investing

There are 10 posts filed in investing (this is page 1 of 1).

Short term rental business case in Valencia suburbs

I was planning to build second house in Valencia for myself, but my lifestyle has changed and I currently prefer living in condominium, where I have outdoor and indoor swimming pool, gym, sauna, padel courts, 24×7 security and most important my kids have many friends to play in a safe environment. As I had a plot and a project ready, I started investigating what could I do with that. My options are:

  • Build to sell (not the best idea as the return on investment is low)
  • Build to rent – I could generate about 7-8% yield, but the demand might drop after the Ukraine wins the war – Also the loans to build the house are quite expensive now so the return is little
  • Sell the land
  • Build to rent on AirBNB – That idea came when I saw AirDNA data on townhouse in Burjassot

Burjassot townhouse rental:

3 Bedroom townhouse in Burjassot with a pool. This is the closest city to Valencia City. It has metro and tram line close by. In addition it is near Sorolla Congress Hall. Airdna says it has 60% occupancy at 410 euros on average per night.

I could definitely make a better quality house, just my location is not that close to the city/metro/tram. This is what AirDNA rentalizer gave as an estimate for my location:

Examples of Airbnb revenue in Valencia suburbs

5 bedroom Villa in Godella. 58% occupancy at 297 euros per night on average

#2 in Godella

Paterna / La Canada zone where I am considering building a 4 bedroom/4bathroom villa for AirBNB rentals. Interesting that the second villa is only listed on VRBO. The First villa that generates 89k / year (according to AirDNA) has 6 bedrooms and can accomodate 14 people. Charges 512 euros on average per night. Has a tennis court.

58k Arquitect Villa

p.s. You can invest in Airbnb rentals over InRento

Selling PUT options

Option is a contract in the future to buy or sell a stock at agreed price (strike price). Options are used to hedge (insurance). (detailed explanation for beginners)

Other uses:

Buying PUT option – betting that stock will go down.

Buying CALL option – betting (with leverage) that stock will go up.

The new concept that I have been introduced by Michael is Selling PUT options

Choosing the right stock. I sell put options only on those stocks that I want to own.

Setting the strike price and expiration date. I usually set the strike price with 10% discount and 1-2 months expiration date.

Related:

I will never buy individual stocks

Money talks during Covid19

Investments

I was lucky to exit the stock market and crypto (exited BTC at 6700 euros) before huge drop. I am not selling any of my real estate investments through the platforms. Housers secondary market is dead. EstateGuru secondary market is dead and expensive to trade. EvoEstate secondary market is active as never before, but i am holding my investments. I am checking the markets mainly sp500 and ibex35 daily and even though i do not have any positions I feel frustrated with big swings in the market. On one hand a big recession is coming. On the other hand US announces 1.5T and later 2T money printing – stimulus package. Universal Basic Income may start sooner – US government is thinking of giving 1000 USD for each citizen.

I will be coming back to stock market on March 23 making 0,3% of my net-worth investments weekly. I will be buying

BTC (Crypto – Bitcoin)

LYXIB – Spanish index

WBA – Pharmacies in USA

BOL – Ports in Africa and 3 potential spinoffs

TEF Telcom for Spain and LATAM

TEL Telcom for Nordics and SE Asia

SCHB Media company from Norway

Shorting ZOOM (Ticker: ZM)

The reason to short (buy put options) Zoom is that i do not know any person paying for paid version. Zoom gives 40 minutes free sessions and then you can just restart a new session – not a big pain to pay for. (more pain to look for your credit card in the pocket). My personal circle uses Google Meet, which comes for free if you are buying Google Suites. The competition is huge. And UX is a fragile competitive advantage that can be copied and made better in days. (example Whereby in my opinion has even better UX)

Oil

With global lockdowns the demand for oil plunged. The tankers have been filled soon and there was no place to put oil. USO ETF stopped tracking oil price. And near expiration oil futures started trading at negative 37$. (Lesson about oil futures: if you do not execute contract before expiration – you have to take real oil)

Covid-19 crisis

I am starting to write this on March 20, when corona virus pandemic is at the peak in Spain.

During first two weeks of February I am reading a lot of warning on Twitter. Some events are being cancelled in the world already. I urge my wife to stock up some basic food in case of total lockdown.

February 17th to 22d I fly to Riga (with connection in Frankfurt) to Startup Wise Guys graduation and Techchill event. Before leaving I buy 6 FFP3 mascs for my family after I notice Chinese woman in the post office sending big packs of surgical mascs to China. At the moment there are plenty of FFP2 mascs.

Lidl meat section midday of March 13

March 12th Spanish government announces that country lock-down begins on Monday – March 16th. That nigh, after an argument with my wife, I decide to not take kids to school on Friday. Friday and Saturday we go for walks with kids (skipping the playgrounds and crowded places). The news are worsening every hour. When the kids go for Friday nap, I go shopping. Some sections are already empty and people are buying a lot – i wait 30 minutes in the line. The lock-down begins 2 days earlier on Saturday night. March 18th my wife goes shopping – the shops are full of food, including toilet and hand paper.

What is the life in quarantine?

In general the life did not change much: I work and have meals at home as usual. The good things:

  • I do Yoga / Stretching daily
  • I sleep better (Oura ring average sleep and readiness over 90)
  • Have time to write and read (though i read mostly about covid)
  • Rethink my life: Set your values, goals and principals (Ray Dalio).
  • I speak to parents daily
  • I speak to friends more often – usually about Covid19 and investments.
  • 100 push-ups a day (started April 10th)

The negative things are: I workout less actively. All the day is about satisfying kids, we watch at the screens more.

New covid19 cases in Spain per day

Positive vibes

Getting back to normal

6 weeks after, we are allowed to go outside with kids.

Sunday. Morning sports hour for adults. The Sci-fi feeling

What I have learned

How viruses spread and how do you get infected

Building a house in Valencia Spain 2020/2021

First, I think that renting is always better than buying. Especially in Spain, where you pay 10-12% buyers fee. So if the rent is 4% – so you can rent for 3 years just of the buyers fee. Secondly your family situation changes and you have more flexibility renting. And thirdly changing places is fun.

The reason why we have started building a house in Valencia, Spain is that we wanted a house next to kids school and there was nothing decent to rent. And the purchase prices seemed ridiculous of the houses that we liked.

So the first thing of building a house – choosing a location was obvious and those are places where most best schools in Valencia are:

  • Torre Conill – lots of new houses. Some plots on the golf course. No trees.
  • Mas Camarena – no plots available at a market price. At the time there were only one plot at 600 euros per squaremeter.
  • Campolivar – big plots (that can not be devided) the plot prices start at 400k
  • La Canada – this is the one we have chosen. At a given time you could buy 500 square meters at around 250 euros per square meter

Architects

The architects qoute different prices from 7.000 to 20.000 for a single family house. The price is proportional to the english level. I an recommend this company.

Building permits

Building permits take approximately 8 months – but there is new law that lets outsource the work townhall to private company. With up to 2k euros you can get a building permit in less than 3 months.

Construction

There are basically two ways to proceed with construction:

A. hire a general contactor. Advantages are that you do nothing, get guarantees. On the other hand you pay 8-20% on this. And as you are paying % – the contractor has incentive to spend more.

B. Hire individual companies. You save money. You have a lot of work

We have chosen hiring 11 companies to do:

  • Land works (movimientos de tierra)
  • foundation and structure (estructura + cimentaciones)
  • electricity
  • plumbing (fontanero)
  • bricks (albaneria) (also put the tiles)
  • windows (ventanas)
  • interior walls (pladur)
  • painting (pintura)
  • parquet floor
  • pool (piscina)
  • garden (jardinero)

Mistakes on building a house

Index funds for foreigners (non-us investors)

UPDATE. (2019) You can not buy USD Index funds in InteractiveBrokers if you are EU citizen/company. 

ERROR REPORT:

“BUY 16 CHIC ARCA @ 23.89” No Trading Permission, Customer Ineligible; Ineligibility reasons: This product is currently unavailable to
clients classified as retail clients. Note: Individual clients and entities that are not large institutions
generally are classified as retail clients. There may be other products with similar economic characteristics  that are available for you to trade.

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BillionToOne investment

I have invested in Billion To One a startup that is trying to make prenatal testing easy/cheap and safe. Even though i stopped my first ”fund” of startups, I have chosen to invest in this particular one because i believe and support their mission:

Our mission is to make prenatal diagnostics safe and affordable for all.

If there will be 1% advance in prenatal testing made and  i will lose all my investment – I will be happy with the outcome

2019 March. Raises series A

The crisis may not come any time soon

Everybody agrees that the crisis or correction will come. I can not disagree with that. My idea is that investing (dollar cost averaging) should be more beneficial (Schwab study) than waiting for the crisis to come. It may come but it may be very short and recover very fast. Technically we are in second longest bull market not affected by recession. But the bear market of 1987 was only 3 months.

1987 August 21 the highest was 335.90

1987 December 4 the lowest was 223.92 (33% fall). From that moment The bull market started again.

1989 July 21 it crossed the 335.90 again

Conclusion: timing market is not a good idea.

Prediction: no one knows if crisis will come this year or in next 10 years. And for the reason that there is huge anticipation that the crisis is near, for that reason I would bet that it might not come soon. Reason #2 is that people still remember 2008. Reason #3 People have too much cash and moderate debt (look at the insane ICOs)

I will never buy individual stocks.

After reading a dozen of articles that low cost index funds beat individual stock pickers, i was not convinced, that i can not pick individual stocks better.

I was very bullish on Rocket Internet RKET. I was buying RKET at 15-19€ and selling 19-23€.

Why i am not buying individual stocks anymore:

  1. It takes too much time to monitor the news, rumors and stock price.
  2. There is high risk with individual stocks.
  3. S&P 500 at the same time made +25% compared to mine 19%

Another great example is TV series Billions, that shows stock market manipulation by billionaires.

Warren Buffet 1M bet