My student Dorothy Bobco wrote me a marvelous note the other day about “lazy money”. Here is a quote:
“I think I have figured out why people get so upset when they think their property values are going down. They are losing free money, lazy money. You can buy a house and do nothing and the value will probably go up. If anything happens that changes that, they lose money that they did not have to work for. That is what makes them mad, losing money they did not have to work for. It is laziness and greed that drives the real estate market. “
It made me think again about the Berghoff and their transparent gambit to tear down a rare 1870s Loop Building – one of only two cast iron facades in Chicago – by moving out the city’s most popular and profitable restaurant. When I spoke to Neal Steinberg at the Sun-Times about this, he made a great observation that the Berghoffs would try to get $25 million at a stroke for the land, instead of $1-2 million a year for 20 years. Lazy money. Money you don’t have to work for – as opposed to the tedious business of running a business (especially one so old fashioned that it offers benefits!) Yes, I know they are going to operate the bar for a while and the restaurant as a banquet facility, but that is how the gambit works. You change the business, eliminating the consituency and crafting excuses (the business is not profitable; the business doesn’t need this location; the facilities are run down) for demolition when the time comes two or three or five years from now.
It also reminds me of those anti-landmarks neighborhood groups – the kind that crop up when a neighborhood is about to be landmarked. They are usually young urban professionals (just like the supporters) but unlike the supporters, they are addicted to lazy money. They bought a greystone in 1995 for 3% down and have flipped it so that now they NEED their new building to be torn down for a six-flat because they have borrowed $700,000 based on their decade-old investment of $9,000. These are lazy money addicts, and they get violent when they don’t get their fix. Overdose is over-equity.
This is not fundamentally different than other market areas that see over-capitalization and over-speculation, like the late 90s dot.com bubble or the 80’s banking scandals and our current energy scandals. Who can blame them for being lazy when they get rewarded for it during the good times?
But who can blame the hard workers who put so much time and sweat into their homes and buildings – for wanting to save them, keep them from harm? Especially the harm of the lazy.