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Monthly Archive for: ‘March, 2011’

  • Book Review: The Real Book of Real Estate

    Since this is our first official book review, let’s discuss format. On all future reviews, I will start with a quick summary of the book with my thoughts on its contents, tone, and overall value. Then I will break out the Pros vs Cons of the book in bullet points. I will also include an audience recommendation. That is, who would this book be most useful to? Finally, I will end with an overall rating of the book out of five possible diamonds (because my diamonds are one better than Roger Ebert’s stars.). Now that we have established the framework, let’s criticize someone else’s creative work.

    The Real Book of Real Estate by Robert Kiyosaki

    Courtesy Amazon.com

    You may know Robert Kiyosaki from his successful series of books that started with Rich Dad, Poor Dad. Over the past several years he has built a small line of investing and personal finance books that are staples for many investors. You may not know that Robert himself is an investor in commercial real estate. He has an investing business in Phoenix, AZ and this book is an ode to his favorite investment, commercial real estate.

    To say that this book is “by” Mr. Kiyosaki is slightly misleading. He did write a few of the chapters, but most of the chapters came from 21 of his closest business and personal contacts. They have a wide range of expertise, talents, and specialties within the field of CRE. One lady does interior design for commercial space. One guy brought the Subway franchises to Russia and the Burger King franchises to Hawaii. One guy specializes in exchanges (as in “1031s”). Donald Trump and his sons each wrote a chapter. And this is, in my opinion, the strength of this book. There are so many different authors with different perspectives that you get exposure to many different corners of the industry.

    This is not a deep and engaging review of one aspect of the industry. You will not be an expert in any one subject having read this book. But, you will have a deeper appreciation for the different challenges and niches within our industry. Kiyosaki goes for width here, not depth. And not everyone will enjoy it, but I did. I think this books reads well for beginners and younger associates in the industry. If you are trying to plan a career path and are interested in other people’s stories and challenges, this book is worth your time. If you are a grizzled veteran and have carved out a very specific niche for yourself, then this may not be the best addition to your library.

    Because this book is written by so many authors, it is difficult to give a comprehensive review of the entire volume. Subject matter, tone, and styles change with every chapter. Some chapters are better than others and some are more interesting than others. Personally, that causes me to keep reading in hopes of discovering another well written or interesting chapter. I suppose some people might consider that lacking “flow” and might call it “disjointed,” but I didn’t get that feeling.

    Long story short: I liked it and found it interesting, but I doubt that everyone will feel the same.

    *Note: My version of the book is the CD edition. I take it with me and listen to it in my car and have listened to it at least 3 times all the way through since I bought it last year.

    Pros: Large range of topics, interesting stories, insider knowledge, easy to read/understand

    Cons: May be too broad, could seem disjointed, different styles and tones every chapter

    Target Audience: Beginners in the industry and young associates

    Overall Rating: ♦♦♦ (out of 5)

    Here is the Amazon link to buy this book:
    http://www.amazon.com/Real-Book-Estate-Experts-Stories/dp/1593155328/ref=sr_1_1?ie=UTF8&qid=1301418847&sr=8-1

    Ratings Guide

    ♦ = Not worth your time

    ♦♦ = May be worth your time if it is specific to your industry or interests

    ♦♦♦ = A decent book and worthy addition to your library depending on your interests

    ♦♦♦♦ = A great book and an excellent addition to your library.

    ♦♦♦♦♦ = One of the all time classics. A must-read for anyone and everyone.

  • 5 Deals I Would Love to Work On

    I do not know what I am going to want for dinner tonight. So trying to guess the final career path I will take is silly.

    So, assuming I could have a wide-range of career paths, here are 5 deals that I would love to work on over the course of my career:

    1. The Atlanta Skyline: I think any young CRE pro wants to one day affect his hometown skyline with a property he/she creates. So, in that respect, my wish isn’t all that unique. What is unique, is that I have known I wanted to do that since I was 22 and I have been scouting infill land since I moved to the city. The main advantage I have is time. Right now, it doesn’t make sense to develop a high-rise spec office building or a high-rise hotel. But, it surely will at some point over the next 45 years (the duration of my CRE career). So, when it makes sense to develop a high-rise again, all I have to do is control the right infill parcel and start the cranes. Easier said that done I’ll admit, but still attainable.

    2. A Tropical Resort: I speak fluent Spanish and I find there are very few opportunities to leverage that skill in my current business. I would love to create a boutique resort in a democratic South American/Caribbean country. I say boutique because I don’t intend to fight the Four Seasons and Sandals resorts of the world (I would lose anyway). The economies of these “emerging market” nations are growing and strengthening every year and tourism is growing in the second tier markets (Nicaragua, Belize, Panama, etc.). So I would bet that there will be strong demand for that product at some point in the next couple decades.

    3. A Deal in NYC: One of the toughest and tightest cities on the planet. I know it will be a challenge and I know that I will be fighting against an army of local developers/owners. That is what makes it fun. It will be a challenge and it will probably keep me up at night. That excites me. If it were easy, anyone could do it. I love the challenge and the sport of competing against the in-town shops. Bring it on, Yankee!

    4. Development in Eastern Europe: This is appealing for many of the same reasons as the South America/Caribbean idea above. These are growing democracies that have joined or will join the EU and are seeing an explosion in the middle class. Places like Slovenia and Bulgaria are ripe for commercial development and I would love to be one the players in those markets.

    5. Any deal in China: This is sort of a mix of all of the above ideas. It is a tough and tight market, but there is nowhere on the planet where growth is more robust or more certain. The size of the middle and upper class in China is staggering and the places they need to work, shop, and live are falling apart. Development and redevelopment is already and appealing venture in the larger markets (Beijing, Shanghai, Guangzhou), but I would bet that secondary markets like Nanjing, Wuhan, and Hangzhou will be hotbeds for commercial property in the next 20 to 30 years.

    Did you notice that of the 5 deals listed only 1 was in Atlanta and only 2 of the 5 were on this continent? Also, none of these deals mentioned massive returns or 25%+ IRRs. Money is important and no deal will work without the right investment criteria, but I am looking for satisfying work not the biggest paycheck. I will happily cut into my margins to work on a fun deal in an interesting location.

    This may all be pie-in-the-sky dreaming, but even if I only get to work on 2 or 3 of these deals I will consider myself to have had a challenging and rewarding international CRE career. Isn’t that much more important than who makes the most money or who has the biggest house?

    – Duke

  • Required Reading: Atlanta Business Chronicle

    The last required reading suggested the Wall Street Journal for daily updates on macroeconomics and global trends. This time, let’s get more local.

    The Atlanta Business Chronicle is a weekly print publication that covers all aspects of the business markets of our fair city. The ABC also offers twice-daily email updates that cover the day’s most important business headlines.

    The allure of the ABC is the scope of businesses and industries covered. Industries include commercial real estate, education, energy, environment, banking & financial services, health care, human resources, insurance, legal services, logistics & transportation, manufacturing, media & marketing, residential real estate, retailing & restaurants, sports business, technology, travel, and miscellaneous other sectors as stories arise.

    For those of us in CRE, the ABC has created the Real Talk Blog; a commercial real estate specific blog with weekly entries from industry experts and veterans. I know I have commented on it before, but I have my favorite authors and topics but generally look forward to reading all the weekly posts.

    The March posts for Real Talk are here:     http://www.bizjournals.com/atlanta/real_talk/2011/03/

    All in all, there is no better resource (that I know of) that reports on local business trends and developments in and around Atlanta. If you want to stay on top of local business news, take my advice and get the print and email updates.

    To sign up for for the twice-daily email updates, go here: http://www.bizjournals.com/atlanta/

    Combination print & digital subscriptions for the ABC are $99, $178, and $227 for one, two, and three year terms, respectively. Email updates are free.

    – Duke

  • Best Practices: Limit Your Weaknesses

    Everything you need to know about business you can learn from baseball.

    In baseball, when I am coaching young men that are just starting to learn the game I always try and focus on their weaknesses. If a player is a decent hitter, decent baserunner, decent fielder, but poor pitcher, I always start with working on his pitching.

    I could focus my time on making him an excellent hitter or baserunner or fielder, but my theory is that when players are young they aren’t going to have a great idea about where their future lies in the game. A boy may be an infielder at 6, an outfielder at 10, a pitcher at 12, and a catcher at 15. There really is no way to know when a boy starts playing. So, I try and limit the weaknesses of each player so that he has the basic skill set necessary to compete at whatever position he ends up playing when he reaches the pinnacle of his career.

    The same logic applies to real estate. Let’s assume that every businessman or woman wants to be as successful as possible when they reach the pinnacle of their CRE career. Let’s further assume that no one can predict exactly where they will end up in this business when they first start working in CRE. Most people have trouble predicting their life status and preferences in ONE year. Trying to predict one’s future employment in TWENTY years is nearly impossible.

    Working with those assumptions, I think of most CRE professionals as young baseball players. They have skills and preferences but they also have glaring weaknesses and only a vague idea of their final career path.

    So, my advice is the same to both parties: start off with limiting your weaknesses and, as time passes, work on increasing you strengths to fit you specialization.

    For a ballplayer that means learning to hit, bunt, run the bases, field infield, field outfield, pitch, etc. As the player gets older I may focus him on outfield and hitting or hitting and pitching.

    For a CRE professional, that means getting to know the lending market, the investment sales market, tenant rep, landlord rep, property management, asset management, property acquisitions and dispositions, development, etc. A basic understanding of the entire real estate pie will help the young professional to better grasp his or her slice of that pie.

    The general idea is that there will be decades of work ahead in which to specialize. At the beginning, learn everything you can about all aspects of our industry and that strong (and wide) foundation will make you better prepared for the niche you eventually choose.

    – Duke

  • Email Etiquette

    I recently had an interview with an equity placement firm here in ATL and even though I didn’t get the job I did end up getting some feedback from the hiring manager.

    His first complaint with most applicants was their written communication. He said that he would get emails written in text speak (Great 2 meet U!) or in colloquialisms (Y’all got a great shop.) and would immediately cross that candidate off the list.

    That got me to thinking about the way that I write emails and the way my friends write emails to me, because I would argue that the polar opposite of that uber-casual style would turn me off just as much.

    For instance, if I met a guy or girl at church or a networking event or a restaurant and they emailed saying what a “tremendous honor is was to make your acquaintance,” then I would assume they were either hitting on me or they were British Royalty.

    Most of the humans I know do not speak that way or write emails that way. These aren’t romantic period novels. These emails are little more than just an electronic hello (or thank you or whatever).

    So, given the importance of email communication in our business and in any business, here are a few rules to live by when writing emails for business:

    1. Know your audience. This could really be all of the rules rolled into one because it is the most important. Before you click on “compose,” think about who you are writing to, why you are writing, and what you want to email to convey beyond just the words. If you do that you will seldom violate any of the rules below.

    2. Never, ever use text speak. I am 26 and it annoys me beyond belief when people use text abbreviations for business emails. Do not end an email to me in LOL! or TTYL!. I automatically lose a little respect for you. Fair or not, it happens.

    3. If in doubt, be formal. Being too formal will get you in much less trouble than being too informal. I would much rather wear a tux to a business casual event than jeans to a black tie event.

    4. Be concise. Everyone is busy. Do not write me a novel. If something requires extensive explanation, just call me.The smartest people I know can communicate everything they need to say in a sentence or two.

    5. Be clear. If I have to send you a reply email asking for further explanation, then your original email wasn’t written clearly (or maybe I’m just THAT stupid). Again, we are all busy. Let’s limit the number of emails we exchange.

    6. SPELL CHECK. Do I even need to explain this one? How hard is it to press the “ABC Check” button?

    7. Do not abuse your Reply-to-All privileges. Not every email needs to be sent to everyone on the thread. I have already seen the cheezburger kittens emails, so I do not need to be copied when you send it to your entire contact list.

    8. Fill out the subject line. I get 150 emails every day. What is this email about and why should I read it? I may or may not remember you and why you know me. An intriguing subject line can almost always entice me to open your email.

    9. Limit the use of templates. I know that many of us use boilerplate email formats for thank yous, introductions, appointments, etc. But try and put something in the language that shows me that you know who I am. How is your baseball team doing? Does your sister like her new job? Glad to hear your friend got better. A personal addition will cancel out the impersonality of a template.

    10. Read before you send. Seriously. Do not ever send anything without reading it at least twice: once for content and once for grammar/punctuation. You will be surprised by how many errors you catch on your third read.

    Those are my tips. Do you have any to add?

    – Duke

  • Required Reading: WSJ

    In our business, information is worth its weight in platinum.

    At a certain point, everyone has basically the same skill set and knowledge, and he with the most information wins.

    Along those lines, the wise businessman reads and absorbs new information everyday and the best place to start is the Wall Street Journal. The WSJ is not RE specific and certainly covers much broader territory than our industry. But that broadness allows a reader to understand the macroeconomy and the global economy.

    No one operates in a vacuum. So understanding the macro and global economic environment is relative to EVERY deal. The WSJ covers corporate finance, global and national stock performance, trends in equity markets, general business trends, US treasuries, notable deals, and dozens of other topics that can be applied to analysis of commercial real estate.

    I have found the most useful parts to be the “What’s News” section and the “Money & Investing” section. (The M&I section has a commercial real estate focus every Wednesday.) The most interesting parts are the “Opinion” section where industry experts offer their views on contemporary issues and the “Personal Journal” section that covers broad personal topics.

    Read the WSJ every day.

    I get mine on my iPad and read it every morning on the treadmill before breakfast. You can only follow the trends and stories in depth if you read it every day.

    A True Story:          When I was just getting into the business, I sat down across from the senior director of my office and asked him: “Senior Director, if you could offer one piece of advice to me or one habit I should pick up now that will be hugely beneficial across my career, what would it be?”

    His response was: “Read the Wall Street Journal every day.”

    So, even if you don’t believe me, believe him and his billions of dollars in successful real estate deals.

    – Duke

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