PRINCIPLES OF APPROPRIATENESS

Some Rules :

#1 The Principle of Value

Can buy at sales price less than intrinsic value.

Aim to sell at above intrinsic value.

IV for property = annual rent / yield (quick and dirty solution.)

Intrinsic value is equal to the present value of all its future incomes - dividends for a share, rents for a property.

#2 Principle of Conservation

Understand why things are as they are before making it better.

Eg, a wall might keep in central heating or keep out cooking smells

#3 Principle of Relative Spending

Spend commensurate with quality. Eg for property. For rung one property, rung 1 rehab. Rung 5 property, rung 5 rehab. Not rung 5 spending on rung 1 property. Not appropriate.

#4 PRINCIPLE OF THE NEGOCE

Any concession you need something in return.