Everyone knows LA is in a housing crisis and everyone is talking about up-zoning as a potential fix. But, recently, a big part of the problem is that construction costs are skyrocketing… and that’s what I want to discuss today. What’s going on? The wipeout of 2007-9 crushed a lot of subcontractors (plumbers, framers, roofers, … Continue reading “How rising construction costs impact affordability”
Category: Building Adaptive
Long term holds
Why do real estate private equity investors sell assets? After all, most private owners of real estate generating really nice cashflow hold forever. And selling forces you to either re-place the capital via a 1031 exchange under duress (eg with a short window) or to pay huge tax bills. So, again, why do the smartest … Continue reading “Long term holds”
A good podcast
Have been spending my morning commute listening to a podcast I think you guys would love. It’s call The Private Equity Funcast. The hosts are two of the partners in a new private equity shop in Chicago called Parker Gale. They have a small (for private equity!) fund of about $200MM which they’re using to … Continue reading “A good podcast”
Where our deals come from
Spent some time this morning looking back at all the deals we’ve done to see if I could learn anything about how we have historically sourced. Here are the numbers: Total deals done (as a buyer myself or as part of our fee-for-service business): 81 Of the total, number that were brokered: 74 Total number … Continue reading “Where our deals come from”
Another obstacle to in-fill development
Want to give you some insight into why, exactly, its so hard for LA to add more housing. Here’s a perfect example: We own a big, R3 lot in an improving area, bordered by two alleys. This ought to be a super easy lot to develop and, indeed, we are in the process of obtaining … Continue reading “Another obstacle to in-fill development”
Thinking about 2018
We’re coming to the end of deploying our current fund and, as usual, I’m considering several possible ideas for our next one. The most likely possibility is that we will do another round of rehab deals, this time ideally with a larger fund of (slightly) cheaper equity… say, in the 5% pref range, instead of … Continue reading “Thinking about 2018”
My on-going pain in the ass
In general, I find managing apartments to be the most painful thing we do. No one calls up his landlord to thank her when everything is great in the apartment. But when something goes wrong, it’s like you just killed the person’s dog. So, why do we continue to manage, rather than outsourcing? Well, the … Continue reading “My on-going pain in the ass”
The math behind what we do
At this point in the cycle, when we consider a new deal, we spend a lot of time thinking about leverage. Mainly, we’re looking at how our pro forma unlevered yield (eg the cap rate we’re trying to hit post renovation) compares to the projected interest rate on the refinance we’ll do at that point. … Continue reading “The math behind what we do”
Here we go again
Just started interior demo on a new, large project in an area we absolutely love. Despite the market being hot, because we bought well, this project is going to end up being a really good one. But, before we get to the fun part where we release beautiful new homes for people to enjoy for … Continue reading “Here we go again”
All-in on LA
Have been thinking about how amazing it is that a person can own land in LA. I know that’s a weird thing to think about, but stay with me. Land is permanent and, increasing density aside, they’re not making more of it. It’s pretty amazing to me that, through actions taken in the course of … Continue reading “All-in on LA”