Profit off the Real Estate CRASH | New Billion Dollar Short.

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

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below thank you

[Music]

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