“Most people are not really free. They are confined by the niche in the world that they carve out for themselves. They limit themselves to fewer possibilities by the narrowness of their vision.” – V. S. Naipaul
There are 33 real estate billionaires in the U.S. today. The one thing most have in common – besides 10-digit net worths – is that they’ve developed massive portfolios in more than one kind of real estate.
Quite a few of these entrepreneurs started with a few rentals or by flipping homes. But you can bet they expanded from there. They succeeded by specializing and focusing, but also by branching out when the time was right.
If you want to accelerate the growth of your real estate portfolio, you have to excel in your niche. But you should also make it a habit to educate yourself in areas outside your niche.
You don’t want to try to become an expert on everything. But you do want to be ready to expand your average transaction size and seize opportunities when they arise.
A few cases in point…
- Donald Bren is a former marine who built his first house in 1958 with a $10,000 loan. Today, he owns 25,000 residential units, but also 30 million square feet of commercial space and 90,000 acres of land near Los Angeles that he is selling in lots.
- Sam Zell began buying and renting out fixer-uppers while he was a student at Ann Arbor in the early 1960s. Since then, he has become one of the country’s largest landlords in three market segments: apartments, office space, and retirement community housing.
- Steven Ross is a former tax lawyer who went from building low-income housing to luxury homes. He eventually branched out to lending on low-income housing. Today, he also owns some prime pieces of commercial real estate in Manhattan (including the Time Warner Center), and he is involved in the $7 billion redevelopment of Madison Square Garden and Penn Station.
- George Akyros is the son of Greek immigrants. He started out buying lots at busy intersections and selling them to gas station owners. Today, his diversified portfolio includes 5,200 apartments and 2 million square feet of commercial property.
- Theodore Lerner’s specialty has been single-family homes. To date, this former lawyer has built 22,000 private homes. But he has also built up a portfolio of 6,000 apartments and 20 million square feet of commercial and retail space, including the massive Washington D.C.-area malls Tysons Corner Center, Tysons II, and White Flint.
And that’s just some of the billionaires. There are thousands of centi-millionaires ($100 million or more) and multi-millionaires who have likewise grown their fortunes by becoming very good at what they do best… but strategically branching out to related areas of real estate as well.
For instance, you may have read articles by Dave Lindahl in Early to Rise. Dave, a former landscaper, started out with small properties, moved up to apartments, and today controls over 3,000 units. Yet he still buys and flips small multi-families and even single-family homes for “chunks of cash” to use for larger purchases (as part of his “chunker strategy”). At the same time, he has branched out to condo conversions.
And speaking of condos, there are, of course, office and warehouse condos in addition to apartment condos. In fact, if you were a condo converter in Florida the last few years, a perfect strategy would have been to learn how to branch into doing commercial condo conversions. That’s because while apartment condos hyper-inflated and are now deflating faster than a hot air balloon without the hot air, warehouse condos in South Florida are in the midst of a very strong market.
Broaden Your Knowledge Without Diluting Your Power
The great running back and baseball player Bo Jackson was a big advocate of cross-training in sports. And if mixed martial artists want to compete at the top these days, they have to step into the ring with a well-rounded game in striking, submission, and grappling.
On a loftier level, Charles Darwin reported that economist Thomas Malthus’s writings on population growth (a discipline completely different from Darwin’s own field) inspired him to fully develop his key concept of natural selection.
And who would have told da Vinci to “stick to his knitting?” (Leo, stop fooling with those drawings of flying machines and two-wheeled vehicles! You can’t possibly have an interest in sculpting, painting, science, architecture, music, and math and expect to excel at anything!)
Now, don’t get me wrong. Focus is indispensable. Those who focus develop knowledge, experience, confidence and expertise much more quickly than those who dabble. And there will be crunch times when you have to focus on certain narrow areas of your real estate business to the exclusion of all else.
But educating yourself on an ongoing basis outside your niche but in related fields can actually make you better at your core business. It can also give you opportunities to diversify and expand when your particular market sector goes into a down cycle.
Good Places to Look for More Education and Inspiration
Even if you plan to do nothing but single-family homes, you might want to pick up some books and courses on real estate investing outside of your specialty, such as…
- Mobile-home king Jim Clayton’s book First a Dream. How good is it? Well, Warren Buffett said it was partly on the strength of this book that his Berkshire Hathaway bought into Clayton Homes.
- Donald Trump’s book The Art of the Deal – a good read that’s full of good stories. Trump’s writing is engaging (not obnoxious like his TV persona), and he includes valuable principles you can apply to any area of real estate.
- Frank McKinney’s Make It Big: 49 Secrets for Building a Life of Extreme Success – about his journey from buying $30,000 fixer-uppers to developing $100 million oceanfront homes on spec. His concept of “exercising your risk threshold like a muscle every day” is worth the price of the book many times over.
- Steve Bergsman has written two excellent books: Maverick Real Estate Investing and Maverick Real Estate Financing. He interviews and profiles some of the largest self-made real estate moguls in the country – on both the buying and financing sides – from Sam Zell to Stephen Ross. You’ll not only be inspired, you’ll learn a ton of very specific, useful information in areas of real estate ranging from residential to office, retail, warehouse, industrial, and land development.
- Dave Lindahl is putting the finishing touches on a book to be published this fall by John Wiley & Sons, and he was good enough to send me a copy of the manuscript. It’s called Emerging Real Estate Markets: How to Find and Profit From Up and Coming Areas. I’ve always admired Dave’s ideas and teaching ability, and in this book he doesn’t hold back. It’s a comprehensive look at what you need to do to build a successful career in real estate… and how to keep your business growing through all market cycles by consistently rotating your capital into the best markets.
These are just a few of the books on my shelves. Various seminars and home-study programs on different real estate topics have also been a big part of my diet for a long time.
The idea isn’t to try to become a master of all trades. It’s to see what you can learn from masters in other fields to become better at what you do… and to be prepared to diversify and expand when the time is right.