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Levine Capital Newsletter: December 2021

Levine Capital Newsletter: December 2021

Real Estate Update December 2021

Find out what’s happening in the market now, what’s driving trends and investor choices, as well as the latest updates from Levine Capital…

The State Of The Markets

Key factors that are at play right now…

The Virtual NFT Explosion

If you talk to your teenagers about investing they might bring up NFTs. A type of digital art ‘investment’. 

NFT trading volumes were over $10B in Q3 2021, with hopes more than $17B will be traded by the end of the year.

It is a hyper risky, trendy way to play with your money online. Like passing a virtual hot potato, and hoping you aren’t the last one stuck with it when it gets hacked or reality strikes. 

If your real investments are giving you enough cash flow surplus every month to entertain yourself in this online arena, then by all means have some fun with it. Banking your real-world financial future on it just might not be that sound of a play. 

Millions Being Paid For Virtual Property In The Metaverse

The Metaverse Group claims it has set a new record purchase, with the $2.43M buy of virtual land online. 

Note, that this isn’t to be confused with Mark Zuckerberg’s new Meta, which is replacing Facebook after the brand’s reputation fell apart. 

While this virtual real estate deal did recently grab some headline coverage, it isn’t a new thing. In the run-up to 2008, many gamers were spending large amounts of real money on virtual real estate in games like SecondLife and Entropia. Some even took out mortgages on their real-world homes to try and flip nightclubs in virtual games. 

There is probably a good reason that this hasn’t been in the news for years. One of them is that when virtual properties, like public stocks, go to zero there may be nothing left. You can be left empty-handed and without income.

Whereas, even when real property values are temporarily depressed, it may not impact the income at all. There is always a hard asset with a value that will bounce back. 

Time To Sprint On Those End Of Year Tax & Money Moves

There are only a few days or weeks left to restructure your finances, slash your tax bill, and set yourself up for compounding financial success in the new year. 

Remember that contribution limits on your tax-saving self-directed 401ks and IRAs have likely gone up this year. It is one perk of inflation. Make sure you use that.

This may also be a wise year to open up accounts like these for your family members to avoid hitting new maximum balance limits that the government wants to put in place.

If you have other investments that are down, this is the moment to sell them, and use tax-loss harvesting for income tax breaks, and then re-invest in something better.

The State Of The Real Estate Market

Deals and trading volumes in real estate continue to abound. 

The US See First Multi-Trillion Dollar Year 

Corelogic projects that 2021 could be the first year that the US real estate market sees over $2T in trading volume.

Sales volume may be lower than in 2005. Though with prices 41% higher now, and more expensive homes being sold, we may see a new record set for residential real estate sales this year. 

Currently, there seems little sign of this trend stopping, potentially setting up 2022 to be an equally powerful year for real estate investors. 

Zillow Folds

Zillow recently publicly admitted defeat. Its stock value has fallen around 75% this year, erasing a lot of wealth. 

It announced it will be closing its house flipping business, which it had previously indicated they would go all-in on as their main line of business. At least 25% of those team members are being laid off.

As well as having to reportedly fire sale at least 7,000 properties for less than they paid for them, Zillow finally admitted that they cannot understand home values, which led to their demise. 

It is great news for real estate investors eager for more deals and less competition. While a fresh reminder that public stocks fail to provide safety, including publicly-traded real estate stocks. It is a much different play than the underlying hard property. 

The Secret To Successful Investing

What’s the secret equation for success in investing?

Family office manager, investor, and former CEO of Reuters says it is the combination of “ensuring you are betting on the right horse in the right racecourse with a good jockey.”

Without a good jockey, it doesn’t matter what the horse is like, or the race you are trying to compete in. 

Especially as a passive investor, you may not have the bandwidth to do enough in-depth learning of every horse and racecourse. But you can find the time to carefully vet your money manager (your jockey). Do this, and they will make sure you get the right horses in the stable, and only compete in races they are confident they will win for you. 

What’s Most Important In Investing Now

This moment is all about positioning. It is about positioning your portfolio to benefit the most from what’s next while minimizing your downside exposure to risk and taxes, and maximizing the upside. 

Talk to one of our experts to answer all the questions you still have about the market, what’s smart for your portfolio, and where the best opportunities are now. 

Levine Capital Updates

We are pleased to announce a new investment opportunity that can be characterized as a high risk-adjusted yield, safe, and liquid investment. The hallmark of the investment strategy is to provide capital to fund 1st lien position loans backed by real estate collaterals, sell the loans for a profit to institutional buyers in the secondary market, and, most importantly, recycle funds over and over. More details about our upcoming webinar will be coming soon! 

Be sure to check our site for the latest developments here and check out the latest news and insights on the market in our news section.


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