# This Is Why We're Journalists: About That Blockbuster Ben Lambert Deal

Yesterday, we trumpeted the killer sale Eastdil Secured’s Benjamin Lambert pulled off on his Upper East Side townhouse. He bought the place for somewhere in the mid-six figures in 1978, and just sold it for \$10.5 million. Reader Richard S. Zimmerman, a partner at accounting firm Berdon LLP, points out that our math is a little off. Or a lot:

Your interest calculation on the Lambert sale is off by a large factor. Assuming Lambert had 100% financing in 1978 and purchased the house for \$300K and he sold in 2011 at \$10.4 M (minus the broker at 5% = \$9.88M) his rate of return would be a more modest 10.5% per year not 2,000%.

Having foolishly believed the pen mightier than the calculator, we asked Mr. Zimmerman for further explanation, and he provided another handy—and telling!—example.

Generally rates of return are stated on an annual basis. Naturally the rate of return looks dazzling if you use an absolute but the amount of time that the investment was held is crucial.

My neighbor on the east end of Long Island bought 3 lots in 1950 for \$1,000 each. Today those half acre lots are worth between \$2.5 – \$3.0 million. Sounds like a spectacular rate of return. But when you do the math the annual rate of return is 12.5 %. Sixty years is a long time.

Not too shabby, but it does take the sting out of having that friend whose dad bought all those brownstones in the ’80s. Except that he still gets to live in one of them rent free.