This afternoon I got another phone call from someone convinced that they should develop condominiums and sell them. I am really struggling to find a better way to communicate on this really basic point. I feel like the guy in the Far Side cartoon above.
If you have the know how required to produce buildings that people live and/or work in, using that very valuable resource to produce houses or condos that you sell to people has a huge opportunity cost. Opportunity cost is a big deal, as in lost opportunity and wasted opportunity. What else could you have been doing instead of building and selling?
I cannot emphasize this enough. If you have the wherewithal to build something, Don’t sell it. Hold onto it and rent out space in your building. The market for new or renovated rental buildings is hugely under-supplied in most markets, particularly in anything even remotely resembling walkable urbanism. There are lots of places where a couple of decent buildings will have a wonderful effect upon the neighborhood. The people who fill in the missing teeth in the neighborhood will do well, while doing good.
Our culture has created completely unrealistic expectations for what is supposed to happen when you buy a home. Avoid putting yourself in a place where you have to deliver on all the delusional nonsense that fills the heads of people who watch too much HGTV. Build to hold and rent. Build in places where the amenities are exotic stuff like proximity to transit, day care, $2 coffee and a genuine local bar.