Top Five Ways To Fail As A Commercial Real Estate Investor In The Coming Economic Storm

June 22nd, 2008

Hello from the metropolis of Cedar Crest, NM.

I am getting ready to take twenty kids from my youth group up to Durango, CO for the Christ In Youth Conference (www.CIY.com).  I think I am more excited than my high school kids are…..it is always a blast.  I am so grateful for commercial real estate because it allows me to do what I love to do….such as hang out with my youth group for a week long conference and go crazy (I can legally do this you know).

Anyway….Let’s talk doom and gloom….

Almost every article and blog on real estate is doom and gloom.  Forget real estate…almost every article on the economy is surreal and very scary.  It reminds me of the months before Y2K.  Remember Y2K?  If not….recall the panic starting in 1998 about how the whole world was going to turn the off switch because computer ‘date’ glitches.  Which may explain the year supply of beanie weenies and water in your garage. I remember how gas generator prices went through the roof.  Yes…I got caught up in all that too….not the beanie weenies….but the hype.  Is all this commotion just hype….or are we really heading into a disaster?

The fact of rice rationing, fuel prices, natural disasters, record breaking foreclosure rates, the sub prime crisis, Bear Sterns, etc….makes the future look rather dismal.  If history repeats itself (which it seems to always do…good and bad) then yes…it is going to get bad…then it is going to get worse.  But the one thing I have learned is that there are always survivors.  Actually, there will be a group of entrepreneurs that not only survive….but gain mass wealth in these troubled times.

Well…so what, Rob?

Well, there are going to be a number of things that this group of entrepreneurs will do (or currently doing) that will set them apart.  Instead of me writing about the Top Five Things You Can Do To Survive The Coming Storm…I am going to use some reverse psychology and tell you how to fail.  Why?  Well, because the 80/20 rule (Pareto) applies…so most investors will fail (pretty harsh huh?) and I am not immune to the failure I am writing about.  As a coach to many real estate students….I sometimes go by my own rule…”Do as I say, not as I do.”

So….here they are….Top Five Ways To Fail As A Commercial Real Estate Investor In The Coming Economic Storm (why only five?  Well…because there are about a hundred ways to fail…who will read that?)

  1. Be over-leveraged

    Make sure that you are mortgage to the hilt on all your assets. This is a surefire way to make you scramble and panic as you come to the realization that you are upside down and if you sell…you will sell at a significant loss….  Even better….if you have any equity in your assets….leverage that too and buy more highly leveraged real estate.