Busting Vegas Apartment Style

12-15 Years ago stories of the MIT Blackjack team flying into Vegas on Friday and over a weekend taking millions from the casinos became the movie “21.” Those kids and their trainers did their homework and realized that every hand wasn’t equal and the opportunity for the player to beat the house changed based on current conditions. Using highly evolved techniques like card steering and ace sequencing they could get the odds in their favor. What really drove their success was their unique team play strategies that double or tripled the profits when the deck was hot. In 5, 10 or at most 30 mins these teams pocketed a huge score while the avg. player kept placing the same bet over and over, waiting for their next “free” drink. Their success led many a friend to buy some books and start counting cards.
Owning apartments and beating the performance of the market is no different. The MIT Blackjack teams’ success came from preparation and observation. Apartment owners today are utilizing the same techniques to create multigenerational wealth.
Owners are all sitting around the table, everybody looks the same, all interested in making some money and having as little hassle as possible while doing it. But over the last few years have properties traded near you? Did a new owner “over pay” or “have no idea what they are getting into,” only to sell that property in 12-24 months at big profit. Were they just lucky while some of the other owners on the block were happy to increase rents $10-$15 and not get a too many calls about a leaky toilet. Fortunately today’s email is not about the investor sitting at the table riding out the cards and waiting for the “free drinks.”
Let’s go back to that unassuming owner who bought the “run down” property or “paid too much” and still scored a huge profit in a short period of time. What did they do? how did they do it? Preparation and observation, everybody who owns an apartment building has been a success or they wouldn’t have the resources to own such a luxury (or scarce) asset. Along the way apartment owners applied their experience to a variety of situations and while each one was different they were successful because the foundation of their decision making was sound. They were able to apply their decision and success making process over numerous different situations and achieve successful outcomes. All apartment owners are as prepared for continued success as the MIT team. The part that makes the difference between a huge score and hopefully breaking even is observation. Investors that beat the market look for favorable opportunities in the deck and utilize their preparation to benefit from them. Is an area ripe for redevelopment, have the local schools all received recent awards, is new development about to break ground and there is an opportunity to fill the B+/A- class. The previous list is local, on a more regional scale, is the cost of ownership housing out of reach for too many, is development only catering to the highest end product and there is gap. These are the current conditions that are occurring today that the big winners are leveraging for the benefit of their future generations.
The MIT team took advantage of windows; 5,10 minute opportunities the deck was highly stacked in their favor and they could get big bets on the table and win. When things cooled they changed tactics, waited and observed, looking for the next window of opportunity. The deck is no different from the real estate cycle, sometimes everybody wins regardless of their preparation and observation and other times it’s better to reduce exposure and ride it out.
For the last few years our deck has been full of aces, and it’s been a joy to help owners improve portfolios by taking advantage of the opportunities. Based on our observation, if you’d like to improve your situation; get a better building, better area, fewer singles (or two’s in rent control), increase cash flow, make an extra million over the next ten years, or something a little different. If you’ve got the feeling you want to do better, let us help you determine if the cards are in your favor.