Morgan

I have been reading a bit lately about the prices of solar. Basically the price to build a solar farm with some battery backup has now fallen below the cost of building a new coal fired plant. Now the economics are in solar's favor, which is good, but it leads me to the question of how much will a solar farm built today, be worth in 20 years? Let’s say a $10m solar farm is built with a 20 year contract signed by the utility provider to buy electricity. At the end of the 20 year contract, some maintenance will have been done on the solar farm, and presumably it will have been a profitable investment. But I am concerned about the value of the asset for the years 20-40. Presumably solar and battery technology will improve dramatically over the next 20 years. The 20 year old solar farm will be using outdated technology, and will have a substantially lower ability to generate revenue compared to solar farms with the new technology, thus the value of the asset goes down correct? If we compare this to a newly constructed $10m apartment building, it will need maintenance (likely more than a solar farm), but it will almost certainly have increased in value over 20 years. Other than being a goody two shoes, why would someone invest in utility scale solar farms now? Please let me know where I have made a mistake! Some interesting info: https://www.youtube.com/watch?v=Yl0VtxAbt40 https://www.nrel.gov/docs/fy21osti/77324.pdf https://rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/

Want to sell your CRV?

Do not buy a Hyundai. My wife and I just bought a used 2012 Hyundai Sonata Hybrid for $10,600 with 90,000 miles. Exactly 15 days later the gas engine seized up and needs to be replaced at a cost of $10,000. No joke. There is a class action lawsuit about these engines, and we're still fighting with the dealership/Hyundai to get them to approve the repair. Even if they pay, it'll take 8 more weeks from approval for it to be completed. I have a 2006 Prius that has been great. Next time I'm just going to buy another Prius. I'm never buying another Hyundai.

My wife and I are thinking of building a house and if we do, I think we’ll use solar to power our passivhaus. From what I’ve read, a passivhaus if built correctly uses 90% LESS energy than a traditionally built house in the US. 90% less energy demand means smaller heating and cooling equipment (or none and just use an EVR or HVR), and thus a smaller and cheaper solar panel system to power it all.

Wow. Definitely sounds like bad deal as you stated. Good luck to that guy selling it. I’ve talked to a few restaurant owners locally and they said you need to own the property to be successful long term. Any economic success you have will be taken by the landlord in rent increases. 100% up selling the establishment is classic too. “The sales are artificially low.” Lol. Come on. If the bar could be profitable in the morning the current owner would have done it himself. As a side note, misrepresenting rent rolls in apartment buildings is very common in offering memorandums as well. Recently I saw one saying NOI was 800k and my quick analysis showed a 400k NOI. They simply didn’t include 400k of expenses. It was ridiculous. PS - Perhaps I was too harsh in my previous reply, as lots of bars have been successful for long periods of time so maybe this one could be too. Bar ownership just isn’t for me.

Except with certain specific equipment, the newest and best equipment is probably not such a large benefit in an equipment rental business. As long as the equipment is reliable, is available to rent that day, and is a competitive price, it’s probably good enough. Large cranes used for a technical part of a skyscraper or something might be a different story. I’m not knowledgeable about that specifically. Basically all the equipment you’d need to use the build a housing development or mall is just a commodity in my opinion. Reliability, availability and price are the determining factors.

I went to party college and every summer most of the bars/clubs would close and change owners or names for the new year. Only two were mainstays and survived over my years of school. One of the mainstays was still in business a number of years after I graduated, but half of it had been converted into an arcade (which was packed when I was there). I couldn’t imagine owning a bar myself to be honest. All kinds of HR issues between bouncers and waitresses and other issues. What if a bouncer beats some kid half to death? Theft from every angle from employees and customers. Fights in the bar. It’s so easy for a bartender to give a free drink out even if you are there but on the other side of the room. Lastly, I didn’t particularly enjoy the bars and clubs when I was in college so now I wouldn’t really want to be in them every night and being around all that BS. Owning a classy jazz bar on the other hand might be nice (maybe). Are college bars profitable over a 3-5-10 year span? It seems like the build out for a basic bar would be fairly expensive. It seems like a lot of owners want a place to be the “big man” and party and show off to the girls. If that’s what your goal is, then it would likely work well for as long as you can keep it going. What kind of moat can you have with a college bar? Location and the lowest price possible? College students have zero loyalty to any specific bar. As far as I know, bars aren’t particularly scalable. Restaurant/bar yes, but bar only? I’m not sure. I should add, my investing has been in apartment buildings so I’m used to doing lots of renovations at the beginning, renting it up, then not spending much time or energy there (within reason) and moving on to the next project.

OMG - Maybe it’s time to sell all my real estate!! This is insane!

Looks like opportunity to me. Within reason, I’ll buy almost any piece of property at the right price. Especially large collections like this. Buy it all, improve it and turn it around. If the current owners optimistically purchased these buildings at 2-3x what the rents will realistically support, they will have to pay for the mistake through long term vacancies or selling at a loss. Eventually they’ll be forced to be rational.

Poorvu was one of the original investors in the Baupost Group. Poorvu wrote a 4-5 real estate books and I believe is a professor at Harvard. You should read all of his books and see if he’s written any papers. I agree with what the others have said. Study what things are selling for in the market you're interested in and eventually you’ll find a deal that you think is good. I’ve been investing in real estate for 15 years now and have looked at hundred of deals and only purchased 12 properties. In other words, 95% of the properties I looked at weren’t attractive enough for me to buy. Everyone in RE wants you to buy and sell. They don’t care if you go broke from owning the property. Their incentives aren’t aligned with yours to buy attractive property, but only to generate commissions for themselves. Realtors/brokers are a necessary part of RE, and there are good people in those businesses, but listen to your own analysis. If the deal is so good, why wouldn’t the realtor or broker buy it? Cheers and good luck!

Could you share any book titles about Lloyd's?

When hiring for my company, it’s been more difficult to find employees and we need to pay higher wages just to get them to start, then give raises to keep them. It seems like everyone is strapped for workers, so wages are going up. Typically 25%-50% higher for the same positions as last year. Excluding lumber which is up 3x, basically everything from wire nuts, to Egg McMuffins, to Pepsi, HVAC parts, to anything and everything else is up at a minimum 10% and most up 15% or more. My city just raised water prices by 45% too (oh joy). Fortunately though, because all of my competitors are facing similar cost increases, we’re all raising our prices so it’ll even out on our end.

I really like Acquired. I’ve listened to all of them while commuting. They have a long backlog as well. Primarily focused on tech companies and their history, but it’s good and the audio quality is good too.

It might be one of those neighborhoods where they pay a seemingly crazy price for an old shed like this, tear it down, and build and sell a McMansion for 4x the price. Maybe this seller will flip a few sheds and then have enough cash to build a McMansion.

I bet this sells. Looks like it has new lipstick on the pig, and has a decent sized yard from the pictures. Someone who doesn’t know anything about buildings will buy it. I’m glad I don’t need to spend 400k for something like that where I live.

Another excellent one!

I remember the issue of paying for entry was brought up maybe ten years ago and it didn’t happen. I would probably pay now that I’m not in college and broke, but I’d prefer not to. I think having the site for free with some ads, plus affiliate links, and a donation button is a good balance. I know the internet is changing from everything is free, to pay for access, but I think this is a bad trend in general. For what it’s worth, I don’t think many young people would join if they had to pay, and over time this would damage the site. Pay to enter would likely also reduce the number of infrequent posters, who over time add a different viewpoint. Just my two cents. I say no pay, plus have ads, affiliate links, and a donation button.

I enjoyed the transcription of the talk as well. I really enjoy basically anything Bruce Greenwald and Li Lu write or say. The Dollar General book is a new one for me, but I’ve read the others. Lots of good info in them. Titan is very good (every Chernow book I’ve read has been excellent). Another interesting, and perhaps more of an opposite view is Ida Tarbell’s, The History of The Standard Oil Company.

It’s up to a $1.37 now! I have prime so free shipping too. Something must be wrong on the amazon site for a relatively new book to be priced like this. Anyways, it’s hard to resist at this price.

I’m interested in the reviews as well. It’s a little expensive to buy with limited info. Although at 750 pages, it’s likely to be filled with a lot of good info.

Awesome thanks!

Congrats on all the work you’ve done to get the new site up. It looks good!

Why is the SSA disinclined to get people off the rolls? I live in WV and a lot of people here are on disability and I think it’s really a problem. Sometimes the entire family, even the young kids, will be on some kind of government disability plan and between the 3-5 people they’ll make a nice little bundle. Some people surely need disability, but many look like they’re cheating the system. I suppose the only thing to do is make it harder to get and review edge cases. there is a certain mentality, prevalent imo at SSA and many other areas of our society/culture, that moving people off the dole and into self-agency and individual responsibility is a bad thing...that people are entitled to their entitlements. the other view is that this the worst thing for people...cf fishes v fisherman Hmm. That very well may be true. This kind of thinking leads to a Beggars in Spain type situation. In my view, and yours is probably similar, the percentage of people on government programs relative to the population would hopefully decline over time. Recipients should use the time to improve them selves so as to provide for themselves at some point. Some recipients of course are permanently disabled and we should help them. Do you think there’s a way to change the culture around government programs so a smaller percentage of people use them over time?

Actually, I think you can say he is, at this point. Maybe an unconventional path to get there, but as lead rocket designer for SpaceX, and based on any reports I could see from people around him, he can hold his own with rocket engineers no problem. Nobody knows everything, but to pretend he doesn't know what he's doing and isn't a real rocket guy just because he didn't have some piece of paper or some job with some title at Boeing before this seems missing the forest for the trees to me. Self-education is still education, and doing is better proof of competence than diplomas. Yea, if he said something stupid about satellites it's most likely because he was simplifying for an audience. When the Falcon 1 reached Space it put Elon in an extremely elite group of people who'd created a privately funded orbital launch system, right now its Rocket Lab Electron, Northrop Minotaur, then you have a couple of tiny air launched vehicles form Virgin Orbit and Northrop Pegasus. Bezos has spent many billions and hasn't come close to orbit, barely reaching 1/10th the necessary velocity with a sub-orbital toy. Since then he's helped lead the design choices that created 1) The worlds leading launch system Falcon 9 that dramatically cut the cost of space access by ... choosing to use ten engines per launch. Yes, Falcon 9 was far cheaper than the competition before reusability because of the decision to design with a liquid fuel engine sized for mass manufacture. It's also cheaper because he didn't make the costly mistake so many others did (Arianespace, SLS, ULA) in adding solid boosters, or using a poor fuel as hydrogen as the first stage propellant. 2) Only then did his team master hypersonic retropropulsion to enable first stage re-use and recovery, using both RTLS and recovery ships. It's the first time cost effective re-use has ever been done for space launch. 3) Then he built the worlds biggest active rocket, the Falcon Heavy. 4) And now they are building the world first fully re-usable launch system, Starship. If you compare the design decisions between the Space Shuttle and Starship, you'd have to conclude Elon is a genius just from those. a) Using identical engines for both stages means they can be efficiently mass manufactured. The Shuttle SRBs were $70M each, and it's Hydrogen engines were $75M each (double that now for SLS), Raptors will cost less than $1M each. b) No expensive solid rocket boosters b) No heavy hydrogen tanks and engines, instead burning dense methane that fits in smaller, lighter tanks and doesn't evaporate over time like hydrogen does. c) No expensive fragile materials like the Shuttle heat tiles and it's aluminum frame, just super cheap stainless steel with much higher heat resistance with carefully located heat shield material on hot spots that can be easily replaced. d) No massive single stage stack to reach the Moon or Mars, instead cheap refueling in low orbit significantly increases velocity (shortening interplanetary trips) and allows for delivering much larger ($100 ton+) payloads. e) The robust heat resistance allows for aerobraking into Mars, saving huge amounts of fuel and again substantially increasing tonnage of payload landed. f) Methane can be made anywhere in the solar system, especially on Mars. This saves another massive amount of launch fuel and increases payloads yet again. 5) Oh, and there is Starlink. There were discussions of satellite constellations before but Musk is actually making this happen. Test results have been fantastic, as has launch cadence. Elon has literally put more satellites into space than anyone on this planet at this point, so I'm going to guess he knows a bit about how they work even if his real focus is launch systems and manned exploration of Mars. Musk may say idiotic things on a regular basis, but as a rocket designer he's neck and neck with Von Braun as the greatest in world history. The world is full of rocket engineers who've made grand plans and done nothing, and lots of them work at Boeing turning government dollars into nothing but pork. I agree with everything you’ve written and will also add that Starlink is probably going to make Elon one of the wealthiest people this century. It’s going to be hugely successful. So many areas basically have a government sponsored monopoly (and terrible) ISP. It’s past time for a step change so everyone can get excellent internet for a cheap price.

Why is the SSA disinclined to get people off the rolls? I live in WV and a lot of people here are on disability and I think it’s really a problem. Sometimes the entire family, even the young kids, will be on some kind of government disability plan and between the 3-5 people they’ll make a nice little bundle. Some people surely need disability, but many look like they’re cheating the system. I suppose the only thing to do is make it harder to get and review edge cases.