Skyscraper Dreams…….. by Norair Yeretsian

Some of us just dream, and some of us actually acquire,build, manage and add value.

The story of the Great Real Estate Dynasties of New York is chronicled in
the book Skyscraper Dreams by Tom Shachtman (1991).

Harry Helmsley “could forecast the economic direction in which a
neighborhood was heading, knew what improvements (new elevators,
more shine to the brass, better windows) would bring in new tenants,
and could figure out which rental leases could most easily be renewed
at higher rates.” Helmsley’s business was not only brokerage ( sales)
like most brokerages, he made a significant fraction of his income from
management, ” which gave him a broader perspective.”

Harry Helmsley understood the sale-and leaseback structure, this
would enhance his company’s capacity to make deals for buildings
but also the fortunes of his property management firm, which could
operate future properties when sellers didn’t want to .

” At the time, the banks, insurance companies, and investment houses
wanted to have nothing to do with real estate.
Burned in the depression, they were overreacting by staying
completely out of the kitchen.

Scarcity of financing translated into fewer groups trying to buy, even
though a plethora of attractively priced buildings were available.
So there were tremendous opportunities for people with both the money
and the acumen to buy. Helmsley found and evaluated the properties,”
and his partner Wien checked his analyses and provided the cash to
buy them : ” a perfect match .”

” In acquisition real estate, partnerships are always desirable.
What you looked for was someone ( preferably a relative) with a body
of expertise that overlapped your own but was different, who could follow
your logic, correct fallacies or inaccuracies, and then bet with you on a
common project and accept the gains or losses from it without breaking
stride or quitting the field of play. You tested that partner on one or two
transactions; if you were still in tandem after several, you kept going and
grew closer together and more bold in your outside reach. “

Here is part of  the formula for your successful partnership and
acquisition vehicle, the other consideration(s) follow.

” In New York real estate, a successful operator later wrote,
” Property is appraised according to the return it brings investors, and
the effect of the syndicate has been quite simply to double values.
A building worth $ 5 million to a corporation is now worth $ 10 million
to a syndicate. ” Because the syndicate would pay taxes at an individual
rather than a corporate rate, Wien and Helmsley could offer top dollar,
spend more to acquire properties than other buyers, and beat out almost
any other bidder.

Though Wien invested alongside the other members of the syndicate,
Helmsley did not. Harry’s  income came from his broker’s fee and from Wien
allowing him to assign the management of the building to his own subsidiary ,
which guaranteed him a continued income from the building.
Wien and Helmsley pledged investors at least a 10% percent annual return
for a period of  ten years; after that, the building would probably be sold,
and investors would then receive 50 percent of any profit — which could
be very considerable, as most buildings went up in value.”

This could be the simple framework and timeframe for your syndicate in the future.
Becareful not to over estimate the returns you pledge to your syndicate partners,
you do not want to disappoint, by not delivering.

Your success going forward will be impacted by your delivery.

With the advantage of hind sight , there is a lot to learn from the  great real estate
Empires and Dynasties of New York, about their successes and failures.

As a real estate practitioner, Harry Helmsley covered all bases of the real estate
business and leveraged his experiences and knowledge to achieve great success
in the business of real estate. Having started as a bicycle courier in the City,
Harry Helmsley owned or had an ownership interest in over 200 buildings in
New York City and an empire valued above $ 1 billion,
by the end of his career in real estate.

Let’s continue the discussion @ EnvoyCapRealty : Twitter  or below…

nyeretsian@yahoo.com May 27, 2010

Monopoly: Essential Board Game! Norair Yeretsian

” Before every game say the following : I can defend myself from
my opponent, but who will defend me from myself ?” Tom Wiswell

In The Education of a Speculator , Victor Niederhoffer
shares his experiences with Board games that were essential in his life
( checkers was his favorite) and in the lifes of many great traders/
speculators/investors as they prepared  themselves and their minds
for their future profession and businesses.
Niederhoffer took lessons for 15 years at his office weekly  from a
world champion (champion for 25 years and author of 17 books) ; Tom Wiswell .

George Soros played chess with his father , while hiding from
the Gestapo, for cookies. After his father had won and eaten all the cookies,
” they turned their attention to Monopoly. The vicarious pleasure of  building
and renting, combining and selling for millions was as close as anyone could
get  to the real thing those days.” (1944 , in Hungary ) .
He continued his chess playing in the U.S. . Helped keep the mind sharp .

T.H. Huxley provided a famous quote connecting board games and life :

” The chess board is the world, the pieces are the phenomena of the universe,
the rules of the game are what we call the laws of  Nature. The player on the
other side is hidden from us. We know that his play is always fair,just and
patient. But also we know, to our cost, that he never overlooks a mistake or
makes the smallest allowance for ignorance. “

Niederhoffer describes Warren Buffett as one of the world’s most
famous speculators ,” personifies Mr. Market as the omniscient
player-opponent in an almost identical fashion.
Sometimes, Mr. Market will buy your goods at Walmart prices.
On other occasions, he will buy from you at Tiffany retail.
The question is :Can you take advantage of his dispositions ? “

Niederhoffer then explores the wisdom of  Tom Wiswell ( Let’s Play Checkers)
and provides a framework to deliver it  :

Rules of  the Game

” The easiest thing in the world is to learn the checkers moves;
the hardest thing is to learn to play them  correctly.

” To lose is human, to win is divine, to draw is an art. “

Before the Game

“It isn’t only what you know that counts, its also what you don’t know; and don’t know that you don’t know.”

“The student playing much, suffering much and studying much: these are the three pillars of learning.”

“You may not have  as much knowledge as your opponent, but you do have as much imagination–use it !”

During the Game

” Exercise judgement, exercise caution, exercise patience; and , finally, exercise. “

“Indecision is fatal. It is better to make a wrong decision than build up a habit of indecision. “

“Never let the fear of  striking out get in your way.”

Deception

“No matter how bad your position is , never let your opponent see you sweat.”

“The best trap is the trap your opponent does not see.”

” It is always wise to remember that your opponent may be
as Machiavellian and scheming as you are. “

” When your opponent allows you to make a very inviting move,
remember the story of the spider and the fly.”

After the Game

“You may make a move without knowing why,
but after you’ve lost the game the reason will be apparent.”

” A good scare may eventually help you to make a good score.”

“After suffering a disastrous defeat, listen to some good music.”

” A beautiful game is in the eye of the beholder; and that is usually the winner;
but a brilliancy is a game that can be admired by the loser, as well as the winner. “

Niederhoffer says ” If only speculators would spend one-tenth the time analyzing
a completed trade that they spend implementing it,they would have a lot fewer losses. “

Character of a Winner

” Only those with passion can become masters.”

” Success does not come all at once; even for masters it comes in stages, separated by years.”

” You are the architect of your own victories and defeats .”

” In order to win, you should analyze the play, you need to analyze the player
and you must,above all, analyze yourself. “

” Those players who do not learn from experience, will not learn at any other school.”

” The good player is the one who knows he will always have a lot to learn. “

Samples of  Tom Wiswell’s proverbs were used to fill in and complete this framework.

The skills that you + your children can develop by game playing are the excellent skills
required in professional investing/trading and speculating.
The strategic thinking on many levels , the timely and possibility thinking as you look
at  options/moves and the changes that happen with every turn. And then you must  act !

Yet another good reason to go back to the game box for : checkers, chess and monopoly,  and
play with your kids ( beyond the obvious reasons to be with your children).
It will help their development and your development.

Game on !

Let continue the discussion @ twitter : EnvoyCapRealty … or send a comment back below

nyeretsian@yahoo.com May 17, 2010

Deep Economy : Do things Locally ! Norair Yeretsian

The Wealth of Communities and the Durable Future :
Deep Economy by Bill McKibben is a book about location,location ,location !
You and I have the best location, to do all the things we want.
In Deep Economy, Bill McKibben explores our current state and problems and
suggests we can do better by doing it within reach/locally.
And thereby build a stronger and healthier economy by building many
micro local economies. Because we now have challenges everywhere and
it weakens the whole economy, example our food :

” Even apart from terrorists, the centralized food  system we’ve built presents risks.
The industrialization of poultry is the nub of the problem ‘ of avian flu ‘ says
Kennedy Shortridge, a Hong Kong microbiologist who has spent three decades
studying influenza viruses. Concentrated agriculture also manages to make us
sick on a fairly regular , if less dramatic, basis. Seventy-six million American
fall ill annually from food-borne illness; 300,000 are hospitalized, 5000 die.
Salmonella is the biggest culprit, and its prevalence has doubled since the 1070s,
which makes sense when you consider the enormous poultry barns and cattle
feedlots that grew up in those years.”

We may need to go smaller , faster.
Detroit , Michigan is planning on destroying many urban vacant homes
and creating farm land : Urban farms.
City councils in Toronto and London , Ontario have been debating whether
to allow residential properties the permitted use of : raising chicken, and
possibly other farm animals in their backyards ?
There is a minor movement to getting vegetable gardens growing on Hydro fields.

We could grow more of our food locally and become healthier in the process.
You and I have the best location : Ontario, Canada to do all that we want.
Geographically well located, and with a nice seasonality to grow and raise wonderfully.

Challenges exist and they must be addressed. Environmental issues of the lands is
another concern, testing must be done first prior to growing things on these properties.
And someone needs to establish healthy standards for the soil conditions for that the
results are beneficial for all.

Land and the quality of our land is very important for our health and well being.
When you buy and sell property there is a responsibility to care and protect the
future uses of these properties. Due diligence is important in this area to satisfy
all concerned that the properties are safe and clean ; environmentally.

Adam Smith (1776) in The Wealth of  Nations that ” it is not the actual greatness
of national wealth, but its continued increase” which raises wages.
Benjamin Friedman in The Moral Consequences of Economic Growth
provides a modified perspective on this increase. How modern commerce was
thought to be a one time event — that they would soon hit a plateau.
The new economic revolution showed that businessess could keep improving
their operations, apparently indefinitely.

” By the early twentieth century, increasing efficiency had become very nearly
a religion, especially in the U.S., where stopwatch-wielding experts like
Frederick Taylor broke every task into its smaller parts, wiping out inefficiencies
with all the zeal of a pastor hunting sins, and with far more success. “
writes Bill McKibben ( Deep Economy ,2007; Times Books)

Is it time to re-think, re-set and get back to the Garden of Eden ?

Let’s discuss it :  Twitter @ EnvoyCapRealty  or just below …

nyeretsian@yahoo.com May 16, 2010

Urban planning Guru and the Prosperity of our Cities Norair Yeretsian

With an authoritative voice and finger pointing at the City councillors
and the planning staff, she told them they were destroying this beautiful City !

I judged this book by the narrow sound bite I just heard on my TV and
thought here is yet another ‘ nut job ‘ telling my City’s leader what they
are doing wrong and how to right it . So I tuned her out and did not read her books.

How wrong I was back then , when I could have both read her and meet with her.

That Lady was Jane Jacobs, brilliant writer and promoter of a simple intelligence
that we have been missing in our urban planning process ever since.

Back then we seemed to have left the human element by the road side as
we planned and built our cities around the automobile/transportation.

Then as progressive city councils and planner went through City Hall,
read her book and planned forward seem to have missed her point(s).

They have gone to the other extreme , where they have purposefully made it
inconvenient for anyone with a vehicle to move anywhere in our City.
Thus creating a great frustration with traffic congestions and great amounts
of  pollution ( with its negative health consequences) and great economic loss
with all that productive human talent sitting in vehicles whether public or private,
going nowhere fast and spending a live time doing it.
The result the great stress among the citizens and that has  ended up
hurting the very people they think they are helping.

No one is happy with the mess and our quality of life suffers greatly and families suffer.

Read Jane Jacobs ‘ books again and appreciate what they really say about ;
our Cities  and our lives in our Cities. The development process and planning ,
official plans and zoning-by that work to make our lives better and our business
can operate without the threat of prosecution .
Understand how your citizens really live and work , and then work to accommodate them.
It has to work well with the citizens in mind first and foremost  , not just look pretty on paper.

Humanize it !

Don’t make it a sterile environment where everything is so organized that the human community is lost.

Read Jane Jacobs’ books and be enriched  :

The Death and Life of Great American Cities (1961)

The Economy of Cities

Cities and the Wealth of Nations ; Principles of Economic Life (1984)

Dark Age Ahead (2004)

nyeretsian@yahoo.com May 3 , 2010