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If I understand your back of the envelope estimate, you believe he had a 650% return on investment. It seems far more likely that some of your assumptions are w
by JackFr 3y ago
If I understand your back of the envelope estimate, you believe he had a 650% return on investment. It seems far more likely that some of your assumptions are wrong.
Regardless, assume this guy had couple of million pounds — building the flats is a productive use of the capital. We know that because he sold them at a profit. That means buyers valued the output more than the cost of the inputs. That is good.
(I understand that markets are not perfect, and monopolists, monopsonists and rent seekers can make profits without creating value, and I agree that is bad. But the fact that an enterprise is profitable is not a bad thing.)
- ForHackernews 3y ago> We know that because he sold them at a profit. That means buyers valued the output more than the cost of the inputs. That is good. This is a very naive interpretation. Perhaps (maybe even more likely) the value of the land skyrocketed according to rising demand, regardless of the capital invested in building flats. They could have built single-family homes, or a parking lot, or even nothing at all and still profited handsomely. Please read up on Georgism, land value tax (LVT) and ground-rents: https://www.strongtowns.org/journal/2020/1/16/the-power-of-the-land-value-tax https://www.strongtowns.org/journal/2020/1/16/the-power-of-t...