Teaching an old(er) dog a new trick

We just agreed to buy a new property, with the intent of executing a business model which is different from what we have done before.

It’s not too far afield from what we have done before, so we have pretty much all of the relevant skills, relationships, etc. in house.

But underwriting the opportunity has been really interesting, because it feels a lot like it felt to underwrite our original apartment repositioning deals:

  1. Am forced to make assumptions based on other peoples’ deals, instead of just using our internal data;
  2. Because of the increased uncertainty and, therefore, likelihood we’ll screw up a bit, have had to look for deals that REALLY look like they have a ton of margin in them, so that we have a wider-than-usual margin of safety
  3. Amazingly, because we’re looking at deals through this new, far-less-common lens, we’ve found this deal (and hopefully will find others) with pro forma returns that seem almost too good to be true

When you’re young and inexperienced, and you haven’t seen a million things go wrong, it’s easy to dive into a deal that looks promising, because you don’t know enough to be worried.

When you’re more experienced, you’ve got used to doing things a certain way for a very long time, and it’s worked, it can be hard to wrap your mind around doing something new.

But you also have to trust yourself and your experience. Every once in a while, you really do just come across a good deal sitting right there to be done.