Maverick Real Estate Investing

Citation

Ooi, J.T.L. (2006), "Maverick Real Estate Investing", Journal of Property Investment & Finance, Vol. 24 No. 4, pp. 381-382. https://doi.org/10.1108/14635780610674552

I bet you would be able to find a number of how‐to investment guides on real estate in the business section of your local bookstores. As an academic, I discount such books because their coverage is usually one‐sided – emphasizing on the potential rewards from real estate without highlighting the corresponding risks or potential pitfalls of the investment strategies recommended. Furthermore, the recipe is more or less the same with the authors claiming knowledge to the secret(s) of getting rich quickly through investing in real estate and the ideas peddled revolve around using high gearing or contra‐cyclical trading strategies.

Despite the prejudice, I recently bought and read an interesting self‐help book purchased from the local bookshop. What first attracted me to the book was its lengthy sub‐title, The Art of Buying and Selling Properties Like Trump, Zell, Simon and the World's Greatest Land Owners. Unlike the typical get‐rich guides you find in the bookstores, Maverick Real Estate Investing is packed with captivating stories of real estate moguls who have successfully played the real estate game. The book, in particular, profiles some of the most well known and successful real estate entrepreneurs such as Donald Trump, who needs no introduction; Sam Zell, who is regarded as the godfather of modern institutional real estate; Paul Reichmann, the co‐founder of Olympia & York Development which was at one time the largest property company in the world; Samuel LeFrak, who built the Lefrak Organization into one of the world's largest private building companies of residential units; Melvin Simon, who founded the Simon Property Group, the largest retail mall owner in the USA. Others equally successful mavericks who are profiled include Walter Shorenstein, Hamid Moghadam, Gerald Hines, John Kukral, and Stuart Hornery. In total, the bios of 18 real estate mavericks were featured in the book. The information includes their date of birth, designation in their company, education background, and their career highlights. In most cases, the bios traced how each of these “mavericks” ventured into real estate, the obstacles and challenges they faced, as well as their first deal and the project that marked their arrival into the iconic group. In addition, the strategies adopted by these mavericks as well as their personal views on what makes a successful real estate deal are weaved nicely into their life stories. In some cases, the mistakes and important lessons learnt by the mavericks are also covered.

Besides getting to know what makes these mavericks tick, the readers are also exposed to a number of mega real estate deals such as the US$ 4.6 billion acquisition of Cornerstone Properties by Same Zell's Equity Office Properties REIT; the US$5.3 billion purchase of assets from Rodamco; and the unsuccessful hostile takeover of Taubman Centers by Simon Property Group, amongst many others. Although most of the cases featured are from the USA, there are several cases from Canada, UK and Australia. In particular, there are two interesting cases featuring two of the most successful global property players from Australia, namely Westfield and Lend Lease. Two cases on UK‐based projects include the successful Bluewater development by Land Lease and the famous Canary Wharf project by the Reichmann brothers.

The 292‐page book is organized into 12 chapters, each expounding an important rule on real estate investing which the author surmised from his research notes and case studies. The 12 golden rules are:

1. 1.

   Make a good deal.

2. 2.

   Understand cycles.

3. 3.

   Use other people's money.

4. 4.

   Establish cash flow targets.

5. 5.

   Be in alignment.

6. 6.

   Find a nearly perfect location.

7. 7.

   Benefit from someone else's disasters.

8. 8.

   Make safe gambles.

9. 9.

   Hire savvy managers.

10. 10.

    Get good legal and tax counsel.

11. 11.

    Overcome negative responses.

12. 12.

    Sell to your advantage.

In each chapter, several mavericks and their defining projects/deals are profiled to reinforce the golden rule covered in the chapter. At the end of each chapter, the main lesson points are conveniently summarized in bullet points. Written in a story‐telling and commentary format, the book is light and easy to read. I particularly enjoyed entering into the world of the mavericks and getting to know their views and strategies on real estate investment. The author, Steve Bergsman, is an experienced financial and real estate writer. His writing credentials include contributions to a number of leading magazines, newsletters, and wire services such as the New York Times, the Wall Street Journal Sunday, Financial World, Fortune, Investment Dealers' Digest, and Reuters News Service. He is also a regular contributor to the real estate industry publications in the USA.

I recommend this book for those who wish to supplement real estate investment theories with the art of deal making. Personally, I will be able to use the stories and cases featured in the book to provide powerful illustrations for my Real Estate Investment and Real Estate Development classes. I believe the success and not successful stories featured in the book will stimulate the students' interest since they can relate easily to the real cases and persons. At the very least, it provides a stimulating and leisurely read over a free weekend. For easier reference, it would have been helpful if the author list the cases and bios in the content page of the book.