In the business world, you need not look much further than the wise words of Warren Buffett for inspiration. Unfortunately, Buffett offers almost no real estate-related witticisms in his letters or his many interviews. But other successful real estate investors and observers have coined a few good ones, a few bad ones, and many thought-provoking ones. Here’s our analysis of a few of them…
1) “Landlords grow rich in their sleep” – John Stuart Mill
stREITwise View: True! The unusually precocious child who grew up to become one of the most profound thinkers of his time and play a critical role with the British East India Company in the 19th century, Mill clearly had his head on straight when he coined this phrase. Ownership comes with many benefits, including the ability to passively collect rent – similar to how stREITwise allows investors to sit back, relax, and collect dividends.
2) “The major fortunes in America have been made in land.” – John D. Rockefeller
stREITwise View: John D. Rockefeller, the American titan of industry and founder of Standard Oil, sounds like he was sending a message to his heirs. Fortunes rise and fall, but the Rockefeller fortune has stood the test of time, even through multiple oil price cycles. The reason? The Rockefellers made sure to diversify into real estate. They own, or have owned, many landmark properties such as Rockefeller Center in New York City and Embarcadero Center in San Francisco. These properties have appreciated tremendously over the years, ensuring the ever-expanding family will remain wealthy for generations to come.
3) “Learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values and the least risk.” – Armstrong Williams
stREITwise View: Armstrong Williams is an entrepreneur and the largest African American owner of TV stations in the US. His comments ring true… mostly. He’s right that it’s worth learning about real estate as it is one of the most effective ways to build wealth. However, unequivocally declaring it to provide the highest returns and the least risk seems a bit over-the-top. It’s not enough to just throw money at real estate and expect a return. Understanding the risks and how to mitigate them is a crucial component of real estate investment success.
Real estate investing is best understood by those who are knowledgeable on the subject. Which is why the experienced team at stREITwise offers a professionally selected portfolio of institutional real estate to everyday investors. Perhaps another quote summarizes it best, this time by Albert Einstein: “The only source of knowledge is experience.” Trust the ones who’ve been there before.
Bottom Line: lots of people say lots of things. Though some sayings are wiser than others, the reason we pay attention to the words of successful people is because they’re, well… successful. It’s good to heed the advice of those who have experience that you may not have. Even if you disagree with what they say, it’s important to respect the viewpoint and how they may have arrived at their perspective. But don’t fall into the trap of using quotes conveniently to confirm your own biases as that can build a false sense of confidence that could lead to poor decisions.
Eliot Bencuya is the co-founder and CEO of stREITwise. Eliot has extensive experience identifying, underwriting, and executing value-add real estate investments.
Prior to forming stREITwise, he was a Vice President of Acquisitions for Canyon Capital Realty Advisors and the Canyon-Johnson Urban Funds, where he was responsible for originating, underwriting, structuring and executing transactions in the Pacific Northwest, Northern California and Midwest regions. Mr. Bencuya also held positions at Sovereign Investment Company (a subsidiary of the Marcus and Millichap Company) and the investment banking division of Merrill Lynch & Co. He holds a Bachelor of Arts degree in Economics and International Studies from Yale University, and a Masters of Business Administration degree from the Haas School of Business at the University of California, Berkeley. Mr. Bencuya is a member of ULI.