<story><title>Listerine Mouthwash Royalties</title><url>https://auctions.royaltyexchange.com/orderbook/asset-detail/4580</url></story><parent_chain><item><author>cannaceo</author><text>I can get a 4.5% cap rate on real estate in a hot market like Los Angeles. I can get a 50% loan on the property as well. The property will likely appreciate on the backend and when it&amp;#x27;s time to sell I can 1031 exchange in to another property or do an opportunity zone to defer taxes. I can get a conventional loan from a bank against that property if I ever need to pull dollars out.&lt;p&gt;A 5% return royalty is largely illiquid, can not likely be collateralized at a low interest rate, has limited ability to appreciate in value, etc. etc.&lt;p&gt;I don&amp;#x27;t see it as that valuable...especially with the decline of major CPG brands. The remaining risk with this investment is completely unknown to me.</text></item><item><author>sytelus</author><text>I think this is great and not often looked way to diversity. They are selling at 20X annual earnings (or 5% annual returns) and have track record of producing earnings for over 100 years. Additionally, royalty is brand dependent (it seems), not whether Listerine actually uses formula. Also, this is regular consumable that is unlikely to get displaced anytime soon. The best thing about it is that it is inflation protected. Not a bad deal to diversity in low-risk, low-return zone.</text></item><item><author>mfringel</author><text>Looking at most of the auctions, this looks like: &amp;quot;these are the deals that don&amp;#x27;t make the hurdle rate of the typical buyers, so let&amp;#x27;s make some money selling them to the dentists who like the idea of owning a song and won&amp;#x27;t look too hard at the return.&amp;quot;&lt;p&gt;I&amp;#x27;d love to be wrong, but I&amp;#x27;m not seeing a good alternate explanation.</text></item></parent_chain><comment><author>noduerme</author><text>idk about the remaining risk, but there&amp;#x27;s definitely a kind of conservative investor who would be happy for a 6.5% return from a forever holding; also there&amp;#x27;s no reason to think you couldn&amp;#x27;t auction it for higher later. (Say, a decade from now when interest rates start falling again). It&amp;#x27;s a bad time to buy this thing, maybe... if you think you&amp;#x27;ll fetch higher returns next year. I&amp;#x27;m a fan of tobacco, (don&amp;#x27;t shoot me, I&amp;#x27;m a chain smoker, it&amp;#x27;s my future health plan), but it&amp;#x27;s just another thing people buy without thinking about what it costs. A lot of people are looking for stability versus maximizing growth. &lt;i&gt;This always gets a bad rap&lt;/i&gt; - people think I&amp;#x27;m insane for keeping almost all my portfolio in utilities and basic necessary goods. I&amp;#x27;m 10% in tech and 10% in retail... the rest is utilities, commodities, real estate, and whatever kicks out at least 4% annual dividends. I&amp;#x27;m in my early 40s, and have followed this strategy since my 20s. Could I be richer if I were more aggressive... probably. Although giving my track record in Vegas, maybe not. But I don&amp;#x27;t try to time the market, I basically never sell anything. I drip dividends and accumulate. I never got struck it rich on a hot ticket but I worked $100k saved in my 20s up to $1m or so now, rotating and seeking dividends.&lt;p&gt;What I&amp;#x27;m trying to say is that for some people, the marginal cost of risk - even from real estate - is worth a few points on a &amp;quot;sure thing&amp;quot;. A sure thing is hard to find.</text></comment>
<story><title>Listerine Mouthwash Royalties</title><url>https://auctions.royaltyexchange.com/orderbook/asset-detail/4580</url></story><parent_chain><item><author>cannaceo</author><text>I can get a 4.5% cap rate on real estate in a hot market like Los Angeles. I can get a 50% loan on the property as well. The property will likely appreciate on the backend and when it&amp;#x27;s time to sell I can 1031 exchange in to another property or do an opportunity zone to defer taxes. I can get a conventional loan from a bank against that property if I ever need to pull dollars out.&lt;p&gt;A 5% return royalty is largely illiquid, can not likely be collateralized at a low interest rate, has limited ability to appreciate in value, etc. etc.&lt;p&gt;I don&amp;#x27;t see it as that valuable...especially with the decline of major CPG brands. The remaining risk with this investment is completely unknown to me.</text></item><item><author>sytelus</author><text>I think this is great and not often looked way to diversity. They are selling at 20X annual earnings (or 5% annual returns) and have track record of producing earnings for over 100 years. Additionally, royalty is brand dependent (it seems), not whether Listerine actually uses formula. Also, this is regular consumable that is unlikely to get displaced anytime soon. The best thing about it is that it is inflation protected. Not a bad deal to diversity in low-risk, low-return zone.</text></item><item><author>mfringel</author><text>Looking at most of the auctions, this looks like: &amp;quot;these are the deals that don&amp;#x27;t make the hurdle rate of the typical buyers, so let&amp;#x27;s make some money selling them to the dentists who like the idea of owning a song and won&amp;#x27;t look too hard at the return.&amp;quot;&lt;p&gt;I&amp;#x27;d love to be wrong, but I&amp;#x27;m not seeing a good alternate explanation.</text></item></parent_chain><comment><author>Red_Leaves_Flyy</author><text>Considering the volatility in the housing market, and the growing populous demand for affordable housing I think you’re valuing real estate extravagantly.</text></comment>