Author Archives: Jeffrey Smith

About Jeffrey Smith

Real estate investor and syndicator.

What is inflation?

Inflation means the increase in the supply of fiat currency caused by the central bank printing (counterfeiting) currency to buy bonds, thus reducing the yield (effective interest rate) and increasing the bond price. Reducing interest rates reduces the Capitalization Rates … Continue reading

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CAP Rate is determined by the cost and structure of financing

I wrote a short article about this over at LinkedIn. Click here.

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Fractional Reserve System versus Central Banking System

There is a world of difference between the “fractional reserve system” (FRS) and the “central banking system” (CBS). FRS merely spreads out the money deposits in the form of loans, and the total sum of deposits plus debt never changes. … Continue reading

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My thoughts on Bitcoin and cryptocurrencies

Bitcoin (BTC) has been hacked several times, mostly for “proof of concept” and not for nefarious intent. The algorithms for creating new BTC are now so difficult to compute that most BTC farmers are out of that business. The processing … Continue reading

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Discounted Present Value of Social Security Benefits

I just heard yet another “personal finance expert” offering some stupid advice on Social Security benefits. Social Security benefits generally become entitled at age 62. If the beneficiary defers receiving benefits for a few years, then higher monthly benefits are … Continue reading

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Only Cash Flow Matters

2014 Q1 is almost over. The lamestream media says everything is rosy (yeah, right). The problem with a cliff, even a demographic cliff, is that it is such a sharp drop-off that most folks can’t see the cliff until they … Continue reading

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Crisis Investing in Real Estate

Booms and busts always happen. You can’t defy the Law of Gravity. What goes up must come down. Today, the real estate market is a Sellers’ Market in most areas. Most average folks view real estate investing as speculating in … Continue reading

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Preparing for another economic crisis

Housing prices will collapse with a nominal increase in interest rates. Get your financial calculator: N=360 (30 years), Rate=4% per year, PV=100,000, PMT=477.52, FV=0. Those are the numbers for a $100,000 mortgage debt at 4% per year, fully amortizing over … Continue reading

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Buy or Refinance Now

The valuation of income properties is directly tied to the cost and structure of financing. Real estate is a “borrowed money” business. As interest rates rise, the capitalization rate required to service the debt for a purchase or refinance also … Continue reading

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The Equity Waterfall for a Syndicator

I just wrote an article about my preferred structure for structuring the equity financing with senior equity, preferred equity, and common equity. A syndicator that raises private equity may consider an equity waterfall that is similar to a combination of … Continue reading

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