Real Estate Titans

7 Key Lessons from the World's Top Real Estate Investors

By Erez Cohen


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Originally published

Mar 26, 2019


Real Estate


Jun 10, 2020


Jul 28, 2020

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Got this for free in the Huntsman Forum so I figured I'd give it a read to broaden horizons and keep in touch with the business side. Oddly there were many typos, some thoughts were not particularly well put together, and a lot of the advice was regurgitated platitudes. Anyhoo, there's something to learn from everything, and I appreciated how this book worked to synthesize a wide variety of interviews and experiences
Understanding risk is everything. "Knowing the downside of any deal is far more important than knowing the upside...never fall in love with the assets or companies [you] own." (xiii)
Real estate is huge
"you can change the way a city, district, neighborhood, or street looks like and operates. You can create beautifully designed spaces in which people live, work, and play." (xiv)
"Hope begins with access to a decent, affordable home." (37)
"the value of global real estate is 2.8 times higher than the world's total annual income." (xv)
Often a good investing strategy: steady class flows, hedge against inflation
Buildings depreciate, land often appreciates (10)
Negotiations are tough because you are operating in the physical world: there are often huge switching costs, externalities, regulatory hurdles, etc.
Negotiate on more than one dimension. Someone is selling for a set of reasons, others are buying for a set of reasons.
Real world risks: "The asset is a property, and as a property, there are maintenance fees, vacancies, and real estate taxes...If you own a stock in a company, it's not going to go down in value if there's a kidnapping in the neighborhood or if a water pipe bursts in the winter and floods the house." (143)
Know the market
Visit all properties, speak to people (not just analysts) (9)
"If you invest with the wrong people, rely on flawed documentation, or don't fully understand the mechanics of the asset, you are doomed to failure." (11)
Try to know something others don't know. If your hypothesis is wrong, what will happen? (13)
"When people speculate, they ignore the downside, and often, that downside comes calling. True long-term and strategic investing is about limiting your downside and being patient. There is a difference." (17)
Ideally you align incentives. Tenants don't have to hate landlords. Build spaces people want to be in. They will stay. (27)
"mixed-use properties where you can create a sense of community" (142)
"operate their business on the assumption that there is a recession coming and they will need to survive for at least three years without capital to start any new projects." (40)
"when there's a recession or a downturn in the market—banks begin to think like machines. They are no longer your friends." (207)
There is value everywhere. You don't need an investing strategy that scales to other places. "Someone small can outmaneuver a massive international company with billions of dollars when they understand their local market in a deep and meaningful way." (32)
"Some fo the best developers I have ever seen are the best copiers" (45)
"Real estate is still a very fragmented market, and that means it is very entrepreneurial." (91)
Must consider market demand, environmental issues, equity sourcing, debt, interest rates, credit risk of counter-parties, government oversight (94)
"Without local knowledge, you could think you're getting a great deal until you realize the property is completely illiquid and unsellable. Data is very important." (115)
Bets are "only as good as the assumptions you include in them" (196)
"The largest and best performing REITs are usually focused on one specific sector." (179); You cannot do all things for all people (181)
Developed and emerging markets are very different
"In developed economies, it's very hard to make projects work without the prudent use of leverage." (16)
"After the Great Recession, the banking industry became much more conservative...New developments are therefore much more conservatively financed and require more capital from developers." (43)
"the best opportunities in the real estate segment are usually present when financing is most difficult to obtain." (70) Be "contrarian" (107)
"when a very attractive deal presents itself, speed becomes very important and therefore many times they choose to focus on removing competitors instead of negotiating." (236)
Looking ahead
"office densification, office hoteling, outsourcing, and artificial intelligence are not bullish trends for office space." (18)
Not to mention changes due to COVID-19
"This new generation loves to collaborate and share spaces where they eat and work, while the space where they sleep is quite small." (56)
"People still like hospitality. They like experiences. They like flexibility. They will pay for them." (18)
Build on yourself. "Your word and your reputation are more important than money." (20) "Being nice and treating other people well is an effective life strategy. When they like you, people will go out of their way to help you succeed." (97)
"we provide a lot fo safety for our investors and developers because we have a strong name, We always try to over-deliver on our promises, and this continues to raise the value of our family name and brand." (113)
"The real estate industry is very small; all the players in the local market know each other. The short-term benefits are not worth it. Your reputation should come above all else." (113)
"Develop situational awareness and always look for ways to give value to others, expecting nothing in return." (217)
Get in the "habit of genuinely praising other people" (219)
"The world belongs to those who read" (99)
"You're going to spend a lot of time with yourself, and all that time when you're along, you have to believe in yourself and in your projects." (119)
Be flexible between introverted and extroverted behavior
Meet people where they are, know their needs (224)
Focus: "most of our thoughts are about tomorrow or yesterday" (158)—why not hunker down and execute? Hardest worker in the room. Value creation doesn't necessarily have anything to do with costs. "the level of results achieve get compounded and the final results are geometric, not incremental." (172)
"the lessons we take for granted are difficult to learn without a mentor in your life" (113)
"If you are a dentist who only knows other dentists with the same specialty as yours, you may have plenty to talk about, but there isn't much opportunity for you to learn new things." (212)
Diversity and openness

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