My sabbatical from commercial real estate brokerage for the last 5 weeks has come to an end this week. After 31 years of chasing deals every day, it was great to have a break. I was continuing to work on three leases for the National Association of REALTORS buildings, before my chairmanship of the Real Property Operations Committee came to an end this month.
During this time, I have said no so many great people and opportunities. I wanted to make sure I didn’t jump back into what I have always done. I needed to give myself time to see what my gut told me to do.
My philosophy has always been that commissions on leases and sales were my “bread and butter.” They paid the bills of a growing family, but wealth is created by owning real estate.
I have had time recently to watch more of the financial news shows. It can drive you crazy – the market goes up, then the market goes down. A world event can change the trajectory in a moment. Then the mind wanders to what happens if the market drops 10%, 15%, or 30%? It’s happened before. Could it happen again?
My simple thoughts on the difference between owning and investing in real estate versus owning stocks are that in the morning, you won’t wake up and have your building disappear. If it is gone, you have insurance to replace it. You may have lost a tenant or two, but your investment is still there. Like the stock market, you still need to know what you are doing when you invest in commercial real estate.
There are so many ways to make money by owning real estate: single family homes, apartments, warehouses, land, renting billboards, cellular towers, hotels, nursing homes. The list goes on.
This is not to say that owning real estate is a get rich scheme. It’s a slow and steady path to wealth. Patience is key. Education is incredibly important. As much as I hate the trite phrase, you must remember, “location, location, location.”
I don’t believe you should ever put your eggs all in one basket, but that you should consider the merits of owning real estate as part of your portfolio. I cant drive and go see the shares of stock in a company I own, but I do find it reassuring to go look at a property I own.