The U.S. housing market faces the prospect of a decade-long supply crunch. Today, we’ll introduce our next play on America's housing shortage, and one of the most capital efficient business models we've come across.
In 2007, Porter recommended NVR, the pioneer of the "land-lite" homebuilding business model. Investors who followed Porter’s advice posted total returns of 1100%+. Today, we introduce a company that is taking a page out of the NVR playbook and is in the early innings of rapid expansion.
The REIT we’ll introduce today offers an extra degree of safety. It avoids physical real estate properties entirely, and instead invests primarily in mortgage securities that are effectively backed by the government. And they’re a better buy than government bonds.
After the 2008 Financial Crisis, lawmakers beefed up banking regulations and cracked down on the irresponsible lending standards that inflated the housing bubble. But trying to regulate away the next crisis is like playing Whac-A-Mole: The next crisis is going to pop up in a brand-new hole.