I know many people who were successful in other industries who parked much of their wealth into real estate assets and built tremendous net worth. Usually, though, this is the exception, not the norm. Most people who come into the real estate business do not have the right expectations of what it takes to be successful.

Most novice investors think that renting real estate is a passive business, not an active one. They think they can buy a building and just collect mailbox money. They then realize how hands on you actually have to be, even if you have delegated the leasing, accounting, asset management, and property management to competent professionals (On a side note if you don’t think these “competent” professionals need constant oversight your expectations are wrong.)

If you are buying a core, stabilized assets you have a better shot. But the full-time nature of the business is amplified when you are doing “value add” deals as we do. Leasing out vacancies. Managing construction. Installing new management systems and processes. It is exhaustive.

Knowing what I know, if I ever left this business, and went into another one, I would never dream of taking on a value add asset part-time. In my mind, it is a recipe for “losing your shirt.”

Most high net worth individuals and institutions with capital to deploy would be better served by investing in partnerships and funds, run by competent asset managers. There are plenty of competent private equity groups, not just ours, that specialize in finding deeply undervalued assets, repositioning them, and adding tremendous value to their partners.

Our partners do not mind paying us our fees, because they know net-net, they would not be able to achieve the same returns, if they went out on their own and attempted to juggle all the balls associated with finding an asset, and then managing, leasing, and running the property.

No matter how you participate in the business, I think investing in real estate is the best long term wealth building strategy there is, and I wish you much success.

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