“Maverick Real Estate Investing,” by Steve Bergsman (John Wiley and Sons, Hoboken, N.J.), 2004, $24.95, 269 pages; Available in stock or by special order at local bookstores, public libraries and www.amazon.com.
If you want to know how the successful “big boy” high-roller real estate investors think, Steve Bergsman’s new book “Maverick Real Estate Investing” provides a concise glimpse into their minds. Well-known realty investors such as Sam Zell, Donald Trump, Samuel and Richard LeFrak, Gerald and Jeffrey Hines, Walter and Douglas Shorenstein, Hamid Moghadam, John Kukral, Dick Dusseldorp, Frank, Peter and Steven Lowy, Eli Broad, Melvin and David Simon, Paul Reichmann, and many others are among the real estate tycoons profiled.
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This fascinating book explains the tactics used by these high-roller real estate investors whose strategies can also be easily adapted by “mom and pop” investors.
For example, Sam Zell, known as the “grave dancer” because he loves to buy distress properties, can be emulated on a smaller scale by ordinary investors who haven’t raised millions of investor dollars for their real estate investment trusts (REIT), as Zell has done. He thinks big, but some of his REITs have also lost big, usually recovering after several years because of long-term holding power.
The book explains how the kingpins of real estate investing got started, evolved and eventually became successful despite challenges along the way.
The book’s most memorable story is Donald Trump’s well-known pitfall when he explains how, after he was $9 billion in debt to banks, an officer of lead Citibank phoned him at 3 a.m. to appear at headquarters or risk losing everything. Even “The Donald” couldn’t find a New York City taxi at that hour so he walked the 15 blocks in rain to negotiate the salvage of his realty investments.
Most of the realty tycoon stories in the book are not that dramatic. Instead, they emphasize the perspective of different investment styles.
To illustrate, San Francisco’s Walter and Douglas Shorenstein explain how they rely on repeat co-investors to supply the equity cash for their investments. The LeFraks show their conservative ways for developing New York City apartments without even borrowing construction funds.
The theme of the book is conservative real estate investment prevails in the long run, and the most successful mega-investors depend on their co-investors for equity money. The major exception is risk-taker Sam Zell, who operates the nation’s largest REITs, which are so huge that even slight mistakes, such as overpaying for a major investment portfolio, can’t rock his operation.
This enjoyable book about high stakes real estate investors cuts to the essence of their investment strategies. A few use high-leverage, winner-take-all techniques. Those who lost, such as famous maverick William Zeckendorf, are named but not seriously profiled. But many of the successful investors prefer to buy existing properties in good condition where the owner, rather than the property, is in trouble.
Chapter topics include “Make a Good Deal”; “Understand Cycles”; “Use Other People’s Money”; “Establish Cash Flow Targets”; “Be in Alignment”; “Find a Nearly Perfect Location”; “Benefit from Someone Else’s Disasters: Make Safe Gambles”; “Hire Savvy Managers”; “Get Good Legal and Tax Counsel”; and “Sell to Your Advantage.”
Although this book profiles real estate tycoons, it provides superb advice for ordinary investors who can use the same techniques but on a smaller scale. It’s fun to read about successful realty investors and then use their tactics on lower-valued properties. This well-researched book provides insight not available elsewhere of strategies that less well-off investors can also use. On my scale of one to 10, this superb book rates a solid 10.
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