Loading article…
Let's talk
Your next chapter can start today.
Tell me what you have in mind and I will get back to you.
Loading article…
Loading article…
Loading article…
Let's talk
Tell me what you have in mind and I will get back to you.
Investment
Real estate investing often comes with attractive numbers.
Projected returns. Expected appreciation. Estimated rent. Projected occupancy. A market that is “growing.” An opportunity that supposedly needs to be seized before prices change.
Numbers are necessary. Projections are too.
The problem begins when we stop treating them as assumptions and start treating them as promises.
An investment should not be evaluated by asking only how much it could produce.
There is an earlier question:
What has to be true for this investment to work?
That is where a much more useful analysis begins.
A projected percentage can help compare opportunities.
A guaranteed percentage should raise questions.
Too many variables affect a real estate investment to reduce the analysis to a single number: entry price, financing, ownership costs, demand, liquidity, time, rent, occupancy, and future exit conditions.
That is why, instead of starting with the return, it is better to start with its structure.
If someone projects a certain return, we can ask:
Then the percentage stops being a promise and becomes something much more useful:
a hypothesis we can examine.
A projection is useful for modeling a possibility. Not for eliminating uncertainty.
Saying that “the market is strong” tells us very little about a specific investment.
A property’s performance depends on the submarket in which it competes.
A city can have healthy residential demand while certain buildings, ZIP codes, price ranges, or product types accumulate inventory.
Even within the same area, different markets can coexist.
That is why, before projecting what might happen with a property, we need to understand who actually participates in that market.
Not who could buy.
Who actually buys.
Local residents, second-home buyers, investors, international buyers, or another particularly dominant segment.
The more dependent a product is on a specific group, the more important it becomes to understand what supports that group’s demand.
A property can have value and still be difficult to sell quickly.
Those are two different things.
It is worth looking at how many comparable properties sell, how long they take to sell, how much inventory exists, and how many buyers appear to participate regularly in that segment.
The exit is part of the investment even if we have no intention of selling anytime soon.
A highly specialized product may offer extraordinary advantages to the right buyer.
It may also have fewer potential buyers.
That does not automatically make it a bad investment.
It simply changes its liquidity profile.
Location matters. But when investing, it matters even more to understand how the market within that location actually works.
Real estate lends itself exceptionally well to storytelling.
Architecture.
Lifestyle.
Amenities.
Design.
A recognized brand.
An emerging neighborhood.
A spectacular waterfront terrace.
All of these can add value.
But they can also make it more difficult to distinguish between what we are buying and the story being used to sell it.
A simple way to separate the two is to temporarily remove the narrative.
Suppose we remove the renderings, promotional video, lifestyle imagery, and marketing description.
We are left with considerably less glamorous questions:
Where is it?
How much does it cost?
What exactly are we buying?
How much does it cost to own and maintain?
What restrictions does it have?
Who else offers something similar?
Who might want to buy it later?
An extraordinary amenity can enhance a good product.
It cannot indefinitely compensate for a weak location, disproportionate costs, or a price that already incorporates overly optimistic expectations.
The narrative should explain the product.
Not replace it.
There is an important difference between identifying a good asset and identifying a good investment.
A property can be well located, have excellent architecture, offer distinctive features, and maintain reasonable demand.
That does not mean it makes sense to buy it at any price.
Price determines how much of the future opportunity we are paying for today.
If the thesis requires significant appreciation simply to justify the entry price, it is important to understand that.
If a comparable completed property can be purchased for less, it is worth understanding why.
If there is a significant premium over the submarket, we should be able to identify what supports it.
The question is not:
“Is this a good property?”
The question is:
“Is this a good property at this price?”
Those are different analyses.
Talking about risk does not mean assuming that something will go wrong.
It means recognizing which variables can change the outcome.
And different types of real estate investments carry different risks.
Supply, demand, interest rates, and access to credit change.
An investment that requires especially favorable conditions for several years deserves a different analysis from one that can work across a broader range of scenarios.
With new construction, there is a period of time between the decision to buy and the actual availability of the asset.
That period introduces variables: permits, construction, potential delays, financing conditions, and a market that may look different by the time the property is delivered.
HOA fees, property taxes, insurance, maintenance, and management are not details to consider after the purchase.
They are part of the economics of the asset.
Owning several properties does not necessarily mean being diversified.
If they all depend on the same submarket, the same buyer profile, or similar economic conditions, concentration exists even when there are multiple assets.
When the thesis depends on rental income, projected figures need context.
What rent is realistically achievable?
For how long?
At what occupancy level?
Under what restrictions?
With what competition?
And after which costs?
Naming a risk does not weaken an investment. It allows us to understand what we are accepting when we make it.
Suppose a property performs very well at 80% occupancy.
That is information.
Now lower the occupancy.
Increase insurance costs.
Assume no property appreciation for several years.
Extend the time required to sell.
Or delay delivery.
What happens?
The point is not to deliberately construct the worst possible scenario.
It is to determine how much the investment depends on all the important variables behaving as expected.
A more resilient thesis can absorb some deviations and still make sense.
A fragile thesis requires almost everything to unfold according to the original scenario.
That difference may be more important than a few additional tenths of a percentage point in projected returns.
When we find an attractive property, our attention naturally focuses on buying.
Price.
Deposit.
Financing.
Closing.
But an investment also has another potential transaction in the future.
The exit.
We do not know exactly when it will happen or what market conditions will look like when that moment comes.
But there is something we can analyze today:
Who might want this asset after us?
If the answer depends on an extremely small group of buyers, that is useful information.
If there are many virtually interchangeable properties within the same building or area, that is useful information too.
If the product has characteristics that maintain broad appeal, that also matters.
We do not need to predict the future buyer.
We need to understand the depth of the market we may eventually need to re-enter.
New construction can have a perfectly valid place within an investment strategy.
But “new” is not an investment thesis.
In some cases, there may be an interesting opportunity because of the payment structure, product characteristics, location, timing of entry, or potential future scarcity.
In others, an existing property may offer a better price, observable cash flow, a documented expense history, and immediate availability.
And sometimes the best decision may be not to buy yet.
That is why the analysis should not begin with:
“Which new construction project should we buy?”
It should begin with:
“What are we trying to accomplish with this capital?”
Then we can compare the alternatives.
If new construction wins that comparison, it becomes part of the thesis on its own merits.
Not by default.
A real estate investment does not need a perfect story.
It needs a structure we can understand.
That means separating projections from promises, studying submarket liquidity, distinguishing product from narrative, understanding the entry price, and naming the risks.
Then come the specific properties.
That is also the starting point when I work through an investment with you.
First, we structure the thesis:
what you want to accomplish, how long it makes sense to keep the capital committed, which risks you are willing to accept, and which assumptions the outcome would depend on.
Then we filter out the noise.
And finally, we evaluate real options — new construction, existing properties, or even the decision to wait — against that thesis.
Because the objective is not to find the property with the most attractive percentage in a presentation.
Investment
Real estate investing often comes with attractive numbers.
Projected returns. Expected appreciation. Estimated rent. Projected occupancy. A market that is “growing.” An opportunity that supposedly needs to be seized before prices change.
Numbers are necessary. Projections are too.
The problem begins when we stop treating them as assumptions and start treating them as promises.
An investment should not be evaluated by asking only how much it could produce.
There is an earlier question:
What has to be true for this investment to work?
That is where a much more useful analysis begins.
A projected percentage can help compare opportunities.
A guaranteed percentage should raise questions.
Too many variables affect a real estate investment to reduce the analysis to a single number: entry price, financing, ownership costs, demand, liquidity, time, rent, occupancy, and future exit conditions.
That is why, instead of starting with the return, it is better to start with its structure.
If someone projects a certain return, we can ask:
Then the percentage stops being a promise and becomes something much more useful:
a hypothesis we can examine.
A projection is useful for modeling a possibility. Not for eliminating uncertainty.
Saying that “the market is strong” tells us very little about a specific investment.
A property’s performance depends on the submarket in which it competes.
A city can have healthy residential demand while certain buildings, ZIP codes, price ranges, or product types accumulate inventory.
Even within the same area, different markets can coexist.
That is why, before projecting what might happen with a property, we need to understand who actually participates in that market.
Not who could buy.
Who actually buys.
Local residents, second-home buyers, investors, international buyers, or another particularly dominant segment.
The more dependent a product is on a specific group, the more important it becomes to understand what supports that group’s demand.
A property can have value and still be difficult to sell quickly.
Those are two different things.
It is worth looking at how many comparable properties sell, how long they take to sell, how much inventory exists, and how many buyers appear to participate regularly in that segment.
The exit is part of the investment even if we have no intention of selling anytime soon.
A highly specialized product may offer extraordinary advantages to the right buyer.
It may also have fewer potential buyers.
That does not automatically make it a bad investment.
It simply changes its liquidity profile.
Location matters. But when investing, it matters even more to understand how the market within that location actually works.
Real estate lends itself exceptionally well to storytelling.
Architecture.
Lifestyle.
Amenities.
Design.
A recognized brand.
An emerging neighborhood.
A spectacular waterfront terrace.
All of these can add value.
But they can also make it more difficult to distinguish between what we are buying and the story being used to sell it.
A simple way to separate the two is to temporarily remove the narrative.
Suppose we remove the renderings, promotional video, lifestyle imagery, and marketing description.
We are left with considerably less glamorous questions:
Where is it?
How much does it cost?
What exactly are we buying?
How much does it cost to own and maintain?
What restrictions does it have?
Who else offers something similar?
Who might want to buy it later?
An extraordinary amenity can enhance a good product.
It cannot indefinitely compensate for a weak location, disproportionate costs, or a price that already incorporates overly optimistic expectations.
The narrative should explain the product.
Not replace it.
There is an important difference between identifying a good asset and identifying a good investment.
A property can be well located, have excellent architecture, offer distinctive features, and maintain reasonable demand.
That does not mean it makes sense to buy it at any price.
Price determines how much of the future opportunity we are paying for today.
If the thesis requires significant appreciation simply to justify the entry price, it is important to understand that.
If a comparable completed property can be purchased for less, it is worth understanding why.
If there is a significant premium over the submarket, we should be able to identify what supports it.
The question is not:
“Is this a good property?”
The question is:
“Is this a good property at this price?”
Those are different analyses.
Talking about risk does not mean assuming that something will go wrong.
It means recognizing which variables can change the outcome.
And different types of real estate investments carry different risks.
Supply, demand, interest rates, and access to credit change.
An investment that requires especially favorable conditions for several years deserves a different analysis from one that can work across a broader range of scenarios.
With new construction, there is a period of time between the decision to buy and the actual availability of the asset.
That period introduces variables: permits, construction, potential delays, financing conditions, and a market that may look different by the time the property is delivered.
HOA fees, property taxes, insurance, maintenance, and management are not details to consider after the purchase.
They are part of the economics of the asset.
Owning several properties does not necessarily mean being diversified.
If they all depend on the same submarket, the same buyer profile, or similar economic conditions, concentration exists even when there are multiple assets.
When the thesis depends on rental income, projected figures need context.
What rent is realistically achievable?
For how long?
At what occupancy level?
Under what restrictions?
With what competition?
And after which costs?
Naming a risk does not weaken an investment. It allows us to understand what we are accepting when we make it.
Suppose a property performs very well at 80% occupancy.
That is information.
Now lower the occupancy.
Increase insurance costs.
Assume no property appreciation for several years.
Extend the time required to sell.
Or delay delivery.
What happens?
The point is not to deliberately construct the worst possible scenario.
It is to determine how much the investment depends on all the important variables behaving as expected.
A more resilient thesis can absorb some deviations and still make sense.
A fragile thesis requires almost everything to unfold according to the original scenario.
That difference may be more important than a few additional tenths of a percentage point in projected returns.
When we find an attractive property, our attention naturally focuses on buying.
Price.
Deposit.
Financing.
Closing.
But an investment also has another potential transaction in the future.
The exit.
We do not know exactly when it will happen or what market conditions will look like when that moment comes.
But there is something we can analyze today:
Who might want this asset after us?
If the answer depends on an extremely small group of buyers, that is useful information.
If there are many virtually interchangeable properties within the same building or area, that is useful information too.
If the product has characteristics that maintain broad appeal, that also matters.
We do not need to predict the future buyer.
We need to understand the depth of the market we may eventually need to re-enter.
New construction can have a perfectly valid place within an investment strategy.
But “new” is not an investment thesis.
In some cases, there may be an interesting opportunity because of the payment structure, product characteristics, location, timing of entry, or potential future scarcity.
In others, an existing property may offer a better price, observable cash flow, a documented expense history, and immediate availability.
And sometimes the best decision may be not to buy yet.
That is why the analysis should not begin with:
“Which new construction project should we buy?”
It should begin with:
“What are we trying to accomplish with this capital?”
Then we can compare the alternatives.
If new construction wins that comparison, it becomes part of the thesis on its own merits.
Not by default.
A real estate investment does not need a perfect story.
It needs a structure we can understand.
That means separating projections from promises, studying submarket liquidity, distinguishing product from narrative, understanding the entry price, and naming the risks.
Then come the specific properties.
That is also the starting point when I work through an investment with you.
First, we structure the thesis:
what you want to accomplish, how long it makes sense to keep the capital committed, which risks you are willing to accept, and which assumptions the outcome would depend on.
Then we filter out the noise.
And finally, we evaluate real options — new construction, existing properties, or even the decision to wait — against that thesis.
Because the objective is not to find the property with the most attractive percentage in a presentation.