John T. Reed’s review of William Poorvu's The Real Estate Game

The Real Estate Game was written by William Poorvu. He is a real estate professor at Harvard Business School. When I was a student there, I did not take his course, but he was the faculty adviser to the real-estate club of which I was president. The book also mentions Sam Plimpton many times. He is a friend and sometime colleague of Poorvu. He is also my friend and was my section mate (a section is a group of about 85 students who sit in the same classroom all day every day during the first year). I relate my connection to these two to make full disclosure.

Poorvu has many years of experience in all aspects of the business. As you would expect, he is on the boards of a lot of real estate organizations. He also has been involved in sole-proprietor investment, limited partnerships, REITs, and development.

The title “Real Estate Game” refers to a metaphor which Poorvu uses to explain how real estate works. I thought the metaphor hindered, rather than helped the reader. Fortunately, he, too, tires of it early in the book, and it disappears until the last chapter.

The book was disappointing in two ways. For one, you would expect a book by a Harvard Business School real-estate professor to give you real advanced, state-of-the-art stuff. It doesn’t. Poorvu thinks that stuff is often overdone in real estate. I agree. For example, I do not use discounted cash flow or multi-year income-expense projections much in this newsletter. On the other hand, I have written about hedging, defeasance, game theory, and the effects of technology. I would like to have read what Poorvu thinks about those and other issues that I have not covered.

The other problem with the book is that Poorvu is a politician. Because of his ongoing involvement with Harvard and numerous real estate constituencies, he devotes much ink to staying on everyone’s good side. One senses that his advice would be less guarded and diplomatic in private.

Poorvu’s book is a good illustration of the difficulty of writing candidly about real estate while heavily involved in it. For example, Poorvu is, in part, a developer. As such, he has to get approvals from government and neighbors. Consequently, he is loathe to write anything that might later be used against him in a permit proceeding or offend any decision maker.

He is right to fear repercussions from published forthright discussion of real-estate issues. When one of my tenants sued me, her attorney made my book How to Manage Residential Property… “Exhibit A”—literally.

In this book Poorvu says all sorts of things that I never heard real estate people say in private. He is very kind to planners, architects, politicians, lenders, and so forth. He also will not get shunned in the faculty lounges at greater Harvard, having covered those bases with various nods to the value of many of the left’s views on real estate issues.

The book purports to be aimed at the reader, but it clearly has many other constituencies and attempts to be politically correct vis a vis all of them. As one who no longer has any rentals, I, on the other hand, am totally uninhibited. Perhaps we should wait until Poorvu retires to get his real views.

Readers of this newsletter are generally sole-proprietor owners of their own rental properties. Poorvu talks about that a bit, but most of what he writes about is quasi-institutional or institutional real estate.

It is somewhat helpful if you wonder what big-time (actually, medium-time) real estate is like. The book won’t change your life, but it will probably give you some useful tips and it will provide you an introduction to other aspects of real estate that may have intrigued you.

This originally appeared in Real Estate Investor’s Monthly newsletter.

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John T. Reed, a.k.a. John Reed, John T Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, Email: