Real Estate Economics and Finance
March 6th, 2010 — Investing, Real Estate
I noticed that a few people were landing on this website based on some variation of the following search: “What questions should I ask when investing in a real estate project?”
Here is the brief answer: Can your team successfully implement your investment strategy? To be more accurate though, we must define a few of the aspects your “project”. Continue reading →
February 7th, 2010 — Economics, Real Estate
This is the calm before the storm of the next housing crash. As the pendulum continues its down swing, expect more fallout across a broader number of housing markets. For the enterprising investor, the upcoming “double dip” presents an unprecedented opportunity to profit.
Zero Hedge presents the case for a second leg to the housing crisis and a lack of government regulation has provided yet another chance for investors to reap tremendous profits. Remember credit default swaps?
February 3rd, 2010 — Investing, Real Estate
The IBM office park built in Westchester, NY during the 1980s is nearly empty. The team members from one particular IBM work group have never even met before… at least in person. Online, they meet everyday.
This isn’t some idealistic vision of a future work place, it’s modern day reality at one of America’s largest corporations. In the PBS Frontline documentary, Digital Nation, Francoise LeGoues, the VP of Innovation at IBM, estimates the savings from holding online meetings amounted to $1mm last year. The online world, Second Life, serves as a virtual office space for various working groups at IBM where they hold daily “sit downs”, gather to discuss strategy and map out the team’s mission ahead.
January 1st, 2010 — Investing, Real Estate
A worthy anecdote from the front lines of distressed real estate deal making by Joshua Kahr at Kahr Real Estate. He discusses the importance of relationships and deal structure in a successful transaction:
[...] if a deal could be structured in a way in which a bank could receive more today for a defaulted note or an asset than they would otherwise receive by the investor by bringing in bank as a partial owner in the purchasing entity, this might help to better align the goals of the investor and the bank. In addition, the lender will often finance the new vehicle as a way to boost the overall sales price and mitigate taking a loss today. This process can be beneficial to both parties, because it allows the investors to reduce the equity commitment while providing the bank with a higher price today on paper. In addition to providing some percentage of the equity, a deal could be structured in which the investor must achieve a targeted rate of return prior to a bank receiving any part of its equity back.
A happy and healthy new year to you!
November 5th, 2008 — Economics, Real Estate
Adapting the Section 8 housing subsidy model, government might the answer we are looking for that will abate the cascading housing crisis. At the root of most of our economy’s problems, especially the contraction in our credit markets and financial institutions, are falling home prices nationwide; a phenomenon never before seen in America. Much of this turmoil was caused by misaligned incentives; however, we can use these same lessons to implement innovative solutions which capitalize on our fundamental economic motivation: financial independence.
A program which expands rental subsidies to homes sold that are in danger of (or already through the process of) foreclosure would do two important things to help abate the current crisis: (1) guarantee real estate investors a baseline rental income –effectively allowing them to accurately value a property based on cashflows which are backed by the government– and (2) help individuals in danger of foreclosure by providing them a way to stay in their homes, even though they will no longer own them.