Now we gotta talk about short selling real estate. Yes, many people have been asking Hey Kevin should we short sell real estate and if so, what should we short And in this video, we're gonna go through my opinions on shorting real estate and I'll give you a little bit of an update as to what I think is going on in the real estate market. So we'll go through all of this starting right now. So first anybody remember this guy Jim Chanos.

He's like a legendary short seller. He was the guy who's like I'm gonna short AMC but I'm gonna go long ape because they're economically the same and I want to take advantage of that spread now. when he said that on CNBC was about a day after I released my video saying dump ape This is not the same, it's going under a dollar. It did end up going under a dollar Jim was wrong AMC also converged down I Just want to give you that background on that's the last time I Remember hearing about Jen Chatos and now we're hearing about him again in shorting real estate and so what is he shorting right now? Well, right now he's actually shorting ticker symbol S L G it is a commercial uh, real estate company in New York City and I think these people are lashing out right now for one very simple reason.

Actually, there are many reasons, but let's start with the first one. This is the investor presentation from SL Green Realty Corp for the year 2022 and I Kid you not, but look at them lash out on page Five of their investor presentation to show you how bad the economy is right now. You ready for this? Page one, two, two three Four Lash out the state of the economy. Jerome Powell Photo I'm going to hike interest rates until you morons stop trading Monkey Jpegs This is literally in a multi-billion dollar real estate company's investor presentation A An Nft J-pow meme is in their investor presentation.

They must be doing really bad because they're lashing out and they're also lashing out at the Metaverse. Look at this Metaverse. that little square. Twenty thousand dollars in 2021? 1.5 000 in 2022..

they're making fun of the Metaverse and Nfts while they're losing money hand over fist and getting shorted by people like Jim Chanos. So now if I'd go over to their actual fundamentals, we could learn a little bit more about this company. So let's go to their annual report and you don't even have to look very hard. Like sometimes people think fundamental analysis is like super overly complicated and I teach it every single day in our course member live streams.

Almost. It's really not that hard. Uh, but I do my best to provide perspective on it. And if you want to get caught up, check out the courses on Billy Rufflingtonball.

But anyway, look, you don't even have to look for revenues 2020. Revenues: 804 million dollars 2021 678 million Dollars 2022 671. So their revenues are going down. but not only are their revenues going down, but unfortunately, they are losing money.

See, look at this loss on sale of real estate: 84 million dollars Equity Lost from unconsolidated joint ventures 57 mil. Now they're going negative. So they're losing money. They used to actually make money.

Now they're losing money. So some people are starting to short the company thinking you know what the best thing to short would be in an environment where commercial real estate could potentially face somewhere around 20 to 30 percent defaults and maybe 10 to 15 percent liquidation. Write: Downs Well, how about a company that happens to own a ton of buildings in the biggest office? Market Basically in the world, this one. Look at all these: Trophy Properties They own a lot of them that just nobody really cares about right now now.

Sure, you got some restaurants and hotels and stuff like that, but who wants the old Office Buildings Anymore They call them trophy assets, but some of them are like trophy toxic look. They even have to talk about Redevelopment renderings because the office space is getting whacked so hard now. I Know that's a little over simplistic here. The argument is, how could you potentially short commercial real estate? Well, you could potentially follow this gym guy into shorting SLG Now I'm not long or short SLG I Personally, don't short real estate and I'll explain why in just a moment.

but before I explain why It's important to remind you that a lot of people actually bet on what are called Cmbx. Now these are credit default swaps against commercial mortgage-backed Securities And so basically they're making the bet that if mortgage-backed Securities go down, then the cost to protect against their loss and value will go up. So you could potentially bet against offices by going long credit default swaps on Commercial mortgage-backed securities in English you could short commercial real estate by going long the insurance policy to protect against the downside. I Don't think that was any better of an explanation, but it's it's the best I Got Cmbx is what a lot of people use for that.

However, this is a big warning. If you've read any history on finance, there's something known as the Widowmaker trade. it is this. This is the Widowmaker and it's called the Widowmaker because younger Traders often think this is it.

Commercial real estate's going to go down and they got their Finance degrees and they're really excited. So they go to the Triple B minus Cmbx's and they go hey, let's go long. uh, the insurance or just straight up short it short actual commercial real estate and then it takes forever for Real Estate to actually go down and you lose all your money and then you divorce and go bankrupt and you're miserable. That's why they call it the Widowmaker Another option that you could use that might be a little bit more simple is you could short I shares U.S Real estate.

Uh, which is an ETF Right now though that position is already 40 short, it is the most short that it has been since June which isn't great. It's very difficult to actually short a real estate because the stock market tends to move in a different way than the real estate market tends to move. Now what some other people will do is they'll actually go long d R V That is a daily 3x real estate short now. Year to date that's up about five percent year over year and it's very volatile.

That's up about 55 percent. But the problem is the stock market and real estate Cycles are very difficult are very different. And this is and because real estate moves very slowly both residential real estate and Commercial Real Estate you have to be really careful trying to play the stock market the same way you try to play the uh, the real estate market. And that's because this is why I don't like the short real estate.

In my opinion, the stock markets crash and then they in a volatile way rotate back up in the long term. Basically, in the long term it looks like a Nike Swoosh The problem though is the real estate market is very sticky, the real estate market bubbles up and then it kind of stagnates. And the reason it takes so long to actually see pressure is because it takes a long time for companies to actually get forced into liquidating REITs Institutions Pension funds. They can be very sticky for a very long period of time, and real estate really only updates its valuations when there are transactions.

but if there are less transactions, then you actually have less price. Discovery In stocks, you get price. Discovery Basically every single day, as soon as there's a new piece of information, you get price. Discovery In the stock market doesn't work that way in real estate.

Real estate. Interest rates could go up literally, just like they did. Four percent in a matter of six months, and real estate prices year over year is still up 15 because you don't have immediate price. Discovery It sometimes takes a year to two years for Real Estate to actually bottom out now.

SLG The company we started with, they're actually just now in March of 23 a year and three months after I started getting worried about the real estate market and I started dumping my real estate. They're just now thinking about selling their real estate and that's because, uh, or well. first of all, they're losing money so they need to raise money. It's also harder to raise money in debt right now to keep going with other Investments and other opportunities so you just liquidate whatever else you might have to be able to do other deals, but what that could do is that it could actually push a downward pressure on real estate.

As in a weird way, this could happen. We don't know this, but it could happen. Pay attention to it in April May and June You could potentially no guarantees see what's called a sudden surge in inventory and if you see a surge in inventory whether those are office buildings, whether those are retail, whether those are single families, whether those are multi-family if you see a surge in inventory, while you have fewer buyers that you have today, you will very likely see prices continue to fall. Now people say.

but Kevin if inventory goes up, why then should I not short those stocks? Well, the problem with shorting the stocks is if the ocean of the stock market is actually rotating up, then it's possible that you're basically fighting this really hard headwind. That is, stocks are going up, which is like a headwind against your short, so everything's wanting to go up. But the real estate market is actually just now showing its stress. And because it takes so long for sometimes real estate pain to come through to fruition and people think somehow real estate should allow you to be as quick as stocks doesn't end up working.

One of the things that everybody who's work who works with me realizes, uh, like new people who come working with me. whether they're interns or employees or whatever. One of the things they realize is damn, people don't understand Boots on the Ground Real Estate. And that actually creates a massive Arbitrage opportunity.

And that's why we're creating the real estate startup that we are. Because Boots on the Ground Real Estate isn't understood by people sitting doing Zoom calls and matterports and spreadsheets. It's a very, very different way of thinking. So how do you take advantage of that potential dip? Well, in my opinion, you become the boots on the ground in your own area and you learn how to actually buy your own real estate.

And you buy that dip in real estate. You don't have to be perfect. This is the important thing to remember about the real estate cycle or really any Market cycle. Market Cycles are just like this: Okay, ideally you want to just buy on the bottom half.

This is where you want to buy. You want to be on the bottom half. You don't want to be on top. You want to be on bottom.

Okay, bottom, good, top, not good. Over here, this is where you want to be trimming, right? This is your top. It's simple DCA here by uh in the green and DCA cell on top. And so in my opinion, we are trending towards that bottom over here.

now. Do I know that we're there? Nope, we could be here. Or we could be here. We don't know.

All we do know is we're off peak. So Tpd. But uh, this cycle does not align with this stock cycle right? That like so the bottom of real estate could literally be and we've talked about this for quite a while. The bottom of real estate could be over here.

that could be q1 of of 24 and the stock market could be way higher in q1 of 24.. over here where you have this intersection right? So that's actually one of the reasons why I Personally have moved a lot of money into stocks to ride the Nike Swoosh I've liquidated real estate put it into stocks because I think when Real Estate is lower, stocks will be higher. That's my bet. and that's my belief.

But it also gives you some insight into potentially if you wanted to short real estate like Jimbo how you might be able to pull that off. So now make sure you get yourself 12 free Stocks by going to Metcaven.com Weeble You can make that very simple. They've got a really cool phone app that you could use and you get 12 totally free stocks signing up with them. You also get life insurance in as little as five minutes and check out the programs on building your wealth.

link down below including stocks and psychology. Money Lead Hustlers and zero to millionaire Real Estate Investing Course Once you're ready to advance, do it yourself! Property management is also an option for you. Check those out linkied down below. Thank you! So one of my course members just said Amit Kevin made some comments during today's course member live stream which may help folks better understand his areas of concentration for Investments and they quoted me and they said the following: quote: I Believe the goal of investing is to generate cash flow I Don't do Commodities I Don't do gold I Don't do oil I Don't do copper I Don't do lithium I Don't do health care I Don't do military industrial complex.

These are just things I don't put a lot of my money into I Don't understand them completely I do High Free cash flow Companies that are growing and real estate? That's what I do. That's what I know that's what I like I feel like that's what I'm good at and that's what I'm going to keep doing me Kevin 323 23. that's cool. So anyway I I thought I'd share that because I thought it was actually a cool quote.

So shout out to you UW Wolf fee.