Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

Everyone Pays The Stupid Tax

21 Feb 2024 · 0 min

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In this short monologue, Christian Osgood explains the concept he calls the "stupid tax," which he says everyone pays when they are new to a field because they "don't know what they don't know." He illustrates the idea with a real‑estate renovation example: renovating units in a 38‑plex should cost about $10,000 per unit, but the team spent $25,000‑$30,000 per unit by adding high‑end finishes like stone countertops, stainless steel appliances, and dishwashers. The extra expense was a mistake because the rent increase achieved was roughly the same as it would have been with the $10,000‑level renovation, highlighting the waste caused by the stupid tax.

What's the stupid tax? So the stupid tax, uh, everyone has to pay this. When you're new, everything costs more because you don't know what you don't know. Great example: it should cost me about $10,000 per unit for our 38-plex to renovate a unit. We could do it in budget, they look fantastic, it's a good renovation. We were spending about $30,000 per unit, $25,000 to $30,000, because we put in stone countertops, stainless steel appliances, we added some dishwashers. Massively wrong mistake because we raised rents about the same amount as we would have with our $10,000 improvements.