Morgan

Donald Bren is pretty interesting. He is the richest real estate developer in the US with a net worth of $15 billion. He bought 10,000 acres in the southern California boonies in 1963 and then built a 250,000 person city in the coming decades. Another huge stroke of luck was when his company was purchased for $34m in 1970 and sold back to him two years later for $22m. I mean come on... how much better could that get? An extra $12m to grow your company? That's just incredibly lucky. That being said, you still have to execute very well to grow that large. Anyways, later he and some partners bought the Irvine company that had another 100,000 acres to develop on. He is very secretive and not much is known about his company. Supposedly he has 500 office properties, about 50 shopping centers and at least 50,000 apartments. He has gotten mostly good press from what I have seen except some negative press from the OC Weekly. See some of the links below: http://www.ocweekly.com/news/donald-brens-highway-robbery-6420022 http://www.ocweekly.com/news/web-extra-the-real-donald-bren-with-commentary-6477118 http://media.ocweekly.com/6016594.0.jpg

While I do agree that it is certainly possible to get quite wealthy/rich from real estate, it is much less common (it seems) to become a real estate billionaire than other industries. Most of the billionaires are builders and there don't seem to be many who get it from inflation alone. There may be some who have bought and held who have become billionaires. There are a large number of Hong Kong and China real estate billionaires. They mostly have come from the same generation and are now 65-80 years old or so. This type of thing isn't likely to happen in the US as far as I can tell. Perhaps on a very small scale in the shale oil rush areas. That's a big maybe. The NYC and HK/China massive return scenarios will happen again, but the question is where? I would guess parts of India, Africa and Brazil. Africa (and that is a broad generalization) is probably at the lowest point of this relative the other places and India seems like the safest place in terms of stability, government and growth. There is opportunity in many, many places for real estate, you just gotta go out and do it! Great! I just ordered it and am looking forward to reading it.

I think part of it is the private nature in general of real estate investing compared to investing in publicly traded companies. There are of course publicly traded real estate instruments. There are a number of real estate investors on this board; DTEJD1997, ragnarisapirate, myself, and probably a few others, but mostly we're fairly small operators. Probably all under $10m in real estate assets. I may be wrong on the size part. The real estate investors who are huge probably don't have time to or desire to post here. Again, I may be wrong on that too. All that being said there are a number of great books on real estate: - All of William J. Poorvu's books are good - King of Capital by David Carey - Other People's Money by y Charles V. Bagli - The Reichmans by Anthony Bianco looks pretty good, but I haven't read it There are probably other good ones, but I haven't read them.

Did you read it? If so, how was it? On amazon it has quite a few bad reviews. I ordered, but would like to know what you think of it.

Assuming it's Bonal, how would you go about financing the deal? I'm just curious. Say you buy it for $5m, use the $1m cash on the balance sheet to pay down part of the debt, that leaves $4m more to come up with. Then raise $1m cash and then borrow $3m. The company makes (averaging the last three years before income taxes) 361k/yr. The debt load for $3m at 4% for 15 years (those may not be realistic terms) per year would be ~254k leaving 107k/yr before taxes. As a theoretical investor putting money into the $1m fund, the company making only ~100k/yr after the buyout, seems quite low. Particularly as the volatility in the earnings in the last five years or so. A change in the revenue by a small percentage or earnings would have pretty drastic effect on the net income and returns. Not long ago, it was trading for about $2.6m in market cap. Currently it's at $4.54m market cap. The earnings have been quite volatile, having gone from $4k (yes $4,000.00 - not $4 million) in 2010 and 510k in 2011 and then a more reasonable 132k to 443k in 2014 and 2015. Is there a better way to structure the deal to reduce risk and increase the profits? A better question to ask may be, is $5m a good price to pay for the company?

Just to be annoying, he lives in or around Detroit, Michigan or Houston, Texas based on his other posts. So it's a publicly traded company with a market cap under 5m within 15 miles of Detroit or Houston. Anyone have a good screener?

Thanks!

I've been looking over the years for information on Sam Zell and haven't been particularly successful on how he got his start in real estate and what happened for the next 5-10-20 years after that. Does anyone have a summary of what he has done and why he has been so successful?

The above photos are just absolutely ridiculously amazing. Elon and Space X are totally changing the world.

I sometimes have wondered for my company how far down this kind of culture needs to be pushed to (hopefully) make a company more efficient, more prompt and more professional overall. What things do need to be stressed and what things don't. It sounds strange sort of, but if it works for some people and you can hire them and they thrive on it, it can certainly beneficial for both the company and employee.

I don't believe he goes through a list, at least not publically. He probably had a list at some point, but he probably remembers everything on it. It's just part of his immediate thought process now. If he did have a list I wish he would share it more explicitly. Like dabuff said, Farnam Street seems to have the best list of Mental Models online.

I really like that list. Have you thought about having others write on the unwritten topics and you acting as the editor? PS - I'm a long time fan of the site.

I've never seen a list with everything written out and explained, but I have seen a list with some explanations from Farnam Street. This is the most complete list I've found. https://www.farnamstreetblog.com/mental-models/ Poor Charlie's Almanack has an updated version of The Psychology of Human Misjudgement speech in it as well as 10 other speeches and lots more information. It's probably one of the best books I've purchased in the last 10 years. If you're interested in mental models, you should get the book.

The link isn't working for me. Anyone have another link or the PDF?

Do you have a link?

From the statement: https://theranos.com/news/posts/statement-from-theranos "The Journal even declined an opportunity to experience the technology themselves by turning down our offer to send proprietary Theranos devices to their offices so they could have a demonstration of tests conducted themselves, and compare the results to those of other testing providers." If that is true, the Journal may have messed up pretty big. It may be an attempt to draw out how Theranos does their work by essentially forcing them to show more details the processes. If Theranos is actually able to do what they state, and I hope they can, they will make the world much, much better.

This is also what I have heard from talking to people who have MBAs from Columbia and Harvard. It's great for building a solid network, credibility, etc, but they weren't sure they learned a huge amount that was really as useful as self-study/work experience. Also, they said unless you go to a top five school, it's very likely not worth it. I'm planning on trying to get an MBA myself so all of these threads are interesting to read over.

Woah, that came out of nowhere. Looks pretty cool.

Uploaded a case study for GGP. It really helped me get a general picture of how bankruptcies work. Ackman and Pershing probably made 50x their money. Thanks to Dougishere for the suggestion! www.raritancapital.com/casestudy/ggp/ The GGP case study was really great. I read it over the weekend. I think Ackman said his investors made about 130x on the GGP investment. I think it was from a Charlie Rose interview after the JcPenny debacle. Either way, 50x or 130x, it's hard to complain.

That's just what I was thinking. That article isn't exactly doing wonders for his reputation.

I'm just curious, why do you want to get an MBA to get into real estate investment/development? From what you've posted here it seems like you've got architecture/construction experience? Is there some reason you feel you need an MBA as opposed to starting a RE investment company and building it up? I completely understand you'd want to get an MBA regardless. Also, congratulations on getting into Oxford!

I read the book too and really, really enjoyed it. I actually had only been to Starbucks a handful of times and never enjoyed the experience, but after reading it I went back to see what I was missing. I found a drink I like, but it's $4-5 and McDonald's has the same drink for $2.50-3. And for some reason the Starbucks drink (from multiple locations) tasted like chemicals, which was really weird. The same drink from Joe Mugs in Books-A-Million was the best of all the places I tried, but it's a ways away. When I think about Starbucks, I can see how Shultz could grow it and also be so profitable, but at the same time it seems like such a bad value to me with the highest price and worst product. I guess everyone else likes it though. What do I know. ::) I still recommend the book though; it was great.

Ordered it and just finished it. Quite a sad book; but better to be sad from a book than from life. Always something to learn. Thank you for sharing this with us.

I read Consider Phlebas. It was a fun and quick read, but the ending of it was so bad it put me off his books. Now I practically read the synopses on wikipedia to see if I want to read a new sci-fi book.

I'm interested in the poster online sales too. Looks pretty neat. Please let us know when it's online.