Real Estate: Avalon Bay Communities

Avalon Bay Properties owns apartment complexes in many major cities. It is known for charging assessments for minor damages, and for walls being relatively thin. I myself have lived in an Avalon Bay property in Seattle. The way to tell if real estate is working for you is to ask what the makeup of the clientele is. If the clientele is like a college crowd that smokes some of the time, then you would expect one type of income stream. If the clientele is of a changing and emerging demographic, then you would expect a different set of analyses, for example the Latin American population is emerging in the United States as a political and economic force and that was cited to me as one reason to buy in a neighborhood that wasn’t really gentrifying but was heavy in these social dynamics. At the end of the day though, cash cows are that way for a reason and reflect a property that is marked down in value because the income stream is so toxic, no matter what the analysis tells you. One can say that investing in real estate isn’t really about the analysis, much like in the board game Monopoly, it is more in the positioning of yourself relative to other players in the market which are coworkers earning salaries jobs who have the income to buy property. When they land on your property, they are starting to rent from you and you discount the entire annuity into the present to reflect what you gain from your property filling up.

In other words, you don’t buy real estate that is junk, no matter what the analysis looks like, because you would never be able to hang onto the property long enough to make money in what is known as slumlording. You buy real estate that is valuable so people you may know may one day rent from you, or at least people you know of, or your social network is not so spanning widely enough for you to buy property of that type.

This goes for the intelligent investor of value stocks too, you never buy junk stocks, no matter how cheap, because someone you know would never so to speak rent that stock from you like a tenant on a property, so you have no analytical edge whatsoever except what you argue from being smarter than other people. Just like some people say no one is bipartisan, no one is smarter than two people working together, both follow from Hobbes if you think about it. What does it mean to be a tenant to a stock? It means your friends get invested into the interests of stocks or businesses you own and begin to cheer for your portfolio.

Now at the end of the day what anyone wants to do from this is make money, but money is not made through analysis but delivery so we can say investment whether in real estate or stocks, is about owning what you know, and that is hard enough. Managing what you own is really in the realm of portfolio theory and that is a different topic. But if you own what you know, you will make money. It’s not about analyzing, making a smart decision, analyzing and repeating. That’s what it looks like to people who are essentially mercenaries to the process as they are providing this service to think for people who don’t want to think as these people are too busy understanding what they truly know and importantly what they truly own.

The meek shall inherit the earth. Canada, we stand on guard for there.

Both these statements show that building wealth is a long-run process cause as Keynes said, in the long-run we may be all dead, but in short-run, we are in a worse position, in the short-run we are at each other’s throats playing antagonist to each other’s dramas, and they said in 2007 I think before the crash while the music is playing we have to keep on dancing around the chairs, but I am not, and neither should you if you read this: as Balian of Jerusalem would have said, there is no such thing that makes our thoughts become reality without our active consent, and if there is such a thing, it is not us and it is not good. Analysis thus does not change anything. Nor is judging by track record of vagaries a true meritocracy. Instead, we ask, what would we have bought if we had known what we know now. If the answer is nothing, then we know, we didn’t have the opportunity set then because we didn’t know enough as we do now, and so trading has nothing to do with opportunity sets, but everything about knowing yourself and knowing what you are buying or selling. In terms of knowing who you are buying or selling from, I would consider that sales. That is useful but not quite complementary, it is a different field.

Sometimes as they say, the world doesn’t need another warrior. Sometimes, the world needs a blacksmith as was Balian before Jerusalem. But men have to go to war when they must, just as skyscrapers were built by men, and some of them may even have used to wear suits. I will miss my properties and monopoly board set, but most of all I will miss my brother who has gone somewhere I can’t follow, he has gone to a place where you can’t distinguish being wrong from being crazy, and that place is known as the fight against tyranny. And I will tend to his blacksmith trade, I had always thought I was the older brother. A real estate is for a life time; love is for one time.


No comments

Other posts

Value Investing: What Is It?
Value investing is epitomized in a quote I think by Warren Buffett who says when someone with money and experience meet, the one with money leaves with experience and the one with experience leaves with the money. That doesn’t sound that nice and it is a typical type of feel you get around very experienced American businessmen of a sort that they are laughing at you while you do business...
Read more
American Water Works: Utilities
Utilities tend to be recession-proof and in the case of a water utility called American Water Works, the earnings go up smoothly over time and carry the stock forward in a relatively smooth ride. Water is in shortage across the world in many places because it is difficult to transport aside from there being a lot of water notably in Canada. I want to address for a moment what the...
Read more
AMD: Technology Sector
AMD got my vote as soon as I found it named a chip K5 after kryptonite to take on Intel in a move that shows both respect and fearlessness against its competitor. The technology sector is usually known for names in consumer electronics or excitement-focused social media like Apple or Facebook respectively but I think that type of technology is mainly effective because it is serving people who otherwise are...
Read more
More posts