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Problem or Opportunity?

Sorry – not a particularly catchy title for this post – but it’s still an important concept that merits reinforcement.  In Equity Happens, we talk about how real estate investing is a business of fundamentals.  When you master the fundamentals, then you master the business.  In this case, the fundamental we’re talking about is one’s attitude towards “adversity”.

Watchers, victims, people who are waiting for “someone” (like the government) to do “something” see adversity as a problem.  “Oh my gosh. There’s a big problem. Someone needs to do something!”

Doers, entrepreneurs, capitalists (you know, the people the government likes to take money from to fix the problem while often blaming them for causing it – oops, didn’t mean to let that slip out) look at adversity and say, “WOW! What a great opportunity!  Everyone is crying in their soup, brain-locked with fear and unwilling to act.  All I have to do is be creative and bold, and I can convert this adversity into an opportunity!”

Case in point:  Today, the Wall Street Journal reports that real estate developer Young Woo is planning to convert the top 40 floors of AIG’s 66-story building into luxury condominiums.  The Journal reports that Woo bought the distressed building (though actually, it was the OWNER that was distressed, not the property) for $150 million or $105 per square foot.  If you don’t know, that’s cheap.  He couldn’t build it for that.

After conversion, Woo hopes to sell the condos for close to $2,000 per square foot.  Even after all his expenses, he could realize a profit of $500 per square foot or roughly $600,000 per condo!  Not too shabby.

Of course, the plan looks good on paper and Woo has to actually execute the plan in order to realize his profit.  But that’s what America and real estate is all about.

You may not be ready to take on a 66 story conversion project, but the principals apply at any level.  The marketplace is full of distress and adversity right now.  That means there are lots of opportunities IF you can see them, and IF you have the courage to lead.

Think and DO is better than Wait and See.

Start with education.  Learn the fundamentals.  Watch other investors.  Learn from their successes and mistakes.  Build relationships with experts you can call on when you’re in the middle of a deal.  It’s always good to get lots of brains on the problem.  But remember, it’s YOUR money and YOUR opportunity, so do NOT wait for someone else to empower you or assure your success.  When you’ve done your homework and you see your opportunity, then YOU make the call – and go make equity happen for you.


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