Real Deal #45
New Podcast: Check out the new show with Doug Stokes of Stokes Family Office in New Orleans, LA. We talk about:
His journey into the business.
How he thinks about investing.
What the short term future may hold.
Quote I love: “To each there comes in their lifetime a special moment when they are figuratively tapped on the shoulder and offered the chance to do a very special thing, unique to them and fitted to their talents. What a tragedy if that moment finds them unprepared or unqualified for that which could have been their finest hour.” - W. Churchill
Will you be prepared? Will I?
Word on the Street: Interest rates are continuing to rise and this is causing the economic gears to grind to a halt. Two primary emotions tend to dominate the investing field: Fear or Greed. Over the last two years, greed have been the winner. Greed as defined as a fear of missing out or defined as only taking into account the positive outcomes but not the potential negative ones. This is has now reset. Investors and lenders are using an abundance of caution.
I don’t believe we will see a 2009-2010 type fire sale on assets. Generally speaking on assets below $10MM there is modest leverage. I do know that regardless of economy, real estate will trade hands due to life events and estate planning purposes. Now that fear has over come greed, those that have stayed disciplined may find reasonable opportunities at today’s interest rates. As the market rebounds in the coming years I have a hunch these marginal deals will turn into triples or home runs.
Four things that will not change moving forward:
Cost of land will not decrease
Cost of labor will not decrease
Over a 10 yr period cost of materials will not decrease
It is harder to develop due to “not in my backyard” syndrome
All of this lines up nicely with the storage business that is recessions resistant, provides 300+ customers per stores, and is a wonderful hedge against inflation.
Lagniappe:
It was short and sweet today. If you enjoyed this today, please forward it to another curious friend. I love your replies to The Real Deal. I read every single one, and I try to respond as often as I can.
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