Lessons From A Billionaire Real Estate Investor & Thinker

Original source: SimoleonSense.com .

H/T Steve Friedman

Click Here To Read: Lessons From A Billionaire Real Estate Investor & Thinker

Favorite Excerpts (via Colony Capital)

Keep it simple and go where they are not!
The trip to Baja and the simple and consistent waves at SS reminded me of the real estate business. There is so much real estate in the world that one does not need to be in a frenzy to acquire it. Since there is no real exchange and it is definitely not homogeneous there is plenty of it for everyone. My first partner in life used to tell me, “Every time you think you are so brilliant at real estate look out the window and see what you did not build, what you do not own and what you did not finance.” No one anywhere owns more than 1 percent of any market in any asset. There are really relatively few big players who know the way down the signless dirt roads to the pristine spots and it is simple and easy to see what they are doing. Real estate is a simple business and bricks and mortar can be exchanged privately without the parade of horribles that we have discussed. There is no need for a “digital odometer.” It normally moves in a lumpy fashion through private treaty trades and in a lagging fashion to the world around it.

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This brought to my meandering mind a few of the important and very basic lessons I have learned over the last three decades:

Buy on the way down and sell on the way up – don’t wait for the trough or peak of either

Seek mispricings and inefficiencies – stay away from the crowds

Bad loans are made in good times and good loans are made in bad times

In a crisis buy debt and confusion not equity and clarity

Call your Mom often

Real estate debt is the drunk driver on the highway of the US economy in every decade

Maintain liquidity and ability to double down when things get tough – vote on your instincts with your dollars

Debt is the new equity

Punctuality is the courtesy of kings

Banks can fail -thank goodness for the FDIC

A flexible investment theme is a necessity during a crisis – theme drift is essential not optional

Control is essential when liquidity is light

Don’t confuse efforts with results

Invest in markets that others do not like

Deliver the bad news first

Make the tough decision if it is the right long-term decision, no matter how painful it is in the short-term

Significant skin in the game on behalf of JV partners is a double-edged sword

Remember first names

Find a relationship lender who keeps loans on balance sheet and beware of syndications

Debt restructurings with varied debt holders is like swimming with the piranhas in the Amazon – logic will not help you and none of them want you to make it to shore

In a crisis first take care of your team, your investors, your partners – then they will take care of you

The jungle is a safer place with professionals than a paved road with amateurs

Capital preservation is more important than increased yield

In a crisis communicate, communicate and communicate

The acres of diamonds are your mistakes not your victories. Comb through them thoroughly for your next opportunity

Humility trumps arrogance

If you are a leader and unsure where you are going…Go anywhere–just go!!!

All excesses end badly

Relationships are built in inches and lost in miles

DO IT NOW!!!!!!!!

Buy the Brand not the vintage

No one ever remembers the lessons learned