Just started Peter Thiel’s book about start-ups. Among the more interesting arguments in the book is about competition. Thiel argues that competition is a bad thing for businesses, because economic theory teaches us that, in competitive markets, profit is competed down to zero. Instead of entering into competitive markets, Thiel advises striking out into new … Continue reading “Thinking about the effect of competition on our business”
Category: Building Adaptive
What we are doing here at Adaptive
Our business generally obeys a truism about investing: It’s relatively easy to generate market-beating returns with small amounts of money, but very difficult to do so with large amounts of money. Because we were capital-starved in the beginning, and needed to generate market-beating returns to attract more, we tuned the Adaptive model to generate market-beating … Continue reading “What we are doing here at Adaptive”
Conflicting interests in the money management business
The NY Times has an interesting article today about conflicts of interest between private equity firms and their investors. The specific conflict addressed relates to payments to outside vendors like law firms: In a nutshell, many private equity firms pay two different rates: A high one, when they’re paying with investor money and a low one, … Continue reading “Conflicting interests in the money management business”
807 N Madison is DONE
Am thrilled to announce the completion of yet another apartment repositioning project, this one the 10 unit front structure at 807 N. Madison. This deal has an interesting back-story. I helped the owners buy the building way back in 2012, pretty early in the history of Adaptive. In many ways, it was a typical Adaptive … Continue reading “807 N Madison is DONE”
Some advice I wish I had received
Going back to Princeton for reunions recently caused me to do some thinking about my personal network, which led me to thinking about advice I wish I had received when I was a kid. The advice is this: Your personal network is the most important factor in your career; Your highschool and college years are … Continue reading “Some advice I wish I had received”
Why I intentionally have a bunch of vacant apartments
Right now, I have a bunch of apartments sitting vacant. That sounds crazy, right? After all, we are in the business of renting apartments. Having vacancies means we’re intentionally not maximizing revenue, which means a lower return to us and our investors. So what’s going on? Well, we bought a bunch of buildings a few years … Continue reading “Why I intentionally have a bunch of vacant apartments”
Why we’re in emerging neighborhoods
Found myself talking about neighborhoods with a new agent of ours yesterday. We were discussing why our deals (both the ones we do for ourselves and the ones we broker) tend to be grouped in a few main areas, none of which are the Westside, Hollywood, or Miracle Mile. It’s not that we dislike working … Continue reading “Why we’re in emerging neighborhoods”
Looking back at a miss
Periodically, I write pieces on here about how our knowledge of achievable rents cycles back into our acquisition process. Wanted to give you a concrete example. There’s a deal we looked at several months ago that sold in the $700-750k range. At the time, not knowing as much about achievable rents, we thought the deal … Continue reading “Looking back at a miss”
What you could learn from a wild-catter
Recently, I’ve found myself repeating the same piece of advice over and over, so I’m going to share it here. The context is as follows: Someone comes to me for help in optimizing her real estate business. He wants to figure out how to generate more revenue per deal or how to do more deals in … Continue reading “What you could learn from a wild-catter”
Welcome to the week of short posts
We got a deal that I think I really like over the weekend. However, the diligence period is only three days. There’s an unbelievable amount to cover in these three days: Physical inspections Reviewing leases, estoppels, rent roll, etc. Reviewing the permit records Compiling a construction budget for the rehab Confirming our pro forma rents … Continue reading “Welcome to the week of short posts”