What it Means to be a Professional Investor

Here’s the thing, is that 99% of people are retail investors, and that means they buy their investment from somebody else and they sit around and they’re used to having absolutely no control of the outcome. So what happens is they’d buy something and they hope that it goes up. Professional investors do not hope anything happens. When our car runs low on gas, we don’t bang on the gas tank and hope that it springs back to full. That’s just not what we do. What we do is we activate a strategy, we run into a gas station, fill up the tank and keep going. That’s what professional investors do. Very, very different from retail investors. That’s not to say that there’s a couple of really good retail investors out there. But for the most part, the pool of retail investors, they just don’t have a lot insight. They don’t have a lot of information. They don’t have a lot ability to really control what happens. The whole syndication business, the fund management business, the business that we’re all in together, is we control a lot of what we do. Now when you bet on deals in the stock market, you have almost no control. I mean you really are just doing your best guess whether it’s scientific, algorithmic or whatever it is. But in real estate, we have a lot of control.

Listen to full episode: https://lifebridgecapital.com/2019/09/ws333-what-it-means-to-be-a-professional-investor-with-joel-block/

And professional investors do a really good job of controlling the outcome of an investment. If there are 10 houses on a street, one is underpriced, it’s almost like that house up lights up in green for those of us who are in this business and we know what we’re doing, because we look at it. Every house worth 100, and we combine this one for 50. It’s going to cost us 20 grand to fix it up. 5 grand to sell it or do whatever we’re going to do, and we’re going to net 25, and we can do that over and over and over again with great accuracy. Retail investor just can’t do that. That’s something that professional investors do. And that’s the reason that this whole industry exists, is that retail investors want to get on the coat-tails and ride us into the sunset, because they’ll give us their money and share the profits, because we know how to do things that they don’t know how to do, and that really at the end of the day is the big difference between retail and professional investors.

It’s not accurate to call everyone an investor, because there are passive investors and there are active investors. We are active investors. We take title to the real estate. We actually work the real estate. We do the job that we need to do. By the way, whether it’s real estate, film, entrepreneurship, whatever it is, whatever category, it doesn’t matter, because the money works no matter. I look at money as a tool. To me it might as well be a shovel or a hammer, and I use that money to make more money. Regular people don’t have the same kind of relationship that syndicators and money managers do. In fact, one of the things that I always say is that the money is not made in the real estate. Everybody thinks it’s the real estate. It’s not the real estate. The money gets made in the money, and if you control the money, you can buy all the real estate you want. So you have to control the money in order to move along and do what it is that you want to do.