Are you a player held ransom by the whims of the market, or are you a real estate business maker? What’s the real difference between the real estate players and market makers? How can more become the makers and masters of their local real estate markets and chosen niches?
Major industry contributors like Bloomberg have, in the past, declared there was little point in being in business unless they could be a ‘market maker.’ In contrast to participating in, or commenting on the market, this means driving the direction of said industries. Similarly, in the real estate market, those that have been able to create business for themselves when others have failed could be considered makers too.
John Doe vs Blackstone
In the stock market, small investors are often set up to lose, or simply to feed larger ones. Of course you have to start somewhere, but it is essential to recognize this, and factor this into your investment strategy, or decide to become a maker.
Blackstone is a perfect example of this. The super-fund has no doubt made money from the market in various ways on the way up to where it is now. They even loaned millions to others to buy. Now that they have driven prices up and loans are due, some of their borrowers are selling; all while Blackstone conduits are opening up lending to another rung of real estate investors.
If you determine to stick with it, how will you do it? How can you form and control your market, and niche? How will you create business, and more importantly direct trends in the right direction?
Mental Preparedness
This all begins with mental preparedness and capability. Thorough real estate education is critical. So is adopting a big picture and long term mindset. Capability is also essential. This goes beyond learning proven tactics and strategies to developing problem solving. Developing problem solving skills is critical for tackling anything that may come and finding solutions.
Gaining Control
There are many methods and levels of gaining control in the real estate industry. Access to capital is just one, and is not always the most important.
Having influence in the development and budgeting process is a big one, yet is often overlooked until real estate investors have been in the game for many years. Everyone has a vote, and they should use it. In some cases you may want to lobby for development near your holdings so that their value will be lifted. In other cases, this may be detrimental and ruin an area in the long term. For example; do you really want your little secret beach town to become a major spring break destination, and then have to spend tens of thousands to travel abroad to an unspoiled beach somewhere else each year to enjoy the same experience?
Diversification in real estate is important, but density also provides control over land, commercial, and residential property values. The same can go for control within a development or condominium building. Percentage ownership to any individual investor may be limited, but partners can definitely work together and seek out opportunities where they have the controlling vote with like minded owners rather than being held ransom by the crazies.
Demand for a type of real estate and area can even be influenced and even controlled to some extent. Look at Menlo Park and Manhattan. It has been done negatively, as highlighted in the series ‘The Wire’. Yet, with a good marketing and content team, along with strategic partnerships any destination can be elevated to being in fashion via the media today.
Ethical Market Making
These powers can be abused. They shouldn’t be. There is no reason to use them negatively, and those that do will usually find themselves in deep trouble, and quickly lose what they have made.
However, individuals and partners can use some of these market making tactics to pioneer positive change, and increase prosperity for themselves and others. Passing down education is a great choice. Building relationships and earning trust amongst a group you can work with can magnify all of this. Look at the Gates Foundation and Giving Pledge.
