Real Estate Titans: 7 Key Lessons From the World’s Top Real Estate Investors

The author interviewed a number of high-profile CRE Titans and summarized their advice and teachings.  It’s a quick read and one can take several golden nuggets from its pages.

My Notes

  • All of the Titans taught themselves to stop overthinking and move forward. Doing so allows them to assess any situation faster and make key decisions in a smarter and more well-balanced manner.
  • Titans are excited to see other projects, learn from other real estate and business experts. Their endless curiosity drives them to explore and learn new things.
  • Most of the Titans work 6-7 days per week. Many of them work while on vacation–seeing, learning, and strategizing.  The work harder than their peers. They don’t just work hard; they work smart and efficiently.

Investment Strategies

  • You can make a great deal of money cleaning up the excess that resulted from overdevelopment, overvaluation and over lending.
  • Emerging markets, primarily outside the US, offer the biggest growth opportunities; however, they come with some of the biggest risks.
  • Real estate financing is like a drug; if you use it correctly, it can have incredible benefits. If you overuse it, it can kill you.
  • To succeed in real estate investing, you must see where the market is going in the next on, two, and five years.
  • Keep construction debt to 75 percent of cost or less and have construction loan maturities that are long enough to get you through a recession.
  • Don’t close on land before you are able to begin construction.
  • Build recurring fees into your business, such as property or asset management fees that continue in periods of limited development activity, so that you can sustain the organization.
  • Creating a large irreplaceable plot of land through land assemblages.
  • Small investors can outmaneuver massive companies when they understand their market in a deep and meaningful way.
  • To succeed as a developer, you must stick to the region you know best.  You must understand the micro.
  • The best opportunities in real estate are usually present when financing is most difficult to obtain.
  • Real estate is a fragmented market, that means it is very entrepreneurial.  Although there are big players, there are also millions of deals that are too small to interest them.
  • Macro bets in real estate tend to be cyclical bets about timing, which means that you need to be able to make micro bets to generate excess returns when markets are in equilibrium.

Investment Philosophies

  • Knowing the downside of any deal is far more important than knowing the upside.
  • Always need to have an exit plan in place for an unforeseen challenge.
  • Don’t get emotionally attached to your investments.
  • Never agree to recourse debt.
  • Some of the best developers are just the best copiers.  They study successful business and projects and simply recreate them. Focus on what is already working.
  • Four major factors to success in real estate: 1. timing; 2. location; 3. debt timing; 4. understanding demand.
  • Your best investment will come during downturns when most of your competitors won’t be purchasing.
  • Never bid first at an auction; wait to see someone else’s opening bid.
  • Take the road less traveled, don’t follow the crowd. Do things most of your competitors are not.
  • Don’t overleverage your investment.
  • Everyone should start by focusing on a specific product type and geography and build from there.

Advice

  • When seeking mentors, find someone who is doing what you want to be doing in real estate–someone more skillful than you yet someone who is young enough to still remember what it is like to be in your position.
  • Surround yourself with people who will disagree with you.
  • Your word and your reputation are more important than money.
  • You can’t trust bankers. They’re not partners and they have an inability to think long term. Because they are short sighted, they are always look for the quickest buck.
  • Early in your career, focus on areas of innovation; learn about new construction methods, architecture, and sales and leasing.
  • Look for supply-demand imbalances — meet with brokers, consultants, tenants, and customers.
  • Look for ideas from other industries and draw parallels on your own situation.
  • Always build rapport with sellers. Real estate is a business of relationships; the better your relations with other market players, the more success you should have.
  • Leadership skills develop in a continuing process. If you aren’t improving them, they are atrophying.
  • In real estate, patience is the ultimate virtue; real estate is not a liquid asset.
  • You should become a spreadsheet master; the better you are with Excel and understanding numbers, the better you’ll be in this business.
  • To succeed you need raw intelligence, vision, culture and a passion for hard work.
  • No matter what you do, have fun and enjoy the journey.  Enjoy every single day.
  • The only money you will take to the afterlife is the money you give back to charity and good causes.
Greg Barrett
Greg Barrett
Greg Barrett is the founder and editor of CREentrepreneur.