Some thoughts on windows (zzzzz….)

Today, I want to talk about windows.

Still here? Good.

Windows are a controversial part of the repositioning process. Replacing them is pretty expensive (on the order to $400-500 / window) and, while new windows open / close easily and look nice, no one ever rented an apartment because of the windows.

Still, we intend to own our buildings forever, so we replace all the windows, as a rule. In the rare cases where tight budgets caused us to forgo replacement, we over-performed on the rent and then wished we have spent the additional money to do the windows when we had the chance.

So, we’re into replacing windows. But doing so is dangerous to your project, and here’s why: They’re a massive source of delay.

Think about what happens when you order windows for a small rehab project. The rep for the window company needs to come out and carefully measure each of the windows you plan to replace. Then, he needs to record these measurements accurately, along with your aesthetic choices (frame material, opening direction, etc.). Finally, he needs to forward your specs to the factory, where the windows are produced over the next 3-5 weeks and then shipped to you.

The above is a painful process and its easy to make mistakes. And here’s the kicker: If you make a mistake on the order, there’s no way to correct it quickly. If, like happened to us recently, the window guy accidentally orders the wrong frame material, your entire order may need to be re-done, imposing a delay of a month on your project.

And there’s nothing you can do about it.

Just another problem that you need to manage around if you want to reposition apartment buildings the right way.


Forget about high paying jobs

I’m a closet Redditor (guess I’m out of the closet now, huh?). And today I saw a popular piece on there titled something like “The 10 Highest Paying Jobs”.

I get why people are interested in a piece like that, but they’re totally, utterly crazy.


With a few exceptions (almost all of which are in finance and require you to have attended one of a handful of universities), jobs won’t make you rich. The country is just not set up that way:

  • By definition, if someone is paying you a salary, it is because you are creating more value for him than he is paying you;
  • It’s incredibly hard to save a meaningful portion of your salary, particularly in expensive coastal cities where rent is high; and
  • The tax code works against you (by taxing labor income more than capital income)

If you want to be rich (eg have a high net-worth, whatever “high” means to you), you pretty much have to figure out how to get in business for yourself. That means finding a problem that people will pay to solve and then figuring out how to solve it better, cheaper, faster than the other guys.

The bad news is that this is tough, because business is super-competitive.

But the good news is that it doesn’t require any specific background. You don’t need to go to a high-end college. It doesn’t matter what your parents do. You don’t even need to speak English as your first language.

All of those things help, sure. But, because we live in an amazing country, anyone can get into business and make herself rich by being smart and honest and working really, really, really hard.

So, if you’re motivated by money (and, of course, not everyone is), then you need to forget about what job is the highest paying and figure out how to employ yourself.

The importance of a great insurance broker

Want to get into the business of repositioning apartment buildings? You’re going to spend a ton of time working with insurance brokers.


Well, consider what happens when you buy a building:

  1. You need a standard policy for the period between closing on the building and the beginning of construction;
  2. Then, you need a construction policy for the period during which you’re doing the work; then
  3. You need a new, standard policy once lease-up begins, one that reflects the new (hopefully enhanced) value of the building

Doing the above for one or two buildings at a time is no big deal. But try doing it for 10-15 projects simultaneously and you learn, very quickly, how hard it is to keep everything straight.

Very fortunately for us, we stumbled upon a great brokerage on our very first deal and have been using them (together with a few others) ever since.

Will I give you the name? No, I will not… in this business, every little 1% advantage is important.

But I will tell you that you should absolutely interview several brokers and, once you choose one, periodically get some quotes from competing brokers to make sure your guy stays honest.

Letting a pitch go by

When someone joins Adaptive, one of the things I tell her is that she should not worry too much about making a mistake. The reasons are that (i) we can fix pretty much any mistake, so long as we know about it*; and (ii) Jon and I make bigger mistakes than any of our employees ever could.

Today, I want to share one of those big ones.

Last week, I spent a lot of time on internal issues here at Adaptive (interviewing, improving leasing systems, etc.). The work needed to be done, so I don’t regret it.

But, while I had my head down working on internal matters, I let a good deal slip through my fingers.

It’s a small-to-medium size deal in an area we like. My back of the envelop calculation is that, because I missed it, Adaptive will end up being something like $250k poorer than it would have been.

Mea culpa.

*Side note: One of the very few things for which we would fire someone instantly is dishonesty / covering up mistakes.

What hustle can do for you

Further to my earlier post about the amount of opportunity available for Millennials who want to seize it… thought I’d share with you the experience of one of our leasing agents this weekend.

Keep in mind this woman has a full-time job she works during the week.

Instead of sitting around all weekend (like I did), she worked on leasing two new buildings for us.

My guess is that she worked something like 30 hours over both days posting ads, responding to inquiries, arranging showings, taking applications and filling out leases.

When all the dust settles, I believe she will have completed 4-5 leases, which ought to net her in the neighborhood of $3,000 in commissions. That’s like $100 / hour.

To give you some context: The tuition for in-state students at the UC schools this year is something like $12,500.

Remember that when you hear people talking about how impossible it is to pay off student loan debt.