Results for ‘How to’ category

The numbers are out of whack

Our business model allows us to generate yields which are consistently 200 basis points in excess of “market”. In other words, if any random ding dong can buy a 4% cap, then we can reliably create a 6% by doing what we do. But, right now, a 6% isn’t that great. Why? Well, interest rates

Some thoughts on negotiating

Repositioning an apartment building requires obtaining the consent of a huge number of people and institutions, from tenants to contractors to city inspectors and on and on. This consent doesn’t necessarily have to be enthusiastic. But you still need it, because not getting it can screw up your project massively. So, a big part of

Imagining a cashflow monster

Regular readers know I’m an avid follower of Berkshire Hathaway, Warren Buffett’s company. One interesting thing about BH is that Buffett never issues dividends. His argument is that he can find better uses for cash the company generates than the investors could on their own (particularly given that dividends are subject to taxes at the

An effective tactic we just can’t use

Yesterday, I noted that pricing for apartment buildings in LA has become detached from the underlying cashflows the buildings can generate. But some deals are still getting done at (semi-)reasonable prices and I want to discuss how, and why it’s a problem for me. Right now, listing brokers and sellers are pricing properties very aggressively.

What is the difference between “price” and “value”?

Answered this question on Quora yesterday and thought it would be interesting to re-post here: The key to understanding “value” is to separate it from “price”. “Price” is the amount of a given currency at which a buyer is willing to buy or a seller is willing to sell (sometimes, those numbers overlap, in which

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