In our business, shit happens. That’s just the way it is. Tenants try to short you on rent. Contractors try to extort money through bogus change-orders. City inspectors call you out for things you know are fine. Buyers try to chip price. Sellers lie about their rent rolls. And on and on and on. When … Continue reading “Don’t be an ostrich”
Category: Development
Avoiding a pretty painful “oops”
A reader wrote in to ask me a question about yesterday’s piece, which argued for refinancing and holding, rather than selling, completed repositioning projects. The question: “Only thing I don’t understand is why not refi on a LTV more than 60% to get back all of your original 2million dollars.” It’s a reasonable question. After … Continue reading “Avoiding a pretty painful “oops””
To sell or not to sell
One of the problems a beginning money manager has is deciding whether to sell or hold completed projects. To understand dilemma, you first need to understand what we’re generally left with when a project is completed: Fully renovated building with all new plumbing, electric, etc. High quality tenants on modern leases with good security deposits An … Continue reading “To sell or not to sell”
How a good contractor handles inspectors
By now, we’ve had a LOT of experience dealing with city inspections. And we’ve seen how many different contractors handle them. And here’s what separates the contractors who get their permits signed off from the ones who get endless streams of corrections: Good quality work (obviously); and Confidence. The nature of renovating old buildings is … Continue reading “How a good contractor handles inspectors”
What we want in a contractor
The construction part of our business is inherently messy. This isn’t new construction, where you start with a nice, flat lot and build exactly what your architect drew on the plans. Our raw material is old buildings with weird framing where the foundation has probably settled unevenly over the years. That means that what is on … Continue reading “What we want in a contractor”
My current catch-22
There are some deals right now that: Aren’t right for our current fund (because the near-term returns aren’t high enough), but I want to buy (because I think they have a lot of potential down the road) One obvious solution to this problem would be to buy the deals with non-fund money, either my own … Continue reading “My current catch-22”
How an HPOZ can screw up a deal
Am looking at an interesting deal, but it’s in an HPOZ (Historic Preservation Overlay Zone). Because the structure was built during the time-period the HPOZ is intended to protect, it is categorized as a “contributing structure”. It is extremely hard to do anything to a contributing structure.We would need prior approval for any work on the … Continue reading “How an HPOZ can screw up a deal”
Never lose units
Saw that someone arrived on the blog yesterday using the following search term “convert duplex into single family home”. Here’s my advice: Don’t do it. Or, at least, don’t do it with permits. Regular readers know I’m strongly in favor of using permits for every single construction project. It’s a bit more expensive, but you … Continue reading “Never lose units”
If I were a broker…
…who didn’t also renovate tons of apartment buildings, I would: Run rent surveys across all relevant neighborhoods, all the time Constantly poll my clients about construction costs for different finish levels and unit sizes Constantly poll my clients about eviction / tenant relocation costs Why would I do all these things? Because, without the above … Continue reading “If I were a broker…”
Stocks, bonds and real estate prices
In case you’ve been under a rock: The stock market has been in free-fall since the beginning of October. Here’s a handy chart: The thinking among investors is that the world economy is slowing due to weakness in Europe and China. Usually, when investors get spooked by stocks, they sell stocks and buy relatively safer government … Continue reading “Stocks, bonds and real estate prices”