Originally Posted: 03/24/2014)
What is everyone's opinion on the casino industry right now? There's been a rather large sell off over the last couple of weeks, it looks to me like a good time to enter a long position in the companies with good exposure in Asia. The numbers coming out of Macau are great; growth continues to explode over there. Specific stocks I've been watching are: $LVS $WYNN $MGM $MPEL
Another thing to consider is that Japan will probably legalize gambling this year and give out licenses. Both Las Vegas Sands and MGM have made statements that they would be willing to invest large sums of money on resorts there. It'd be beneficial for the Japanese as it would provide needed revenue to fund the 2020 Olympic games.
I agree with you. Profit in casino Industry is rapidly increasing. But you need to knowledge and experience on this industry. I think you have taken a good decision.
I like Wynn over LVS right now. Wynn is opening a new property in Cotai which is the booming area right now in Macau. Also they a history of entering late and still outperforming based upon property. Japan is the next big phase in Asia. I'm waiting for Wynn to dip to 200 and at that level I'm going to buy.
Investing in Water (Originally Posted: 08/02/2014)
What water plays would you guys consider valuable or even just interesting to talk about, and would generally be available to retail investors?
Anywhere from well-known water ETFs to infrastructure funds, equity in desalination companies, speculative water rights areas, crowdfunded startups, etc.
Here is a speculative play: WTER.
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