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ERICOPOLY
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Posts posted by ERICOPOLY
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But I do like the preferred structure of APTS for the purpose of holding in a taxable account. It effectively pays out the taxable income to the preferred holders and leaves the common stock with additional capital gains.
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I switched most of mine out for BABA options on October 6th. Not regretting it.
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Anyways... it's clear that leveraging 4% cap rate assets with 6% coupon preferred is not lifting the market's skirt. Nobdy's going to pay the liquidation value unless a liquidation is on the table.
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Investors in other REITS: what if rates are 6% when we refi 9 years from now?
Investors in APTS: almost half of it already is.. the name is 'preferred'.
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2 minutes ago, thepupil said:
APTS trades at a leverage , management , and multi-asset class discount. it's very common. We will only know w/ time if it's justified. We are being paid to bear the risks that come with that.
That was more true 2 years ago than it is today. And rents are 20% higher when they roll over.
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I mean, in 12-18 months time if these 20% higher rates flow through the APTS multifamily portfolio they'll be able to stop the issuances and pay a sizable real dividend. However, this is worth nothing to Mr. Market because cash flow doesn't matter? WTF.
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I'd rather have the newbuild apartment complex with today's financing lows rather than the REIT stuffed with old mortgages carrying higher rates. So there's that.
How much of a discount that should bring depends on when those old mortgages come due and who can say where rates are in 7 years for example.
So the REIT isn't apples to apples with the market prices of multifamily for that reason if no other.
However, but that was all true two years ago and rents are 20% higher now. I can't explain the total apathy.
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The strange thing about the apartment REIT market and the well publicized jump in rents is that the REIT stocks discussed on this board have not responded. They have snapped back from their covid lows but look at their stock prices 24 months ago vs today.
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2 hours ago, hyten1 said:
Eric I am not sure why the author mention the 31 days, I don’t think you need that, maybe contact author for clarification or someone else
He already told us why he mentioned 31 days. He says so right on page 29.
quoting from page 29:
"Of course, the loss would not be deductible if expiration of the option was itself a wash sale."
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Are there any divorce statistics available? Any links?
Anecdotally my wife and I know of a few couples who seemed to get along alright until they started working from home in 2020 due to covid-19. Now they are separated or divorced. Now each prior couple requires an additional housing units and it is typically a rented unit.
That kind of event can spur new household formation and I think it is reasonable to call it a one-off. Later, these free floating singles will eventually pair up again.
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Well it actually did sound impressive to me when I first read it.
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58 minutes ago, Ulti said:
Currently there are are 714 thousand multi-family units under construction. This is the highest level since 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.
714k. Impressive sounding. How many are needed?
https://www.marketplace.org/2021/07/02/how-many-more-housing-units-do-we-really-need-to-build/
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In other words, on pages "27-29" he provides an example of how 'should' isn't happening out in the real world (they hold the expiring call beyond the wash sale period).
That is not contradicted by what is written on page 4.
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21 minutes ago, hyten1 said:
one page 4 the author acknowledge the problem that we currently have, option to equity doesn't trigger wash sale,
page 4.
Fortunately, current law already comes to the right answer in some cases. Most importantly, it finds a wash sale when stock is replaced with a call option. Commentators generally attack this result as overbroad, since options are economically different from stock. In response, this Article defends this widely criticized rule, showing that it is appropriate in light of our system’s generous treatment of gains. Of course, other aspects of current law do not conform to the “call spread” theory. In response, this Article recommends specific changes (or at least clarifications) of current law. For instance, a wash sale should be triggered when stock replaces a call option, when a put option replaces a short sale...
on page 27 note 63, There is an asymmetry in applying the “substantially identical” test to stock and options. According to Rev. Rul. 56-406,sorry eric, this is all have, if you find anything more let me know
No, he is saying 'should', he is not saying that it 'is' that way.
Remember that he is writing the paper as an academic:
"Rather, the “call spread” approach is offered as a theory for policymakers to determine the “right” answer as a matter of policy."
He writes:
For instance, a wash sale should be triggered when stock replaces a call option
It 'should' work that way (he writes). 'Should' is not to be confused with 'is'. He literally means 'should' and the word choice is very cautious.
Later, on pages 47-49 he shows how 'should' and 'is' are different and he mentions "of course" the 30 day rule.
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48 minutes ago, hyten1 said:
EDIT: also if you are interested I think the rest of the paper might provide some clue as to why equity to option is consider a wash sale but option to equity is not.
You are saying the rest of the paper contradicts this statement from the attorney on page 29?
"Happily for the taxpayer, though"... "the purchase of stock on November 2 is more than thirty-one days before the option expires"
Can you cite the spot?
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32 minutes ago, hyten1 said:
haha, agree.
the paper somewhat addresses why wash sale rules exist in the first place, and why your above senarios doesn't
Oh, if the gains could be washed it would de facto eliminate capital gains tax.
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5 minutes ago, hyten1 said:
also back to the spirit of the law.
If there were such a spirit I would not be taxed when I sell for a gain and repurchase a substantially identical security within 30 days. Alas...
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3 minutes ago, hyten1 said:
having a call and expiring/selling at a loss and then buying a stock will not create a wash sale.
you would think otherwise!!! but apparently it is.
I do think otherwise when the following condition (from the attorney) is not met:
"Happily for the taxpayer, though"... "the purchase of stock on November 2 is more than thirty-one days before the option expires"
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I'll point you directly to it:
"Happily for the taxpayer, though"... "the purchase of stock on November 2 is more than thirty-one days before the option expires"
page 29:
https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3484&context=faculty_scholarship
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59 minutes ago, hyten1 said:
ERIC you are right, the law seemingly contridict itself
No, I'm saying the authors seem to contradict themselves. When they introduce the out-of-the-money strategy on page 27 they claim a wash sale occurs because a loss is taken on the shares and out-of-the-money options have been purchased.
But then on page 29 they argue against themselves, saying that out-of-the-money options are not "substantially identical" and don't trigger wash sales.
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And prefaced with "Of course"
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8 minutes ago, hyten1 said:
having a call and expiring/selling at a loss and then buying a stock will not create a wash sale.
They mention 31 days for what reason then?
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On 10/14/2021 at 9:29 AM, Mephistopheles said:
...and then they revert back to it not applying to "sales of calls", the argument moves in circles. It's like that whack a mole game.
+1
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These guys are picking and choosing here: "Second, the stock in the new lot is not substantially identical to the option (i.e., since the option is out-of-the-money)."
cited from page 29:
https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=3484&context=faculty_scholarship
I'm not sure how they're going to be convincing in an audit with that remark when it undermines their claim that the loss was transferred to the calls upon purchase of said calls which they later argue is not substantially identical because they are out-of-the-money.
They cannot have it both ways.
Zelman on housing
in General Discussion
Posted
I have always been bidding on homes against the market. In my experience it has always been tied to income, not inflation.