The following set of pictures are breathtaking, weird, beautiful, or just plain interesting visual real estate productions. Because if you’d asked Louis the XIV, the Sun King, just what rent he might come to expect on the Palace of Versailles, that would be the end of your French vacation.
A widely traded stock, commodity, property, or good is priced based on its present-day prospects, near-future prospects, far-future prospects, past production, or any number of infinite indicators convincing experts of ‘value’. If gold was guaranteed to price at $3,000, it’s already there, it’s that simple. For every expert convinced that one particular indicator, say past performance, concludes a rise in gold’s price, you’ll find another expert convinced that an alternate indicator, say moving average, ensures a drop in price.
In investment, there is a holy grail, it’s the concept of arbitrage: taking advantage of a price difference between two or more markets. In Commercial Real Estate specifically, it’s the rate difference between borrowing and earning – the cost of money vs. the return on a property. Arbitrage in CRE is called Positive Leverage.
Don’t get me wrong, Stephen Hawking is a mathematical genius, but it takes more than that to estrange him from everyone. When writing a brief history, his editor warned him that for every equation included in his book, the readership would be cut in half. Imagine the imagination it requires to condense the most complex astrophysics and mathematical theory into something simple, enjoyable (yes enjoyable!), and comprehensible for ten million readers. He used only one equation.
Debt Service Coverage Ratio (DSCR) is the ratio of cash available to debt service cost.
Most of what Donald Trump says has been said before, only better. He’s easily one of the most influential figures in present-day Commercial Real Estate, so hey, maybe there’s a lesson here: if you know what works, work it.
Out of respect for a man Forbes pegs at 2.4 billion (a number Donald considers grossly undervalued), let’s run down to the local SuperCuts, ask for a really awfully bad haircut, and while we’re awaiting immense success, review the five rules of Trump (and who said it better):