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| Q&A |
Peeble's Principles
01/01/2008
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But my site had been a rock quarry since the 1800s, and in fact
provided some of the limestone when they rebuilt San Francisco after the 1906
earthquake and fire. Next to me is some land where the San Francisco garter
snake and the red-legged frog exist. In an effort to stop development, years ago
environmentalists tagged our site as an environmental habitat. Well, I went out
and I hired an expert on snakes. We had 100-something traps. Within a year, we
didn’t find one San Francisco garter snake. We found three frogs.
The environmentalists opposed our project because they wanted us
to re-create and make that into an environmental habitat and bring snakes and
frogs from other parts of the area and put them there. This was the last
development parcel in the city. Its whole economic future depended on that.
We’re moving on with our development process, but ultimately there will be a
compromise.
In real estate development, is political know-how as important as business acumen?
When it gets down to the
municipal level of politics, it’s important to support somebody who has the
capacity to win, and somebody who has the philosophical approach that I share
about business. I’ve always had the philosophy about politics that you live to
fight another day. The same applies in business. You don’t go out and alienate
people, and you don’t go out and make enemies—unless you have to. You want to
be able to work with whomever is in office.
I think people are naïve if they assume that you give somebody a
campaign contribution and then that person is going to vote your way or do
something to help you. What I expect is a level playing field and candor. And
access. I want to be able to sit down and explain my position. That’s what
supporting someone will get you, or should get you.
What’s your take on the current real estate downturn? Many investors are hurting.
For the last three years it has
been very hard for a small or medium-size investor—those worth up to $5
million—to make big money in the real estate market. Because people were paying
such high prices, the prospects for appreciation were weakened. And then, of
course, we’ve had our downturn. You make the most money in real estate when
the market pulls back. Real estate is a great business because it’s cyclical,
and it runs in a 10- to 15-year cycle.
The advantage the wealthy had—and so much wealth was created after
the big downturn in the real estate market in the beginning of the 1990s—is that
they and private equity groups started to buy. And they were buying at great
prices. The environment that hurts the overall real estate economy is better for
those who have some capital.
Now is the time to buy, to get educated and gear up, to start
getting your lines of credit in place. The key in real estate is that you make
your money on the buy side.
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