Always better to property-develop a decrepit asset?

From OpenArt

Suppose you owned a decrepit property, borderline uninhabitable, requiring substantial cash and effort to fix before it could be put on the market for sale or rent?

If you are someone with few skills in the building sector, is it better to sell off the property as-is to a professional developer; or would it make better financial sense to run a fix-up project yourself and then put it on the market in perfect order?

It always surprises me that a common opinion is that the smart move is the latter: that you would lose money by selling the derelict property as-is and then investing the resulting cash in your own choice of asset-class.

I asked Gemini: "What are the pros and cons of property development as an investment strategy? As compared with, say, investment in equities? If property development offered consistently better returns than equity investment, wouldn't capital move to that sector until returns equalised?"

Gemini:  "You're right. In a perfectly efficient market, with all investors having access to the same information and acting rationally, capital would constantly flow in and out of asset classes to equalize risk-adjusted returns. However, the real world isn't perfectly efficient. Here are some reasons why property development might not always offer the best returns despite its potential for higher gains:

• Higher Risks: Property development involves significant risks like project delays, cost overruns, and market downturns that can wipe out profits. Investors demand a higher return to compensate for these risks.
• Barriers to Entry: Unlike stocks, which anyone can buy, property development requires significant capital, expertise, and connections to navigate the complexities of the real estate market.
• Transaction Costs: Buying and selling properties involve high transaction costs, including realtor fees, taxes, and renovations, which eat into returns.
• Illiquidity: Real estate is illiquid, meaning it can take months to sell a property. This can be a disadvantage if you need quick access to your capital.

So, while property development has the potential for high returns, it also comes with substantial drawbacks that equity investments generally don't have. This keeps some investors away, preventing a complete shift of capital towards property development.

This seems like a good answer to me; also, the right framework to think about the issue. One tends to remember the successful property development projects which - with the risk-premium - paid off well, while forgetting those builders whose projects went bust. And then there's the hours and days of unpaid labour time with the amateur fix-ups...

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Note

Suppose your decrepit asset is worth £X.

Scenario 1: (sell the asset as-is for £X).

Developer spends £X to acquire the property, £Y1 to fix it up, and sells it on the market for £Z.

Developer's net revenue: £(Z - X - Y1).

Your net revenue: £X, ready for onward investment - now.

Scenario 2: (you fix-up the asset yourself).

You borrow £Y2 to fix up the asset and spend it. You sell the developed property for £Z.

Your net revenue: £(Z - Y2 - X) - available at the end of the project.

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If the developer is efficient, his rate of return = (Z - X - Y1)/(X + Y1) will be equivalent to the return any other efficient company makes, and therefore equivalent to standard equity returns.

If your costs (Y2) are greater than his (Y1) then your rate of return will be less than his. You would be better off simply investing £X in a well-judged stock market portfolio.

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In real life there are many caveats: market conditions, local monopolies etc. But in the end, professional competence normally wins out over amateurism when making profits. 

Quo modo Deus exstat?

Michelangelo -The Creation  of Adam (Wikipedia)

Major is the family dog, recently taken to sheep-worrying/killing. The father will have to put it down. Owen, the godless younger brother, petitions his religious-curious older sister.

“'If you prayed for Major not to get shot would he not get shot?' said Owen in a demanding voice.

The thought of praying had never crossed my mind.

'You prayed you wouldn't have to thread the sewing machine any more and you didn't.'

I saw with dismay the unavoidable collision coming, of religion and life.

He got up and stood in front of me and said tensely, 'Pray. How do you do it? Start now!'

'You can't pray,' I said, 'about a thing like that.'

'Why not?'

Why not? Because, I could have said to him, we do not pray for things to happen or not happen, but for the strength and grace to bear what does. A fine way out, that smells abominably of defeat. But I did not think of it. I simply thought, and knew, that praying was not going to stop my father going out and getting his gun and calling, 'Major! Here, Major -' Praying would not alter that.”

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‘Age of Faith’, in ‘Lives of Girls and Women’, Alice Munro (p. 145).

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Aged ten, I ask my father if he believes in God. “No I don't,” he says, “There is no way heaven could be big enough for all the people it would need to contain.”

A parish meeting in Andover, a Q&A. Hesitantly, a parishioner asks the priest, “Father, where is heaven?” The priest, equally hesitant, talks about quantum theory and the strange spaces within the atom. I cringe with embarrassment.

Rod Liddle writes in his Sunday Times column about asking a CofE bishop whether he believes in God. “Blessed if I know, Rod,” comes the reply, confirming Liddle’s sardonic take on England's institutional religion.

A liberal states their deepest attachment and loyalty: to democracy and the rule of law. But in what sense do those things actually exist? I ask. They don't understand the question.

Buddhists believe that the self is an illusion.

Freighted, that term ‘illusion’.

It appears that Buddhists believe the self is a process, an epiphenomenon of more basic physical and mental state transitions. Is that what ‘illusion' means?

It's natural to think naively that existence is a simple, obvious notion. Stones exist, your body exists. If something exists, you can poke or paint it. But most ‘things’ we deal with in life are not like this: contracts, democracy, numbers, freedom, oppression, patriotism, any -ism. Welcome to the social construction of reality and the ubiquity of reification.

Catholicism is more a framework than a set of definite precepts. It's not reducible to biblical literalism. Orthodoxy will tell you that the true nature of God is mysterious. Most Catholics opt for some manner of ontological realism but I'm more deontological…

The Conscious Mind (David J. Chalmers)

 

Amazon link

Question

David Chalmers's argument for panpsychism from the alleged irreducibility of experiential consciousness to physics, rather reminds me of St Anselm's Ontological Argument. It seems that, because Chalmers can conceive of a universe in which experiential consciousness does not supervene on the facts and laws of physics, and because at present no-one has any kind of plausible causal explanation, then we are necessarily forced into a kind of dualism, and strict materialism is refuted.

Would this be a fair characterisation of David Chalmers's position?

Gemini

Your characterization of David Chalmers's argument for panpsychism aligns with some key aspects of his position. Here's a breakdown of the similarities you identified:

• Irreducibility of Consciousness: Chalmers argues that consciousness, the "what it's like" of experience, cannot be fully explained by physical properties or processes alone. This parallels the ontological argument's claim that God's existence is irreducible to any other concept.
• Conceivability Argument: Both arguments hinge on the idea that we can conceive of an alternate reality where the key phenomenon exists independently. Chalmers imagines a universe with physically identical systems (‘philosophical zombies’) lacking consciousness, similar to Anselm's conception of a maximally great being that necessarily exists.

However, it's important to note that Chalmers's argument doesn't necessarily lead to a dualist position (mind and matter as separate substances). He proposes panpsychism (consciousness inherent in all things) as a solution to the mind-body problem.

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Comment

The book, like many semi-popular philosophy texts, is a dry reading experience in the parts where he's developing and defending his own philosophical position. Rather like attempting Proust.

When he's purely didactic, however, he's excellent: a justly-praised virtuoso essay at the end on the ways quantum theory could be interpreted (his imagination again fails him on the MWI); his compelling framing of what's wrong with Searle's Chinese Room thought experiment - a model of conceptual clarity.

But on the central question, how to understand how Standard Model matter can give rise to qualia like the subjective experiences of the colour 'red', or agonising pain, he's inclined to reject any kind of physicalist explanation on principle.

People talk about the 'God of the Gaps; Chalmers is proposing a 'Philosophy of the Gaps'. Recall that he wrote this book in the mid-1990s when GOFAI was running out of steam while Artificial Neural Net research (the precursor to LLMs) was limited to toy problems. 

With bio-realistic neural architectures computationally now in reach, I am optimistic that qualia can become a practical research topic.

Beautiful world, where are you?

 

I've just re-read this after three years; I'm as impressed as I ever was. I stand by my review here of October 11th 2021.

The Felix character rejects Catholicism crassly: Jesus in the sky spying on people - hard to believe, huh? This is in character.

The Alice character thinks Catholicism (the character Simon is a practising Catholic, although hardly orthodox) is a delusion, but then again, she argues, absent nihilism, what isn't? If we are playing with ideas, I would have liked the complexities of ontology to have made an appearance, as argued here.

After immersing myself in Dublin-adjacent existential angst I'm now considering buying some of her other books: she has 'Intermezzo' coming out in September 24. 

Fathers and Sons

Sigmund Freud

Sigmund Freud said that no man could be truly free until the death of his own father (or something like that).

The bond between father and son is that curious thing, a dialectic of respect and rebellion.

In the early years, a father is a towering figure: some kind of ‘superhero’ whose authority verges on the absolute. But as the son matures, so too does the urge to forge his own path, to leave the constraining shadow of his dad.

A son might admire his father's achievements, (the corner office, the shiny car!) yet feel eternally stuck in the framework of his father's expectations. The father, sensing this growing coolness, might try to morph into a benevolent peer… (but older and wiser? Those old memories of hierarchy subvert his efforts).

A strange twist of fate: after a father's passing the son often sees him in an entirely new light. That competitive, judgemental pressure is no more, replaced by a nuanced appreciation of the man himself. 

Grandfathers, by contrast, hold a special place for grandsons - benevolent support without the presence and pressure of their immediate authority figure.

Daughters, on the other hand, tend to view their fathers through a different lens. They see them as complementary role models, sources of strength and guidance rather than rivals in a lifelong competition. Their affection for their fathers can be unconditional. How pleasant to have daughters!

An irony for the son who grows up to become the father of boys of his own; he finds - to his rueful horror - that he gravitates helplessly into that imprisoning role of his own father… The shade of his father nods slowly, in sympathy and understanding.

Shotokan Karate’s Identity Crisis

 

Website

In the latest copy of Shotokan Karate Magazine (#160) we have one author bemoaning the fact that in contemporary karate classes, people very rarely hit each other - indeed, a whole culture of ‘no-contact karate’ has developed. In a fight, he says, you’re going to be hit and knocked silly; it takes practice and experience to keep your cool, not freeze, and go on to the attack with technique intact. 

Mike Tyson's observation applies.

Another author talks about karate for children spiced with music, fun and games to keep them interested, while elsewhere marshalled ranks of adult students march up and down the dojo hall practising repetitive drills in unison on stentorious command. He thinks that the core of karate - personal development in body and character - which can be done at any age, is being forgotten.

What is karate for?

Traditional Shotokan Karate presents itself as primarily a self-defence art. It doesn’t ignore the spiritual aspects, the self-discipline and ‘correct attitude’ but it’s focused on lethality. In particular it strongly deprecates sport karate where, it thinks, too many compromises have been made to the art precisely to make competitions survivable and indeed, non-disabling.

Traditional Shotokan Karate is, however, spectacularly ineffective.

The obvious reason is that it is self-sabotaging. An effective fighting art requires endless, hyper-realistic practice so that moves are absorbed into automatic, effortless muscle-memory. Outside of elite detachments of the military, it’s hard to conduct such training: it’s just too dangerous.

TSK substitutes ‘empty-air’ drills, kata and choreographed kumite ('sparring'): it looks and sounds impressive but does not even approximate a real fight with someone who’s out to harm you and just doesn’t care about the consequences.

Most thoughtful karate exponents accept that if you really want to prepare yourself against street thugs, you should consider boxing where sparring and competition are at the centre of things. (Recent trends for no-contact boxing - no head attacks - show karate is not alone in being drained of its hard martial edge).

The magazine’s articles are good at identifying problems and even, perhaps, at celebrating the diversity and broad church of contemporary karate. The art does develop confidence, camaraderie and self-discipline. But in today’s modern societies, where fights are not common and most karate practitioners go through their whole lives without ever experiencing a real fight, it seems we just have to accept the hypocrisy of current training norms.

Bottom line: if you really want to defend yourself against seriously-violent bad people, practise an art where sparring and competition are central, and where some semblance of real-world effectiveness of technique still continues. Boxing and Judo are probably a quicker route to effectiveness although with the right club and enough time and practice, karate will get you to a good place in the end - probably.

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Note: I am well aware that it is the aura of controlled, lethal violence surrounding karate - its glamour - which attracts most karate students to train. But I suspect that if clubs actually tried to deliver on that promise by instituting the very tough, very physical, very violent, blood-on-the-walls training methods common in the 1970s across the world then there would be a major exodus: only the hard, fit, aggressive young men would be left (with the occasional young woman who also actually liked inflicting and soaking up physical violence).

On biting the hand that 'protects' you

Clare, picking up the post this morning, said, "Your Ninja Turtle magazine's arrived."

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And here's Clare at the East Somerset Railway station four days ago.

Medical Advice from Gemini (LLM)

Doctor Google is a cliché - so I was interested as to how Gemini would advise me on a hand problem I have. Here is the prompt.

On my left palm I have two, just visually perceptible, circular lumps under the skin, each about one cm in diameter. They are placed horizontally, about two thirds of the way up the palm, roughly aligned with my two middle fingers. They are not painful and do not impede any aspect of hand or finger mobility; they have been very slowly getting more obvious over several months. What would be a possible diagnosis?

Gemini

“Unfortunately, I can't give medical diagnoses, but I can offer some possibilities for what the lumps might be and recommend the best course of action. Here are a few potential explanations:

1. Ganglions: These are fluid-filled cysts that often develop on the back of the wrist or the palm of the hand. They are usually painless and slow-growing, which aligns with your description.
2. Epidermal inclusion cysts: These are noncancerous cysts that form when skin cells get trapped under the surface of the skin. They can appear anywhere on the body, including the palms.
3. Lipomas: These are slow-growing, fatty tumors that are typically benign. They are usually soft and movable, and wouldn't cause pain.

In most cases, these types of lumps are harmless and don't require treatment. However, a doctor can confirm this and recommend monitoring or removal if needed.”

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Note (me)

Back in the 1980s I had such a swelling on the back of my left hand. Under my company's medical plan I was able to see a hand doctor who deployed the standard treatment: he had me put my palm flat on the table, then took a large medical book from his shelf and smashed the spine hard down onto the lump; smashed it.

I had no further trouble.

"Down by the seaside"

 

Thursday May 9th 2024

Burnham-on-Sea is our nearest seaside town. This author-portrait  taken in the recent micro-heatwave. I believe Jeremy Corbyn used to holiday here too; it has a period charm, reminding me of inner-Bristol in the 1950s.

Notebook: Higgs, Gym, Beta-level Simulation

Amazon

Higgs field/boson popular science book

I recently read Matt Strassler's book, "Waves in an Impossible Sea" which aims to explain the Higgs field and Higgs boson to non-physicists. It's probably as good as you can expect for such a book. Strassler is a clear writer and doesn't shy away from difficult questions.

For example, he tackles the question of whether light, which travels through a vacuum, needs a (very strange, 'impossible') medium to carry the electromagnetic field. He makes a clear distinction between a medium and a field which is crucial here.

The explanation of the Higgs field "stiffening" quantum fields for particles with mass isn't perfect, but it's perhaps the best analogy available. It encouraged me to revisit the maths - I have some books which are gentler than this.

Exercise Routine

This morning at the gym I continued my aerobic workout: five minutes on the exercise bike, then the stepper, and finally, the treadmill. My goal is to improve my fitness, especially after a bad case of what was likely COVID last June. The breathlessness lingers, but I believe exercise can help. The idea is to use the gym for 15-20 minutes of high-intensity aerobic exercise, complementing my Tai Chi sword form, Tai Chi form and Heian kata (shotokan karate) practice.

With summer approaching I can move some of the latter exercises outdoors, freeing up gym time for equipment-based aerobic work.

Your very own beta-level simulation

An article in The Times recently discussed the use of large language models to create "Grief-Bots" or "Dead-bots" – terms that could use some marketing work! The concept involves feeding a large language model with information about a deceased person, including appearance, voice recordings, conversation samples, and even their style of communication. The system then essentially "reincarnates" the departed, allowing a simulated interaction with a spouse, parent, or other loved one.

One suggestion was to leave such a "beta-level simulation" (as Alastair Reynolds termed it) for your descendants. This could be an alternative to traditional ‘letters cast into the future’, which naturally lack context and specificity.

However, the question arises: what's the purpose of such a simulation? It wouldn't be an information source, as better systems exist and will continue to develop. It wouldn't be the first choice for advice either.

Perhaps it's for emotional support – someone who responds in a way that resembles a spouse, grandparent, or ancestor, acting more like a friend than a resource. Science fiction often explores this theme, sometimes with a Far-Eastern cultural context: ancestor-worship.

While I understand the concept, I suspect most people wouldn't be interested in frequent interaction with such an "archaic entity" when daily life offers so much.

Practically, leaving an operational large language model to your descendants is impossible. Technology advances rapidly, rendering the software outdated and unusable within a year.

A better solution might be to leave training data – biographies, transcripts, and other relevant information. This way, future generations could train a model using the latest software, essentially "reincarnating" you or anyone else.

Forward-thinking individuals might consider this approach for the future. Or perhaps they’ll wonder why on earth they should bother: one’s sprawling digital estate will have all the data any future AI system could ever require, whether you like it or not.