6 ms·

> It's simplistic but he's basically printing money. Upvoted you, but I disagree. This is classic survivorship bias. You see the 10% of cases where this works,

by dvt 3y ago

> It's simplistic but he's basically printing money. Upvoted you, but I disagree. This is classic survivorship bias. You see the 10% of cases where this works, and you don't see the 90% of cases where the owner goes into crippling debt, can't sell the land, can't sell the condos, or vacancies are at 50%+. There's no such thing as "printing money" in capitalistic markets and it's naïve to think there is. I'm not an efficient market hypothesis guy, but markets tend to be efficient. There are cases of problematic monopolies (e.g. telecom companies, energy distribution, steel, Google advertising, "too big to fail" banks, etc.) and maybe you could argue those actually do print money, but, imo, that's far and few in between.

waboremo 3y ago
Where are you getting 90% failure rate for those with access to enough wealth to easily sweep up $1m land + development costs for several buildings? I can buy that for average folk, as they often do not have the expertise (nor the wealth to access the expertise) necessary to make better decisions for their business. For those substantially wealthier, it doesn't really make sense but maybe you're privy to more sources here that I would love to dive into.
- deleted 3y ago
  [deleted]
- dvt 3y ago
  Maybe 90% is a bit dramatic, but the spirit of my post is that, even with $1m, you won't be printing money any time soon.
  - ethanbond 3y ago
    Yes you can and yes it is as simple and nearly foolproof as buying land. It takes a lot of stupidity and/or misfortune to lose money on real estate in a stable economy.
- _dain_ 3y ago
  Even when you own the land it's hard to get anything built. Planning permission, legal disputes, nimbys, nimbys, nimbys. Developers take on a lot of risk when they do this; they might end up owning a very pretty parcel of land that is a pile of shit in business terms, because they effectively aren't allowed to do anything profitable with it. Therefore, in the cases where it does work out, the profit is high. It has to be, to justify the whole thing. That's what "risk-adjusted rate of return" means. Btw this is why it's always "big developers" in the first place; they have to be big, because they have to spread out this risk over a large number of ventures, and have easier access to credit. Planning restrictions drives consolidation in the construction/real estate industry because it raises the level of risk above what smaller companies can endure. That's why it's so maddening to hear nimbys say they're opposed to profiteering big developers, and that loosening of planning regulations would be some kind of handout to them. Precisely the opposite is the case. They're unwitting agents of regulatory capture. Jeremy Clarkson's farm show is an accidental documentary about this. See here: https://twitter.com/NuclearBeacon/status/1630617164536332303 https://twitter.com/NuclearBeacon/status/1630617164536332303
  - waboremo 3y ago
    I'm still not seeing any sources to the high failure rates.
  - dmje 3y ago
    I think to be clear - firstly it's a hot topic in Cornwall not because of nimby-ism but because the developments are all pitched at hyper wealthy individuals, whether retirement individuals with £500k to spunk on a 1-bed per my example or people from outside the region who are buying holiday homes at similarly inflated values. I don't think anyone locally would say "don't build", instead it's "please build for locals" (where "local" = normal locally employed person). Secondly, my point is kind of more general. I think if anyone with reasonable intelligence were given £1m they could make fairly reasonable profits in fairly short time, possibly from land or maybe from other investments. Of course there are risky investment strategies that could easily see them losing the lot but in general I think you'd be hard pushed to not find some level of success given this initial starting point.
deleted 3y ago
[deleted]
Supermancho 3y ago
> This is classic survivorship bias. The analysis is not looking at the probability of the situation occurring (where survivorship would apply). The formula is applied, where it can be. The observation is pointing out the Success driving success paradigm in action.
- dvt 3y ago
  But there's plenty of cases where success drives failure (look at Bezos' Fire Phone as a low hanging fruit example, or more recently at Branson's Virgin Orbit), so, again, it's classic survivorship bias, as there are plenty of counter-examples.
  - Supermancho 3y ago
    > But there's plenty of cases where success drives failure That's a separate issue, under different conditions. Land development is the most common way to grow wealth, historically. It's mostly a matter of probability consideration and access to capital. It's not no-risk, but it's low risk until you start building.
    - dvt 3y ago
      > It's not no-risk, but it's low risk until you start building. Building is kind of.. the whole point. And risk profiles vary. For example, I'd rather build/invest in a startup rather than buying land where I may or may not be able to build anything profitable over the long term. Development also has a very long horizon, tying up liquidity in the process. Saying "just buy land bro, making money is ez" seems like a very TikTok Investor kind of take.
      - Supermancho 3y ago
        > Building is kind of.. the whole point. Land development is not limited to "build anywhere you can". Purchases of land for later resale, when armed with knowledge about likely events, is a common strategy. In cities, you often have to deal with municipal pressures to do more. Parking lots filled empty plots in southern california 1980s and since 2015ish the number of Car Washes in Fargo, ND has grown to 80... a cash business with minimal overhead and a flimsy construction, which does not have to cover the entirety of the plot. > Saying "just buy land bro, making money is ez" seems like a very TikTok Investor kind of take Just like interest on large amounts of liquidity, land ownership generates a meaningful passive income, over time. There's nothing trivial about it...unless you buy wasteland in Arizona (which many people hold).

by dvt 3y ago

waboremo 3y ago

Where are you getting 90% failure rate for those with access to enough wealth to easily sweep up $1m land + development costs for several buildings? I can buy that for average folk, as they often do not have the expertise (nor the wealth to access the expertise) necessary to make better decisions for their business. For those substantially wealthier, it doesn't really make sense but maybe you're privy to more sources here that I would love to dive into.

deleted 3y ago
[deleted]
dvt 3y ago
Maybe 90% is a bit dramatic, but the spirit of my post is that, even with $1m, you won't be printing money any time soon.
- ethanbond 3y ago
  Yes you can and yes it is as simple and nearly foolproof as buying land. It takes a lot of stupidity and/or misfortune to lose money on real estate in a stable economy.
_dain_ 3y ago
Even when you own the land it's hard to get anything built. Planning permission, legal disputes, nimbys, nimbys, nimbys. Developers take on a lot of risk when they do this; they might end up owning a very pretty parcel of land that is a pile of shit in business terms, because they effectively aren't allowed to do anything profitable with it. Therefore, in the cases where it does work out, the profit is high. It has to be, to justify the whole thing. That's what "risk-adjusted rate of return" means. Btw this is why it's always "big developers" in the first place; they have to be big, because they have to spread out this risk over a large number of ventures, and have easier access to credit. Planning restrictions drives consolidation in the construction/real estate industry because it raises the level of risk above what smaller companies can endure. That's why it's so maddening to hear nimbys say they're opposed to profiteering big developers, and that loosening of planning regulations would be some kind of handout to them. Precisely the opposite is the case. They're unwitting agents of regulatory capture. Jeremy Clarkson's farm show is an accidental documentary about this. See here: https://twitter.com/NuclearBeacon/status/1630617164536332303 https://twitter.com/NuclearBeacon/status/1630617164536332303
- waboremo 3y ago
  I'm still not seeing any sources to the high failure rates.
- dmje 3y ago
  I think to be clear - firstly it's a hot topic in Cornwall not because of nimby-ism but because the developments are all pitched at hyper wealthy individuals, whether retirement individuals with £500k to spunk on a 1-bed per my example or people from outside the region who are buying holiday homes at similarly inflated values. I don't think anyone locally would say "don't build", instead it's "please build for locals" (where "local" = normal locally employed person). Secondly, my point is kind of more general. I think if anyone with reasonable intelligence were given £1m they could make fairly reasonable profits in fairly short time, possibly from land or maybe from other investments. Of course there are risky investment strategies that could easily see them losing the lot but in general I think you'd be hard pushed to not find some level of success given this initial starting point.

deleted 3y ago

[deleted]

Supermancho 3y ago

> This is classic survivorship bias. The analysis is not looking at the probability of the situation occurring (where survivorship would apply). The formula is applied, where it can be. The observation is pointing out the Success driving success paradigm in action.

dvt 3y ago
But there's plenty of cases where success drives failure (look at Bezos' Fire Phone as a low hanging fruit example, or more recently at Branson's Virgin Orbit), so, again, it's classic survivorship bias, as there are plenty of counter-examples.
- Supermancho 3y ago
  > But there's plenty of cases where success drives failure That's a separate issue, under different conditions. Land development is the most common way to grow wealth, historically. It's mostly a matter of probability consideration and access to capital. It's not no-risk, but it's low risk until you start building.
  - dvt 3y ago
    > It's not no-risk, but it's low risk until you start building. Building is kind of.. the whole point. And risk profiles vary. For example, I'd rather build/invest in a startup rather than buying land where I may or may not be able to build anything profitable over the long term. Development also has a very long horizon, tying up liquidity in the process. Saying "just buy land bro, making money is ez" seems like a very TikTok Investor kind of take.
    - Supermancho 3y ago
      > Building is kind of.. the whole point. Land development is not limited to "build anywhere you can". Purchases of land for later resale, when armed with knowledge about likely events, is a common strategy. In cities, you often have to deal with municipal pressures to do more. Parking lots filled empty plots in southern california 1980s and since 2015ish the number of Car Washes in Fargo, ND has grown to 80... a cash business with minimal overhead and a flimsy construction, which does not have to cover the entirety of the plot. > Saying "just buy land bro, making money is ez" seems like a very TikTok Investor kind of take Just like interest on large amounts of liquidity, land ownership generates a meaningful passive income, over time. There's nothing trivial about it...unless you buy wasteland in Arizona (which many people hold).