When the financial crisis hit in 2008, I was living in the United States. At that time I remember developers and other people saying that it was going to take at least 20 years before the country would build another commercial office building. It felt that bad.
Job opportunities had certainly dried up -- especially for Canadians like me who were focused on real estate development. But of course, things eventually got better. New office buildings got built well inside of two decades, and the US went on to see its longest ever economic expansion.
This past Monday we saw the financial markets suffer one of, if not the, biggest selloffs since the financial crisis. If you haven't yet checked your portfolio and/or retirement savings, I suggest you hold off until the Fed "prints" some more money. The time to sell is not right now. (Not actual financial advice.)
When the financial crisis hit in 2008, I was living in the United States. At that time I remember developers and other people saying that it was going to take at least 20 years before the country would build another commercial office building. It felt that bad.
Job opportunities had certainly dried up -- especially for Canadians like me who were focused on real estate development. But of course, things eventually got better. New office buildings got built well inside of two decades, and the US went on to see its longest ever economic expansion.
This past Monday we saw the financial markets suffer one of, if not the, biggest selloffs since the financial crisis. If you haven't yet checked your portfolio and/or retirement savings, I suggest you hold off until the Fed "prints" some more money. The time to sell is not right now. (Not actual financial advice.)
" is a good reminder of this. So here are a couple of excerpts that I really liked:
I’ve seen this movie before. I had just started working in the venture capital business in 1987 when the stock market crashed 23% on “black monday.” There was the Internet stock meltdown in 2000 when the internet sector went down something like 80% over that bear market. And then there was the financial crisis in 2008.
Capital markets sometimes put out the for sale sign and if you are patient and wait for bargains to emerge, they will do that.
But I do know that good companies with resilient businesses and strong balance sheets will survive these occasional crises and that they can be bought with confidence at the right time.
Landed is trying to solve this problem by offering downpayment assistance to "essential professionals" -- starting first with teachers -- so that they can buy homes in and near the communities that they serve.
The way it works is pretty simple.
They'll contribute up to half of a traditional 20% downpayment -- so 10% of the value of the home -- in exchange for a 25% share in any future gains, or losses.
Put differently, for every 1% that Landed contributes, it takes 2.5% of any future appreciation (or depreciation). However, on an equity basis, they are actually putting up 50% of the required cash (in the maximum scenario) in order to get 25% of any future gains.
There's no monthly payment associated with Landed's money, but it does need to be repaid at the end of 30 years or when the homeowner exits the agreement, whichever comes first. Homeowners are free to repay Landed at any time should they decide to sell the property or they just want to pay them out.
Landed pitches the service as another version of "the bank of mom and dad." And for many prospective homeowners, I am sure that it makes all the difference in the world.
At first glance, it would seem that each homeowner also benefits from a kind of positive leverage. They only put up 50% of the required equity, but they get to enjoy 75% of the potential gains. However, each homeowner is also responsible for 100% of the carrying costs.
I ran a couple of quick return scenarios, assuming a $500,000 purchase price and a 10 year hold, in order to test whether Landed or the homeowner would receive a higher IRR once the property gets sold.
I didn't carry any transaction costs, but I did factor in principal recapture, as well as utilities, insurance, and maintenance.
My rough numbers suggest that it depends on the annual rate of appreciation. If appreciation stays close to the rate of inflation, it could tip in favor of Landed because they don't put out any money after t = 0.
But at higher rates of appreciation, the homeowner starts to benefit from the favorable 75/25 split at the end of the hold period.
Either way, Landed is providing a service to people who may not otherwise be able to afford to buy a home. That has value. Here's some more information on how it works, in case you're interested.
Apple announced a number of new products and services this week, including Apple TV+ and a new Apple credit card, which will initially only be available in the US.
I thought this topic would make an interesting follow-up to my recent post about whether cities should be banning cashless businesses so as to not discriminate against the "unbanked."
Because embedded in the above credit card is the following cashback reward structure:
3% back on Apple purchases
2% back on purchases made with Apple Pay (iPhone)
1% back on purchases made with the (optional) physical card
And so what this "card" will do is pay you to always use your phone. The cashback reward system is also instantaneous and you'll be able to spend that Daily Cash (that's the name) just like you would actual cash.
Do you think this would change how you pay for things? I think for most people it will.
market meltdowns
" is a good reminder of this. So here are a couple of excerpts that I really liked:
I’ve seen this movie before. I had just started working in the venture capital business in 1987 when the stock market crashed 23% on “black monday.” There was the Internet stock meltdown in 2000 when the internet sector went down something like 80% over that bear market. And then there was the financial crisis in 2008.
Capital markets sometimes put out the for sale sign and if you are patient and wait for bargains to emerge, they will do that.
But I do know that good companies with resilient businesses and strong balance sheets will survive these occasional crises and that they can be bought with confidence at the right time.
Landed is trying to solve this problem by offering downpayment assistance to "essential professionals" -- starting first with teachers -- so that they can buy homes in and near the communities that they serve.
The way it works is pretty simple.
They'll contribute up to half of a traditional 20% downpayment -- so 10% of the value of the home -- in exchange for a 25% share in any future gains, or losses.
Put differently, for every 1% that Landed contributes, it takes 2.5% of any future appreciation (or depreciation). However, on an equity basis, they are actually putting up 50% of the required cash (in the maximum scenario) in order to get 25% of any future gains.
There's no monthly payment associated with Landed's money, but it does need to be repaid at the end of 30 years or when the homeowner exits the agreement, whichever comes first. Homeowners are free to repay Landed at any time should they decide to sell the property or they just want to pay them out.
Landed pitches the service as another version of "the bank of mom and dad." And for many prospective homeowners, I am sure that it makes all the difference in the world.
At first glance, it would seem that each homeowner also benefits from a kind of positive leverage. They only put up 50% of the required equity, but they get to enjoy 75% of the potential gains. However, each homeowner is also responsible for 100% of the carrying costs.
I ran a couple of quick return scenarios, assuming a $500,000 purchase price and a 10 year hold, in order to test whether Landed or the homeowner would receive a higher IRR once the property gets sold.
I didn't carry any transaction costs, but I did factor in principal recapture, as well as utilities, insurance, and maintenance.
My rough numbers suggest that it depends on the annual rate of appreciation. If appreciation stays close to the rate of inflation, it could tip in favor of Landed because they don't put out any money after t = 0.
But at higher rates of appreciation, the homeowner starts to benefit from the favorable 75/25 split at the end of the hold period.
Either way, Landed is providing a service to people who may not otherwise be able to afford to buy a home. That has value. Here's some more information on how it works, in case you're interested.
Apple announced a number of new products and services this week, including Apple TV+ and a new Apple credit card, which will initially only be available in the US.
I thought this topic would make an interesting follow-up to my recent post about whether cities should be banning cashless businesses so as to not discriminate against the "unbanked."
Because embedded in the above credit card is the following cashback reward structure:
3% back on Apple purchases
2% back on purchases made with Apple Pay (iPhone)
1% back on purchases made with the (optional) physical card
And so what this "card" will do is pay you to always use your phone. The cashback reward system is also instantaneous and you'll be able to spend that Daily Cash (that's the name) just like you would actual cash.
Do you think this would change how you pay for things? I think for most people it will.
