100 Million Dollars...Can real estate really produce this?
Real Estate Investor · Hartford, CT · Member since 2011 · 222 posts · 17 votes
Hey Guys,
So i was reading a really interesting article on FORBES the other day, and it was about how many of these real estate TYCOONS did over there careers.
The interview/articles featured people such Sam Zell, Eli Broad, Stephen Ross, Jorge Perez ect
And the article was about how these guys built HUGE real estate companies over there careers, and how they almost lost it all, good times and bad times ect...
It was very interesting because these guys were all talking about the kinds of deals they were doing, how things were when they first started out ect
Now, my question is;
IS REAL ESTATE REALLY PRODUCING THESE GUYS MILLIONS OF DOLLARS OF CASH FLOW IN A MONTH, EVEN POSSIBLY YEARS?
I know this may sound like a silly question, but i really wonder...
WHAT SEPARATES THOSE GUYS FROM US (OF COURSE $$$) BUT HOW IS IT THAT THESE GUYS ARE ABLE TO BUILD THESE MASSIVE NETWORTHS???
Contacts, family wealth, luck
Im really excited about hearing some of the feedback BP!
Geoffrey- the answer is absolutely yes! As one of the older people here on BP I've been able to see quite a few amazing things during my real estate career. I hope I don't get blasted for this e-mail, but it does require a little in the way of explaining what I was doing in real estate and what level I had reached in the late 1970s.
As a previous poster had said a lot depends on timing and location and I have always stated that was of the utmost importance in my real estate career. My early years were spent in orange county just a short drive down the freeway from Los Angeles. It was relatively easy in that era to make money in real estate and I've often stated that here on BP and also in my book. There were lots of opportunities that don't exist now. You could buy homes with relatively little down payment and you could assume FHA and VA loans that others had taken out at very little down payment. It was easy to buy a home with four or 5000 down and see your money double or triple in value due to the high inflation rate in less than a year. At one time I was watching my money double in less than a year. It does require more time in my opinion for your money to double when you have a great deal of it. The options become fewer.
My net worth grew to not quite $10 million at its highest point in the 1970s and early 80s. My health was failing, my weight was in the stratosphere, and I was told by a physician that I would definitely become the richest man in the graveyard. At the time I had four children and would later have two more children. As others have stated on this post some people become workaholics and spend 24/7 doing just real estate or other ventures.
The reason I started this post in this manner was I want to tell you about an individual that definitely has accomplished this. Many of you will recognize the name Jerry Buss. This gentleman died recently I believe that the age of 80. An incident that became very impressionable on my mind occurred in 1979. This individual who had started with literally $1000 and purchased into an apartment building had just closed a transaction to purchase the Los Angeles Lakers basketball team for $67.5 million. Not only did he get the team, but he also got the basketball stadium known as the forum in Inglewood California. The team was not worth the amount he paid at the time. I believe at the time, the forum was the most expensive piece of real estate that he had purchased but I could be wrong on that fact. What I do know, is that he continued to make the Lakers a name brand which was recently listed by Forbes magazine having a value of $1 billion! I believe the article said that the net income was roughly $50 million annually and remember, sports teams have very unique ways of showing little in the way of income with all of the tax write offs available to them.
This gentleman died recently with a supposedly value of $600 million. The reason I mentioned this incident, was I found myself at a crossroads. I could either continue to work 24/7 in real estate and continue to double my net worth at most likely a slower pace but still very possible. I was telling myself that if I could continue to double my net worth approximately 3 more times, I would be in position to buy a team like the Los Angeles Lakers. I don't know whether it ever would've been possible, but I do feel that I would've lost my family and possibly my life due to being in such poor physical shape. I did make the decision that money was not that important and shortly after that I moved my family to southern Oregon to basically retire. There were enough funds to live on but I would never become Jerry Buss.
I sometimes wonder what life would have looked like if I had chosen to continue at the pace I was on providing I didn't die from obesity! I guess I would have to admit, sometimes it has been interesting to think what might have been. There are many examples of people that are literally receiving millions of dollars annually or even monthly that oh their well-being to real estate. Jerry Buss is just one example. Rich
Possible, but incredibly unlikely.
Real estate...
Internet IPO...
Some invention...
As Seen on TV item...
All of these *could* product millions, but rarely do.
For every multi-millionaire that "made it" in real estate, you have tens and tens of thousands who only make a modest living. If that.
It's like every kid who self-produces a song on YouTube thinks they'll become rich and famous.
Or, even nerdy teen who makes a website thinks they're the next Google.
Possible, but incredibly unlikely. A more realistic goal is to make a comfortable living wage, while setting away some for retirement and vacations.
I would imagine that most here are making more than I do from rentals. Very much more, I would guess. Even so, I would say that the odds of making millions and millions in cash off real estate aren't likely. Some combination of pre-existing assets and cash to invest, know how, connections, luck, tenants, flat out chance, and rental market could all be factors. You could have two people following the same investment process and one be rich, the other be making a small amount. I would say "chance" has something to do with it, along with skill, connections, luck, location, and the other things.
Real estate has made some (a small percentage) of people millions. There was a show on HGTV where each room in a mansion was worth $1 million. The house was worth, I think, tens of millions total. The owner was a real estate mongol in California. They didn't say his name on HGTV, just his industry.
I think it would be incredibly unrealistic to go into this thinking you'll make millions. I would run the numbers on each deal and try to make a reasonable middle-class living in order to stay in the business. Otherwise, I'd' get out of it.
I think (know) it is very likely and a proven fact. Many millionaires are made from RE. Can you start small with a few rentals and grow the portfolio to 1000 doors each producing $100 per month cash flow? Of course you can and many have and will continue. Others do even more.
Has it produced $100 million is assets? Im sure it has for some, of course, that is not as common, but again, very, very possible.
I've heard gurus state that more people because rich from real estate than any other way. Some time back, I looked at the Forbes richest people list. A handful out of the top 100 had dealings in real estate.
I just re-counted the list. 43 out of the top 501. So, if getting really rich is your goal, real estate is one way, but its only one way. And not even an especially common way. I was generous in the counting, too and counted anyone that had real estate listed as a source, even if they had other sources.
http://www.forbes.com/billionaires/
IMHO, two things separate people who are wildly successful from the masses and even their only-10%-as-rich peers:
1) Working really hard, and
2) luck
Being in the right place, making the right choices even without all the info, and being involved in the right businesses at the right time make a HUGE difference. We operate in a "winner take most" environment that sorts a few out for massive wealth. "Success breeds success" is one way its said. "The 1%" vs. "the 99%" is another. For every real estate tycoon (or sports star, movie star, retail tycoon, or internet entrepreneur) there are hundreds or thousands of people who are just as smart, know just as many right answers, and work just as hard, but just do something a little different and come out much worse. Two books I like that discuss this phonenomena are "Outliers" by Malcolm Gladwell and "The Black Swan" by Nassim Nicholas Taleb. That story is a little discouraging. But I take two lessons from it. First, hard work (in all its various forms) is essential. Without it, you have little chance of huge success. Second, if you don't achieve these top pinnacles, then don't be discouraged. The stars have to align so carefully that even killing yourself to achieve these goals probably won't get you to the tip top.
Ask yourself this. If someone bought a house in 2002 and then sold in 2007 they likely made a ton, especially in boomy areas. But did they really know something the guy who bought in 2006 and then wanted to sell in 2011 didn't? A few, perhaps. Some did read the tea leaves and saw the bubble was about to burst. But by far the conventional wisdom in 2006 was that you should be buying as much real estate as possible. If you did, its entirely possible the rest of your life is seriously challenged.
Yes. It does and can happen. It is about your level of determination. It doesn't happen overnight. I know a gentlemen who has experienced this. He built 100 million dollar portfolio in 14 years.
But he spent 14 years 24/7 to get where he is. He wasn't doing this on the side, or trying to get it done while working fulltime somewhere else. He sold and bought everything himself as a licensed broker. He pooled together resources of others as well to help him buy large distressed office buildings as well. And he had the benefit at the peak of his success was the peak of the real estate market in california.
Ask Don Trump (a billionair). Mostly REI
Will Barnard- your absolutely right will. reaching a 1000 door is very, very possible. of course doesnt happenover night, but guys are definitely reaching/passing this number. Im sure you know a few, as do I ;)
Jon Holdman- thanks for quoting those books, im actually looking to pick up the Black Swan. I heard it was a great read...
It was just really inspiring you know. Not even so much the money, but to accumalate so much as assets. that was the striking part about it.
To break into the asset/networth class is not a cake walk. That is a completely different league.
I was even reading about different real estate companies, that alot of people probably never heard of. (Multifamilyexecutive.com)
and these guys own 1ooo's of units....
Have you guys ever ran into anyone that owns anywhere close to this amount in assets????, bbecause like you said, it takes alot more than just hardwork. (RELATIONSHIPS, RELATIONSHIPS, LUCK)
Emily Dixon- that was really interesting to hear! 14 years? thats a real short time... Is he still in the business?
Well if that's your goal. Then break it down into actionable parts build a plan to attain that goal. And then plan on working 24/7 to get there. However, if you just want to make your life better and be able to retire earlier then set that as your goal.
If you want a million dollars in monthly cashflow you'd need 10k units. That's a lot of units to manage in residential and probably better to move into commercial real estate.
You ask what's the difference between mogul style investing and us style of investing.
1) Drive
2) Lifestyle
While those two go hand in hand, they are driven to build an empire. They sacrifice early in their life their lifestyle. They give up everything to build that. Relationships, family, everything. Most of us, probably are not looking for that, we want to slow down and enjoy life instead.
Geoffrey- the answer is absolutely yes! As one of the older people here on BP I've been able to see quite a few amazing things during my real estate career. I hope I don't get blasted for this e-mail, but it does require a little in the way of explaining what I was doing in real estate and what level I had reached in the late 1970s.
As a previous poster had said a lot depends on timing and location and I have always stated that was of the utmost importance in my real estate career. My early years were spent in orange county just a short drive down the freeway from Los Angeles. It was relatively easy in that era to make money in real estate and I've often stated that here on BP and also in my book. There were lots of opportunities that don't exist now. You could buy homes with relatively little down payment and you could assume FHA and VA loans that others had taken out at very little down payment. It was easy to buy a home with four or 5000 down and see your money double or triple in value due to the high inflation rate in less than a year. At one time I was watching my money double in less than a year. It does require more time in my opinion for your money to double when you have a great deal of it. The options become fewer.
My net worth grew to not quite $10 million at its highest point in the 1970s and early 80s. My health was failing, my weight was in the stratosphere, and I was told by a physician that I would definitely become the richest man in the graveyard. At the time I had four children and would later have two more children. As others have stated on this post some people become workaholics and spend 24/7 doing just real estate or other ventures.
The reason I started this post in this manner was I want to tell you about an individual that definitely has accomplished this. Many of you will recognize the name Jerry Buss. This gentleman died recently I believe that the age of 80. An incident that became very impressionable on my mind occurred in 1979. This individual who had started with literally $1000 and purchased into an apartment building had just closed a transaction to purchase the Los Angeles Lakers basketball team for $67.5 million. Not only did he get the team, but he also got the basketball stadium known as the forum in Inglewood California. The team was not worth the amount he paid at the time. I believe at the time, the forum was the most expensive piece of real estate that he had purchased but I could be wrong on that fact. What I do know, is that he continued to make the Lakers a name brand which was recently listed by Forbes magazine having a value of $1 billion! I believe the article said that the net income was roughly $50 million annually and remember, sports teams have very unique ways of showing little in the way of income with all of the tax write offs available to them.
This gentleman died recently with a supposedly value of $600 million. The reason I mentioned this incident, was I found myself at a crossroads. I could either continue to work 24/7 in real estate and continue to double my net worth at most likely a slower pace but still very possible. I was telling myself that if I could continue to double my net worth approximately 3 more times, I would be in position to buy a team like the Los Angeles Lakers. I don't know whether it ever would've been possible, but I do feel that I would've lost my family and possibly my life due to being in such poor physical shape. I did make the decision that money was not that important and shortly after that I moved my family to southern Oregon to basically retire. There were enough funds to live on but I would never become Jerry Buss.
I sometimes wonder what life would have looked like if I had chosen to continue at the pace I was on providing I didn't die from obesity! I guess I would have to admit, sometimes it has been interesting to think what might have been. There are many examples of people that are literally receiving millions of dollars annually or even monthly that oh their well-being to real estate. Jerry Buss is just one example. Rich
Rich -
Jerry Buss was my first thought when I read this thread too...
I was lucky enough to get to play poker with Jerry a few times (all before I got into real estate, unfortunately). Great guy. Just to add a little color to this story, he was actually a professor when he got into real estate investing -- apparently, teaching didn't pay him enough so he invested in real estate part time for additional income.
So, not only was it possible for him to do, but he basically did it part-time for quite a while. I believe that by the time he got into real estate full-time, he was already quite wealthy from his investments.
Geoffrey Murphy
He is still in business but now he has started a family so not as driven. the 14 years was NO FAMILY, NO DISTRACTION so its like 25 years for the rest of us real folk. I think his 100 mil in assets dropped to half of that when recession hit! DIFFICULT COME EASY GO
The question I have for you is is it worth it? How much money do you need to be happy? DO you need 100million dollars?
The fact is you can spend 14 years with no life, no fun, no family, no relationships pursuing money and get to 100million dollars. You can get hit by a train the next day and it was all a big waste of time and energy.
People should think about the fact life is short and there are no guarantees in life. Make a solid plan with goals for yourself, everyone I know who has made millions and millions had one thing in common A PLAN, GOALS for each year...
Pursue the plan, but DO NOT FORGET TO LIVE YOUR LIFE
Life liberty and the pursuit of money. The american dream.
Troy Fisher- your absolutely correct....you have to break it down in order to achieve that...thanks alot, any more advice
Rich Weese- this is absolutely very possible, seeing the day and age that were living in. Im sure it was much easier seeing that it was less comp, and regulations when obtaining assets.
Mr. Buss story was very interesting, i actually just read a neat article on that guy. Im sure you knew individuals that met this goal in there lifetime!
J Scott- WOW, that must have been really neat to meet that guy. on the biography i read, stated that he was a really BIG gambler, and even finished 3rd in a big tournament. How was that experience?
Emily Dixon- i must admit your absolutely right with your statement.
however, 14 years from now,i'll be 35. maybe starting a family by then. right now in my life it is "LIVE, BREATH, EAT" real estate, and so far it has been starting to finally come together and take off....
So im all in personally. if i reach 100 million then great, if i reach 500 million, even better! ;)
thanks alot guys!
Geoff
I think getting to 100 million alone by just investing in real estate is possible but I think the vast amount of investors use multiple vehicles to get there. At some point someone will approach you with a business investment or you'll put some money in the market etc.
Har har. Did he go around on horseback acquiring real estate under threat of extermination? :)
Amusingly enough, the word (I assume!) you meant, mogul, comes to us from the Mughal Empire...which was founded by a branch of the Mongols, so it's not entirely inappropriate.
Jim M.- i agree. more than one way is probably used.
This has definitely turned into a great thread.
Thanks
BP