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In this episode, we're joined by Matt Argersinger. Matt is a former stock adviser who is now the lead adviser for The Motley Fool's Mogul and Millionacres platform, where he helps members find today's best real estate investment opportunities.
We discuss how went from a stock adviser to lead advisor for The Motley Fool real estate program, how he analyzes investment opportunities, portfolio allocation, and his opinion on the current state of the financial markets during this Coronavirus crisis.
Millionacres and Mogul Services
In September of 2019, The Motley Fool launched millionacres.com, a location where investors can learn all about real estate investing, such as flipping, REITs, and commercial investing. Behind the scenes is a premium subscription service called Mogul, which focuses on providing recommendations in the REIT space, public equities, and private commercial offerings. The Tax Cuts and Jobs Act and new crowdfunding regulations has made these vehicles much more accessible to the average investor.
Metrics and Criteria for Analyzing a Deal
The Motley Fool has developed a Mogul Score, a scale of 0-100, and their target for recommending deals is 75 or higher. The factors that go into this score are rating the investment platform, the deal itself (location, demand and supply factors), the sponsor (track record of the management team), and the assumptions behind the deal that produce the return number. The assumptions need to be conservative and realistic to avoid risk. Finally, they look at the macro factors, such as the current business cycle and interest rates.
Matt personally believes the single-most criteria right now in April 2020 is looking at the sponsor. How have they handled the management, how long have they been in business, and what is their history of returns?
Portfolio Allocation - Not Investment or Financial Advice!
Matt's current portfolio is about 50/50 divided between real estate and the stock market. With smart investing, the returns can be similar, but real estate has about half of the volatility of the stock market. Because of that, Matt thinks that heavy real estate investment is an intelligent move for more conservative investors, such as those looking to place their money in the bond market with more of a 60/40 split favoring the bonds and safe investments.
Matt hopes, overtime, the average investor looks at about 20-25% allocation to real estate. He believes that may be the sweet spot. Maybe start small at 10-15% until comfortable.
Words of Wisdom During COVID-19
Matt believes, though "boring" to say, that it's not a time to panic or hit the sell button. This is such a rare situation, where we have slammed the brakes on the economy and the unemployment numbers are ridiculously high. Retail outlets and restaurants have closed shop, and some may not come back. If you're lucky enough to have some capital, this seems like a great time to make some measures investments in the stock market. Even the devastation we've seen in REITs has presented an opportunity to buy.
Nobody can pretend to see the end or know exactly how we will emerge, but Matt is still optimistic and opportunistic during this time.