Real Estate Needs improvements (Suggestions please)

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WilliamMGary
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Real Estate Needs improvements (Suggestions please)

Post by WilliamMGary »

Now that I've found a way to step out of my current game and play with the most current betas I'm trying different things. So today I diluted my company shares by 50% and took out $1.1 billion loan giving me $3 billion in cash. I noticed there were some cities that had high demand for housing so I decided to give that market a try and then I realized something.

Real Estate has indeed been enhanced in Capitalism Lab, we have Real Estate focused AI companies but what about if we wanted to run a purely Real Estate based company? There's constant feedback on how much micro managing is needed in retail and factories, ha! Try running a multiple billion real estate firm.

There's no way easy way to compare your rent rates to those of the AI (like a product overview). There's no one you can hire to manage real estate for you, if you're building a conglomerate that sees a business opp in real estate open up. There's no way to see at a glance what the demand for housing are in all cities (maybe a Housing report with the housing index for each city).

Today I come with little ideals or suggestions just an observation and maybe together we can come up with a solution. This hasn't been considered a problem because most of us doesn't try to build a real estate only firm.....but what if someone wanted? What tools/reports would this person need in order to explore and enjoy the real estate aspect of Capitalism lab?
WilliamMGary
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Re: Real Estate Needs improvements (Suggestions please)

Post by WilliamMGary »

I will jolt random suggestions here

-Maybe allowing us to adjust rents for Apartments & Commercial buildings from the firms screen.
-Maybe a Real Estate view (similar to firms but for only Commercial, Community, Sports, Apartment building ) with unique options for these areas.
-In the firm Real Estate view if everything is separated by cities maybe have a graph of the housing index for that city.
Esoteric Rogue
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Re: Real Estate Needs improvements (Suggestions please)

Post by Esoteric Rogue »

I don't have any problem managing rentals, they're far easier than any other firm to me. Just filter for apartment or commerical, and space through them all, and adjust the rent based on occupancy. However, I concede that I don't do it much because I play short games and it's a low profit margin.

You don't need to specifically know what your opposition is charging, nor the market conditions. No matter what the cause is, whether competitors or the market conditions, if your occupancy falls, you need to charge less. Occupancy is the metric that you should base your rental price upon. The occupancy is the most reliable indicator of current conditions because it already reflects all the other factors your want to look at.

While it is reasonable to want to preemptively speculate on what you should charge, but I don't think that it's a sizable difference from using a reactionary method like I do. Maybe a speculator could get 10% more rent for a month or two than I do, but I think it changes slowly enough that I'm not far behind. After all, if everything took a turn for the worst my apartments wouldn't be empty in a couple weeks; rentals take a year to fill up and I presume to empty out.

Image
88% is close to 86.04%

My method is to click the market rate 'M' button, which allows you to base your price as a function of the 'market rate', which I assume reflects the current market precisely.

Now, I'm using simplified fuzzy math, and this percentage-based pricing makes things very easy to my math head, although I have to admit none of us know the actual formula for occupancy used (thus, as said, my math must be fuzzy.)

I assume that charging over 100% market rate cannot be good in general; this point seems to be common sense to me. I'll never charge over 100% unless my occupancy is at 100%. So, I see 100% market rate as the maximum I can charge, in general. If the game didn't give us this information, that is, if the 'M' button is unclicked, I'm at a loss for a clue of what to charge. But it is there, so let's move forward.

Say I had 180 points to distribute between percentage of occupancy and percentage of market price, however I wanted.
I mathematically know that the total revenue is greatest when they are equal. 90 x 90 = 8100, whereas either 80 x 100 or 100 x 80 only equal 8000. The further away I get from equal numbers, the worse the revenue will be. 70 x 110 = 7700, 60 x 120 = 7200, 50 x 130 = 6500, etc.

How many points we actually have to distribute however is unknown, so there's some trial and error, which is really no problem because of the slow growth-rate of occupancy. I don't see any need to check them more often than once a year, in fact, if I don't remember whether I adjusted the prices recently, I'll just wait another year. All you have to do is try to maintain fairly equal percentages:

So, to start out, I may set price to to 50%.
If occupancy rises past 50% I raise my price to 60.
If occupancy continues to rise past 60% I raise my price to 70.
If occupancy continues to rise past 70%, I raise my price to 80.
If occupancy continues to rise past 80%, I raise my price to 90.
If occupancy falls below 80%, I reduce my price to 80.

Seems to work just fine. I've never looked at what the opposition is charging or changed my procedure in response to whatever macroeconomic concerns.

Here's a video of my standard operating ... /c/3427499
elfy
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Re: Real Estate Needs improvements (Suggestions please)

Post by elfy »

Very interesting thinking and sugestions.

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real estate prices
Last edited by elfy on Mon Feb 01, 2016 8:15 am, edited 1 time in total.
Arcnor
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Re: Real Estate Needs improvements (Suggestions please)

Post by Arcnor »

For me real estate is basically build it and forget it. I basically put extra money in a sub and then build up the cities with apartments and commercial buildings. I don't really worry about maximizing their profits. Most of the time the value of them increase in time and they bring a good return.
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anjali
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Re: Real Estate Needs improvements (Suggestions please)

Post by anjali »

Arcnor wrote:For me real estate is basically build it and forget it. I basically put extra money in a sub and then build up the cities with apartments and commercial buildings. I don't really worry about maximizing their profits. Most of the time the value of them increase in time and they bring a good return.
yup same here, after drawing a plan for a whole city (incl public/sports facilities and shops) i set up the apartments of the city set the rent to market price +5% and forget about the apartments, after this i plant the public/sport buildings on the places they were planned at and the shops at last as shops can only be setup if i produce the goods for it. as a PLC's only goal is to maximize protfits, i dont plant empty shops just to fill the spots as this is creating expanses and not bringing a single penny.

if all of this is taken care of, a real estate portfolio can have an anual return on investment of 30% and more which is quite good as this is only the rent income and increase in landvalue is not even considered in this 30%.
a net return for the shareholders will be even higher if all means of cheap capital is used (in caplab cheap capital is bankloan only as there are no other ways of lending money) a PLC not taking loans is a bad managed company and offers way less return to the shareholders because it only operates with equity, which is the most expansive money. always should operate eround an LtV of 50% to maximize profits.
klompen
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Re: Real Estate Needs improvements (Suggestions please)

Post by klompen »

I disagree with the loan thing.
As I've seen in CapLab, the intrest rent is from 6-8% ish. and Inflation is lower than intrest rate. Means as long as you don't pay some of the loan amount every year you're loan will become bigger over time and eat you up.
If the intrest rate are lower than inflation, you're loan will be eaten up by inflation over time.

I don't say, taking a loan to make an expansion for a short perriod of time is wrong. Can be smart, but pay down your loan if intrest rate is higher than inflation!
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