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  • Originally posted by Bob Kane View Post
    That old joke:
    Question: How can you end up with a billion dollars?
    Answer: Start with a trillion and buy residential property and become a corporate landlord.

    The corporate approach doesn't work for residential property.
    There's not enough fat to support the head office employees.
    Not sure i understand. There doesn't need to be a huge hierarchy in a corporate landlord. My thinking is to take what I do and multiply by 100 or 1000 times.


    My portfolio is very profitable remaining profitable even though it:
    1) Funds all maintenance and improvements at market rates which with corporate scale would be far cheaper,
    2) Funds a 3rd party property manager who charges about what 1x FTE would cost me should i choose to employ a manager and that manager could probably manage 2x the no. of properties so in effect a corporate could halve my management costs
    3) Funds all related office/vehicle expenses you'd expect from running a businss
    4) Funds my 'wage' which replaced my corporate income
    5) Provides a ROI of greater than 20% on any improvement we do to our properties

    If it can be profitable on my scale, why do you believe it can't be profitable on the scale 10,000 -100,000 houses?

    Comment


    • Do you have:
      -an HR Manager with several make-work flunkys and an established employee grievance and gender-equality investigation committee?
      - an OSH expert with a large stock of road cones, hi-viz vests and an open AirNZ business class ticket allowing them to spend a large part of the year travelling to exotic places around the world to see how other people do things?
      - a heavily employer-subsidised MBA program for your top executive management team?
      - new and luxurious corporate offices in the central downtown area close to all the expensive restaurants, clubs and bars and with a grand view of the harbour?
      - a contract with a independent personnel consultant firm that will, each year, study the executive labour market and recommend substantial pay rises for each and every one of your 'team' who already have a six-figure salary? And who will the tell their other clients they need to match your largess to maintain relativity.

      No?
      Then you have no idea of the modern corporate business environment and the overheads involved.

      Comment


      • Originally posted by flyernzl View Post
        Do you have:
        -an HR Manager with several make-work flunkys and an established employee grievance and gender-equality investigation committee?
        - an OSH expert with a large stock of road cones, hi-viz vests and an open AirNZ business class ticket allowing them to spend a large part of the year travelling to exotic places around the world to see how other people do things?
        - a heavily employer-subsidised MBA program for your top executive management team?
        - new and luxurious corporate offices in the central downtown area close to all the expensive restaurants, clubs and bars and with a grand view of the harbour?
        - a contract with a independent personnel consultant firm that will, each year, study the executive labour market and recommend substantial pay rises for each and every one of your 'team' who already have a six-figure salary? And who will the tell their other clients they need to match your largess to maintain relativity.

        No?
        Then you have no idea of the modern corporate business environment and the overheads involved.
        I have worked for one of the largest corporate in the world in the top 50 of the Fortune 500 with over $70b annual revenue. Funnily enough in a role heading corporate strategy. I fully understand corporate life and the ego and expectations that go with it. I also know that these types of things a have been largely cut back.

        Start up businesses have not of the things you mention above. As with any capital intensive business you need to have a long term payout model and would not expect to make a profit in yr 1. We launched a major brand into a new market a few years back that cost $100 million and if we achieved the sales targets would break even in year 5.

        Do you think if you spent $100m on residential property you could turn a profit within 5 years?

        Comment


        • Originally posted by Don't believe the Hype View Post
          Do you think if you spent $100m on residential property you could turn a profit within 5 years?
          Only if their values increased markedly during that time.
          You would run at a loss until you could get big rent increases.
          Prove me wrong - go and do it now.
          So far, no-one has managed to scale up their residential portfolio.
          Or perhaps a better way to put it is, many investors grow to a certain size and then ease back and enjoy life or sell down and enjoy life.
          Why would you grind out 12 hr days chasing defaulting tenants when you had $100m in the bank?

          Comment


          • I suspect that modest-scale PIs do have a lot of under- or un-paid effort put in to them.

            Deferred payback?
            Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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            • Originally posted by flyernzl View Post
              Do you have:
              -an HR Manager with several make-work flunkys and an established employee grievance and gender-equality investigation committee?
              - an OSH expert with a large stock of road cones, hi-viz vests and an open AirNZ business class ticket allowing them to spend a large part of the year travelling to exotic places around the world to see how other people do things?
              - a heavily employer-subsidised MBA program for your top executive management team?
              - new and luxurious corporate offices in the central downtown area close to all the expensive restaurants, clubs and bars and with a grand view of the harbour?
              - a contract with a independent personnel consultant firm that will, each year, study the executive labour market and recommend substantial pay rises for each and every one of your 'team' who already have a six-figure salary? And who will the tell their other clients they need to match your largess to maintain relativity.

              No?
              Then you have no idea of the modern corporate business environment and the overheads involved.
              Don't forget the fleet of company cars for management which includes city parking and fringe tax for personal use (pretty sure that's the right one). Oh, and the petrol.

              Comment


              • Originally posted by Sportsvee View Post
                Don't forget the fleet of company cars for management which includes city parking and fringe tax for personal use (pretty sure that's the right one). Oh, and the petrol.
                cars and associated costs are built into salary packages - as Is parking in many large cities.

                Comment


                • Originally posted by Bob Kane View Post
                  Why would you grind out 12 hr days chasing defaulting tenants when you had $100m in the bank?
                  By that logic why would any large company do anything - many companies out there with valuations well beyond $100m

                  Comment


                  • Originally posted by Bob Kane View Post
                    Only if their values increased markedly during that time.
                    You would run at a loss until you could get big rent increases.
                    Prove me wrong - go and do it now.
                    So far, no-one has managed to scale up their residential portfolio.

                    Didn't Orion do it last year?

                    Why not scale what he did by 5 or 10 times - if one man can run his program the. I can't see a corporate landlord needing all the resources you and others are suggesting is necessary

                    Comment


                    • BTW my rents have more than doubled in the last decade and the ROI on my improvement is greater than 30%

                      im sure someone with more focus and better scale could improve on my performance

                      Comment


                      • Originally posted by Don't believe the Hype View Post
                        Didn't Orion do it last year?

                        Why not scale what he did by 5 or 10 times - if one man can run his program the. I can't see a corporate landlord needing all the resources you and others are suggesting is necessary
                        Not that I'm aware of.
                        Why doesn't Orion do that?
                        In theory, you make a case for the corporate landlord.
                        In practice, no corporate has survived running a residential portfolio.
                        When you have worked out why this is so, you will be a wise man.

                        Comment


                        • Originally posted by Don't believe the Hype View Post
                          By that logic why would any large company do anything - many companies out there with valuations well beyond $100m
                          Most large companies muddle along.
                          Why work hard when you have $100m in the bank?
                          What has happened to Fletcher Building recently?

                          Comment


                          • Originally posted by Bob Kane View Post
                            Most large companies muddle along.
                            Why work hard when you have $100m in the bank?
                            What has happened to Fletcher Building recently?
                            fletcher building isn't anywhere near a large company (and by all accounts run quite poorly)with a matket cap of $5.5b th current kiwisaver pool could buy 5 Fletcher's.
                            Last edited by Don't believe the Hype; 20-05-2018, 02:07 AM.

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                            • I might be slightly wrong, but I believe there are a couple of companies that hold the majority of apartments in Sweden (Gothenburg) and they seem to work.

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                              • Let's not bring other countries into the debate. Do you want Swedens' tax system?
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