Came across a listing for a renovated building yesterday that made me very scared for the potential new owner. To be clear, this was a nicely renovated building, with brand new systems, high-quality finishes, decent taste, etc. And the rents were pretty good – around $2500 for 2 beds with no parking, which, for the … Continue reading “A really scary roof deck”
Category: Buying
Two types of potential investors
When I speak with potential capital providers, I hear two very different ways of thinking about investing in our projects. The first group of investors thinks about things in terms of a return target. These investors trust us and like what we do. They are concerned about where we are in the real estate cycle … Continue reading “Two types of potential investors”
The most important variable
In a recent email to investors in Adaptive Realty Fund 4, I wrote: “In our business, there are three types of variables (of varying degrees of magnitude): Things we can’t control… Things we can control… Things over which we have some, but not total, control…” Spent the rest of the letter discussing the most important … Continue reading “The most important variable”
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”
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”
A difference between brokers and principals
Got a phone call today from a great pair of brokers with whom I have long-standing, mutually-profitable relationships. They were calling to congratulate me on closing our most recent deal. On the call, I told them again how much I appreciate their continued help (particularly on this deal, which got a little hairy). But also … Continue reading “A difference between brokers and principals”
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”
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 … Continue reading “Imagining a cashflow monster”
Navigating a hot market by raising cheaper capital
Two days ago, I wrote about how hot the apartment market has got and promised to talk about how we, and others, are navigating it. Yesterday, I discussed a tactic that kind of works right now, though we can’t use it. Today I want to talk about another way to approach this hot market: By … Continue reading “Navigating a hot market by raising cheaper capital”
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. … Continue reading “An effective tactic we just can’t use”