Perspective on Real Estate

August 28, 2002

September 4, 2002

September 11, 2002


What kind of player are you?

There are all kinds of opportunities in real estate: To invest, to build or rebuild. I have learned that there are major classification of types which go into these provinces of real estate.

In 1969, Peter Drucker wrote: "measured by the yardsticks of the economist, the last half-century has been the Age of Continuity." To me that means that there was a predictability -- rules you could learn and live by. The first half of this new century will be known as the Age of Discontinuity, which is the title of his great book written back then -- rules that were no longer valid. Even Drucker would not have expected volatility and mistrust to become the watchwords of the new millennium.

Continuity, like success, breeds arrogance. So much of success is pure luck and timing -- being at the right place at the right time. But the right place has no arrow above it, pointing it out as "the place to make money." Timing is mostly cumulative experience that becomes intuition -- the gut-feeling that this is the right place and time.

I have known many people gifted with that sense and even more who grew an arrogance that smelled up their organization. There was no room for personal growth; people hung around because they were well-paid and got used to the tyranny of the master -- though it ate them up inside and sacrificed their very souls.

Herein I begin a series of articles which will bring my experience and observations into focus during this age of volatility and discontinuity. My first goal is to help you to recognize which type of real estate player you are or intend to be:

1. Platinum Players: Already notably experienced, they have discretionary money to invest without any one deal crushing them. They have earned self-confidence with their success and accumulated knowledge. These are calculated risk-takers who gather as much feeling and evidence that they can feed into their intuition until it sparks the conclusion.

2. God-Complex Players: Decision makers to whom others look to save their lives and heal them. Notably, they are doctors who are used to making judgements and building a defense mechanism that protects them from feelings of failure and guilt. They are innocent of how this mechanism can make them terrible investors in something about which they know nothing. They need professional assistance in deciding risk and abstinence.

3. Innocent Players: Long for success and have role models they believe are successful in the field in which they will invest. Their innocence calls for professional guidance to illuminate the way, for they are on a severe learning curve and there is no exception to this.

Each needs to take a different path in making money in real estate. Of course, there are all kinds of other types, but these are good ones in general. There are key common ingredients to finding that path:

  • Knowledge: Real knowledge rather than just information or the compilation of statistics. I believe in knowledge that is gained through personal experience and investigation of subjects like timing, location, demand and satisfaction of specific demand. If it is important enough not to lose money, then personalized investigation is wise and even necessary.

  • Field investigation: Visiting types of real estate to get a sense of differentiation between success and failure; when one touches it and speaks to the person who built, designed or financed it -- whatever "it" may be -- one gains insight into specific land use and real estate types.

  • Borrowing the experience of others: Making contacts with lenders who have lent financing for projects; finding why and what they would do differently now. This I call "original research into case studies," and it is invaluable. It takes time and patience but is worthwhile.

  • Timeliness and perspective: There are windows of opportunity that open and close to form "timing" itself, which I believe is the most important ingredient to success. Taking the time to investigate lessons learned from case studies is so important. Impatience is probably the single most common reason for failure. It's like money burning a hole in your pocket; it attempts to accelerate the investigation and decision process, thereby penalizing the entire process. Fast Company magazine built an immediate reputation on its analysis of the new economy, and concluded that the old economy had a different rhythm. The new economy needed to be faster, more nimble and accelerate its entire management velocity. The magazine was wrong and it was a dangerous illusion.

  • Being busy: Busy people may make faster decisions, but they make larger mistakes in judgement. I have also concluded that most successful people are very busy ones who keep cutting down on the time they take to gather information and make decisions. They become more impatient, and less mature in their judgements.

    In conclusion, take your time to find who you are, what you want to accomplish and on whom to rely as your sounding board. Since you will experience discontinuity between today and the last time you went through the process, your learning curve must be cultivated out of patience and astute observation.

    Goodkin is president of Ackman-Ziff-Goodkin, an international real estate adviser and strategist, and has been a housing analyst since 1956. He can be reached at sandy.goodkin@sddt.com.


  • August 28, 2002

    September 4, 2002

    September 11, 2002