Have We Hit The Top?

[LearningMachine]

22 hours ago, thepupil said:

Ginnie Mae we’ll do a 40 yr amortization construction loan that converts to permanent, tough to get, but I used to fund them (as well as 80-90%LTV 30-35 yr permanent loans on big buildings… like $50mm loans)…also do senior housing and nursing homes homes 

 

look up 223f and 223a7 221d4 loans ginnie Mae hud 

 

https://www.mandtrealtycapital.com/FHA/HUD_Multifamily/fha_multifamily.html

 

 

 

@thepupil, have you found any public equities or private equity syndicates that are taking advantage of this for almost all their mortgages resulting in having a very long weighted average maturity for their mortgages?

 

Would any of the folks you used to fund be open to taking equity investors where debt is funded by such mortgages? 

 

 

 

Edited December 24, 2021 by LearningMachine

[muscleman]

On 12/24/2021 at 2:06 PM, thepupil said:

You’ll have to get a quote from a mtg banker. I suspect smaller loans would be 4ish% and big ones below 4%

 

Got it. Thank you! I guess that's probably the case here. I am not a big player.

What mtg banker do you recommend?

Edited December 26, 2021 by muscleman

[lnofeisone]

On 12/24/2021 at 5:33 PM, LearningMachine said:

 

@thepupil, have you found any public equities or private equity syndicates that are taking advantage of this for almost all their mortgages resulting in having a very long weighted average maturity for their mortgages?

 

Would any of the folks you used to fund be open to taking equity investors where debt is funded by such mortgages? 

 

 

 

@LearningMachine These loans (guaranteed by Ginnie) have to be through one of the Gov't programs (e.g., FHA, USDA, PIH, VA) so the housing has to roll up to one of these. Someone like AVB wouldn't be able to use these programs to purchase MF housing. I view this as somewhat of a niche area of the mortgage market. If you google Greystone or Walker Dunlop and see most recent deal flow, you'll get the sense of who takes advantage of these programs (232, 223f, etc.). Wells Fargo is a reasonably large player here as well. FHA loans will come with 1% upfront + annual insurance of up to 0.6%. 

 

@thepupil - the 40 year option just went live nowish (December?). The loans you funded must've been mighty recent.  For those interested this product would go into a a custom pool (designated C-ET [custom extended]) with a single mortgage with a min balance of at least 25k. 

[thepupil]

5 hours ago, lnofeisone said:

@LearningMachine These loans (guaranteed by Ginnie) have to be through one of the Gov't programs (e.g., FHA, USDA, PIH, VA) so the housing has to roll up to one of these. Someone like AVB wouldn't be able to use these programs to purchase MF housing. I view this as somewhat of a niche area of the mortgage market. If you google Greystone or Walker Dunlop and see most recent deal flow, you'll get the sense of who takes advantage of these programs (232, 223f, etc.). Wells Fargo is a reasonably large player here as well. FHA loans will come with 1% upfront + annual insurance of up to 0.6%. 

 

@thepupil - the 40 year option just went live nowish (December?). The loans you funded must've been mighty recent.  For those interested this product would go into a a custom pool (designated C-ET [custom extended]) with a single mortgage with a min balance of at least 25k. 

This was 2011-2013…definitely recall some 40 yr 221d4 (construction to perm), but maybe I’m misremembering??? It was long ago. 
 

but ya those are the folks, walker dunlop, greystone, Wells Fargo, PNC, Red Capital, Berkadia, Arbor Capital, I’m sure many others and I’m sure some of the lesser well known ones I listed don’t do it anymore. 
 

my impression was regular for profit owners of buildings could take these out and the info here says so (for profit and non profit borrowers, no income m/affordability requirements for units)

 

and again my info is way stale on this, but we were doing 7+ $1B + securitizations/ year and we’re just one player so while it’s not huge, a fair number of people take these out.

 

https://www.hud.gov/program_offices/housing/mfh/progdesc/purchrefi223f

 

here’s some more stuff, note that it takes a really long time to get one, so you obviously couldn’t use in a bidding processes 

https://blog.stacksource.com/beginners-guide-to-hud-multi-family-loans-d07531e0e6f3

 

Edited December 26, 2021 by thepupil

[lnofeisone]

I think you hit the nail on the head that these loans take a while and the process is a bit opaque so not particularly favorable in a bidding process. I did see a lot of 232s coming though for specialized nursing and senior housing but I can't recall if ever saw the likes of Ventas in the mix (though I wasn't really paying attention to that). 

[LearningMachine]

Thanks @thepupil and @lnofeisone, each time I've looked into it, I haven't been able to find a way to invest on the equity side of these long-term commercial loans. 

 

I connected with a sponsor that had managed to get one of these loans within a fund, and found that they were also staying away from it in general both because of the length it takes for approval and also so that they could get lower interest rate with shorter-term mortgages to be able to finance their purchases and still show investors cash-on-cash return.  While investors are the ones who would suffer if interest rate risk materialized, as sponsors, they were going to get paid even in that case. For the property that they did get financed with the long-term loan, they pretty much self-appraised it at a high price for investors in the fund.

 

So, I'd really appreciate if anyone has found any specific investor-friendly syndicate sponsors or shareholder-friendly public equities to invest on equity side of these long-term commercial loans.

Edited December 26, 2021 by LearningMachine

[Spekulatius]

16 hours ago, LearningMachine said:

Thanks @thepupil and @lnofeisone, each time I've looked into it, I haven't been able to find a way to invest on the equity side of these long-term commercial loans. 

 

I connected with a sponsor that had managed to get one of these loans within a fund, and found that they were also staying away from it in general both because of the length it takes for approval and also so that they could get lower interest rate with shorter-term mortgages to be able to finance their purchases and still show investors cash-on-cash return.  While investors are the ones who would suffer if interest rate risk materialized, as sponsors, they were going to get paid even in that case. For the property that they did get financed with the long-term loan, they pretty much self-appraised it at a high price for investors in the fund.

Ouch - this seems pretty damning for the sponsor and maybe the entire business.

Paraphrasing:

 

"We have a time period of XX years so we finance out properties with this timeframe in mind. if the wheels come off after this (Due to higher interest rates) it's not my problem - it's the investors"

 

Self appraising properties is also a nice deal for he sponsor, not the investor.

[Morgan]

9 hours ago, Spekulatius said:

Ouch - this seems pretty damning for the sponsor and maybe the entire business.

Paraphrasing:

 

"We have a time period of XX years so we finance out properties with this timeframe in mind. if the wheels come off after this (Due to higher interest rates) it's not my problem - it's the investors"

 

Self appraising properties is also a nice deal for he sponsor, not the investor.

I agree. The incentives are all wrong in these kinds of investment vehicles. The managers get paid to do deals, and the more and bigger deals they do the more they get paid no matter the outcome. What crap. The manager should only get paid when the investors get paid, whether it’s from the FCFs or from property sales. 

[stockman500]

It feels like everyone is expecting at least some kind of S&P500, large market cap stock correction going into first quarter of 2022 with tapering, rate hikes, and SPY at all time highs. Almost feels inevitable, but it would be funny if we don't get that and SPY remains flat or runs up next year. 

[TwoCitiesCapital]

12 hours ago, stockman500 said:

It feels like everyone is expecting at least some kind of S&P500, large market cap stock correction going into first quarter of 2022 with tapering, rate hikes, and SPY at all time highs. Almost feels inevitable, but it would be funny if we don't get that and SPY remains flat or runs up next year. 

 

I'd love to see it happen, but everyone expecting is likely the sign that it won't. Seems like we keep grinding slightly higher regardless of the massive amount of pessimism and concern people have

[Spekulatius]

2 hours ago, TwoCitiesCapital said:

 

I'd love to see it happen, but everyone expecting is likely the sign that it won't. Seems like we keep grinding slightly higher regardless of the massive amount of pessimism and concern people have

The stuff that upsets the market is the stuff that nobody (or at least the consensus ) isn’t expecting. I don’t think anything COVID-19 related is going to impact the market a lot. COVID-19 was an unknown risk with a huge right tail and it tanked the market, but now it’s a known variable and Won’t do much.

 

Some stuff that might cause trouble is politically unrest in the US, China going rogue on Taiwan etc,  Chinese property markets blowing up ( creates a huge issue for many commodities and financial contagion that may go beyond China) or more likely something that haven’t been thought much about at all.

Edited December 29, 2021 by Spekulatius

[Gregmal]

Yea I also wouldnt be fooled by the indexes just slowly grinding higher. A whole lot of the market has gotten utterly smoked. Just as going into 2021 shorting the ARKs was the way to go because it excluded the big tech behemoths, I actually think right now that if you are playing the next leg of this, the way to do so is actually OTM puts on some of the FANG type stuff. On a risk adjusted basis its kind of the AAA tranche type play. I am half-assedly doing it on a couple, but my expectations are not high; as long as I can cover my ass on the margined stuff and net out profit I'm good. Hedges arent typically meant to make money, theyre meant to provide freedom to still play ball. 

 

The problem with the rubbish tech is that the more it goes down the more expensive it gets to short. It was glorious shorting ARKK and ARKG last Q4 into Q1 cuz while everyone was mouthing off about them being ridiculous, no one had the balls to short them. Go look at the ARK threads. Recurring theme was, "(insert Cathy bashing, etc).... but I'm not short cuz you cant short this market"(LOL ironic right? psychology is a bitch, eh?). Now, its a totally different story. So its less attractive. 

[Spekulatius]

@Gregmal, if you short Fangs or buy puts on them, you might as well short the indexes or buy puts. QQQ has liquid options and would probably be the best vehicle to do so.

 

I don’t think the option on individual names are cheaper than options on the QQQ either.

[Gregmal]

Yea good point. Definitely true. Im referring to AAPL right now and like the put in existence with a good chunk of Berkshire long, but yea. The Index would be a wider and cheaper net to cast as a hedge. Dont think theres anything compelling about trying to be short any of the FANG stuff with the expectation of making money though. Just kind of an insurance policy. 

[Spekulatius]

1 hour ago, Gregmal said:

Yea good point. Definitely true. Im referring to AAPL right now and like the put in existence with a good chunk of Berkshire long, but yea. The Index would be a wider and cheaper net to cast as a hedge. Dont think theres anything compelling about trying to be short any of the FANG stuff with the expectation of making money though. Just kind of an insurance policy. 

Apple is the one Fang that is likely to get singled out from the herd first. Valuation is pretty high for the growth you are getting and I suspect it is mostly buybacks keeping the stock price high. No know against the business but it looks like a single digit organic grower going forward. Trading at ~7.5x revenues and 26 EBIT seems pretty rich for what you get.

[TwoCitiesCapital]

5 hours ago, Gregmal said:

Yea I also wouldnt be fooled by the indexes just slowly grinding higher. A whole lot of the market has gotten utterly smoked. Just as going into 2021 shorting the ARKs was the way to go because it excluded the big tech behemoths, I actually think right now that if you are playing the next leg of this, the way to do so is actually OTM puts on some of the FANG type stuff. On a risk adjusted basis its kind of the AAA tranche type play. I am half-assedly doing it on a couple, but my expectations are not high; as long as I can cover my ass on the margined stuff and net out profit I'm good. Hedges arent typically meant to make money, theyre meant to provide freedom to still play ball. 

 

The problem with the rubbish tech is that the more it goes down the more expensive it gets to short. It was glorious shorting ARKK and ARKG last Q4 into Q1 cuz while everyone was mouthing off about them being ridiculous, no one had the balls to short them. Go look at the ARK threads. Recurring theme was, "(insert Cathy bashing, etc).... but I'm not short cuz you cant short this market"(LOL ironic right? psychology is a bitch, eh?). Now, its a totally different story. So its less attractive. 

 

For sure. I've rolled my Apple puts forward - I'll make money on anything below $150 and have risked nothing in establishing the positions. I just know sentiment has basically been in the dog house since September. VIX blew out. Bond yields have cratered back down. And the markets made new highs throughout that. I think we might get another round of complacency before another leg lower.

 

Do generally agree the forward looking prospects are terrible medium and long-term. Short term it just seems like everyone is expecting it. 

Edited December 29, 2021 by TwoCitiesCapital

[stockman500]

Has anybody when following WallStreetBets recently, I have to say their major stocks picks last winter were absolutely solid for momentum, trend, meme investing. There were a lot of posts on Palantir when it listed at $10 and was going up, a lot of posts on GameStop for all of fall and winter, leading into the late Jan squeeze. 

This year, post Q1, seems to have been more of a miss. They were pushing hard for stocks like WISH, CLOV, SDC, BABA, and now it's mostly just memes about losing money and no actual stock picks. There were a lot of memes about losing money on WISH recently. Some people did have success buying short term puts on PTON and DOCU for Q3 earnings and making solid returns off that. 

Edited December 29, 2021 by stockman500

[Spekulatius]

7 hours ago, stockman500 said:

Has anybody when following WallStreetBets recently, I have to say their major stocks picks last winter were absolutely solid for momentum, trend, meme investing. There were a lot of posts on Palantir when it listed at $10 and was going up, a lot of posts on GameStop for all of fall and winter, leading into the late Jan squeeze. 

This year, post Q1, seems to have been more of a miss. They were pushing hard for stocks like WISH, CLOV, SDC, BABA, and now it's mostly just memes about losing money and no actual stock picks. There were a lot of memes about losing money on WISH recently. Some people did have success buying short term puts on PTON and DOCU for Q3 earnings and making solid returns off that. 

WSB has a meme for that as well:

 

[MattR]

7 hours ago, stockman500 said:

Has anybody when following WallStreetBets recently, I have to say their major stocks picks last winter were absolutely solid for momentum, trend, meme investing. There were a lot of posts on Palantir when it listed at $10 and was going up, a lot of posts on GameStop for all of fall and winter, leading into the late Jan squeeze. 

This year, post Q1, seems to have been more of a miss. They were pushing hard for stocks like WISH, CLOV, SDC, BABA, and now it's mostly just memes about losing money and no actual stock picks. There were a lot of memes about losing money on WISH recently. Some people did have success buying short term puts on PTON and DOCU for Q3 earnings and making solid returns off that. 

WSB used to be a fun place where you would find solid thesis more often than not - with the influx of members after the Gamestop Squeeze the quality went into the gutter. Used to be one of my favourite internet hangouts, not anymore.

[Gregmal]

[stockman500]

We now have Elon Musk calling for a top soon:

 

 

[ERICOPOLY]

Didn't we do that last year?

[KFS]

Very good (IMO) interview with Jim Chanos...  Discussion of parallels with dot-com bubble, discusson of crypto, inflation, etc. 

 

 

[fareastwarriors]

Apple hit a market cap of $3 trillion, tripling in valuation in under four years.

 

https://www.cnbc.com/2022/01/03/apple-becomes-first-us-company-to-reach-3-trillion-market-cap.html

[ERICOPOLY]

19 hours ago, KFS said:

Very good (IMO) interview with Jim Chanos...  Discussion of parallels with dot-com bubble, discusson of crypto, inflation, etc. 

 

 

 

Is he being interviewed by Stiffler's mom?