A pal of mine has made a fortune buying properties with the projection that they'll be sold for less than the purchase price. For 25 years he's been buying (at a decent scale) horrible locations surrounded by bad news. He prices them based on cash flow, assuming the underlying property value will drop rather than increase over the hold period. But for most of his investments he's been wrong and it's been pretty sweet.
@iononrecourse There was a fortune to be made in cities like Denver betting on the worst neighborhoods near downtown based solely on slow but sure gentrification and redevelopment.
@iononrecourse Does he look for those properties specifically because they cash flow better even though they are depreciating in value?
@iononrecourse There was a really interesting thread posted recently about Ben Graham’s machinations w a coal company that started me thinking along the same lines.
@iononrecourse Cool! Does he bet on unfavored themes / categories or just terrible locations?