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?

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. See my Blog & AMA
 

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/

 

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.

 

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.

 
REValuation:
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?

 
REValuation:
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.

Thinking about getting an investment property. Why do you say you are not in the business of managing these properties? Is it that difficult?

 

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...

 
International Pymp:
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.

 

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.

 
Vi:
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?

I know a guy who does something similar. They structure many of these as a loan with an absurdly high rate. Say it's a case involving someone who got injured in a car accident. The person needs $4,000 a month to survive. They might pay them the $4,000 until the case settles at a 20% interest rate payable when the case ends, including all appeals. If the case takes 5 years, they still pat. I believe there are instances where they take a piece of the settlement as well. I only know it at a very high level, so I'm sure I have the details incorrect. Pretty interesting stuff.
 
Vi:
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.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 

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.

 

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