You’ve heard it before, and you’ll hear it again: there is no reward in life without risk. In the sometimes-daunting and always-towering world of real estate, this is certainly true. To get even one property off the ground, you’ll need to take calculated risks. To become enormously successful, you’ll need to bravely forge forward in the face of uncertainty.
I’ve always been a risk-taker. In fact, my decision to pursue real estate was a risk in and of itself. Before entering the real estate industry, I was lawyer to a development firm. In this position I witnessed first hand that, in fact, the grass and money were greener on the other side.
In many “grass is greener” situations, the punchline is that the grass isn’t so green after all once you’ve hopped the fence. Is it a risk to switch industries in hopes of brighter pastures? Inherently. But it’s against my nature not to explore promising opportunities—I needed to take the risk. And I truly believe it’s my drive to take risks that give me a competitive edge.
So here are some pointers on taking calculated risks in real estate, and what making informed leaps of faith can do for your career in this industry.
Educate first, risk later
As said George S. Patton said, “Take calculated risks. That is quite different from being rash.” In other words, risks on a whim should hardly count as risks, period—it is foolish beyond measure to put yourself in a vulnerable situation without cautious vetting and planning first. When an opportunity presents itself, investigate it thoroughly: what are the potential benefits? What are the potential pitfalls? Weigh these factors before making your move.
Smart risk-takers are able to make calculated risks with speed. If you sit on something too long, the opportunity may pass. My advice is to tune out your emotions when making such decisions—fear and greed especially—and pay attention to logic first and foremost. Know what you’re getting into and be prepared to deal with every outcome.
If you can’t lose it, don’t risk it
Many real estate entrepreneurs come from old money, or have established power and connections in some way. This makes it difficult for hungry up-and-comers to level the playing field because, while existing entities can take risks without thought, one risk for an entrepreneur can be the difference between fortune and utter failure.
It’s common wisdom that if you can’t lose something, you shouldn’t risk it. This may seem like a huge barrier to success, but in reality it just means you need to build your tolerance and understand it. Your financial, personal, and business circumstances should all be considered carefully, fortifying these areas to allow for more risk and reward. The stronger your buffer, the more opportunities will come into focus on the horizon.
Seize new markets
When I decided first to move from commercial to residential, then from Connecticut to NYC, some considered the move foolish, and the result of a lack of experience. But here’s the truth: everyone is inexperienced at some point or another, and there is no way to get from one end of the spectrum to another without trying.
The key is paying attention to different markets, discovering openings, and making space for yourself to succeed there. Knowing all about real estate trends is a good place to start—what’s heating up and what’s cooling down; which neighborhoods have deficits and which are experiencing glut.
Hire a great team
All the risk-taking in the world may be for naught if you don’t have a great team to back you up. I like to surround myself with the most intelligent and talented people in the business so that I can be confident in every decision we make as a team.
With great support, I know that my own blind spots (we all have them) will be challenged. We arrive at decisions together, then execute projects together, and provide quality service from start to finish. No man or woman can do it alone. The more trusted advisors you have, the more collective knowledge you have at your disposal.
Find the right partners
Lastly, entrepreneurship in real estate has more to do with strategic partnerships than you might think. You’ll want to look for partners who share your mission and values, or who have something to offer that you don’t, making you a stronger force together—and one more capable of taking risks.
As another example, I’ve partnered with a number of big buyers in Chinese real estate. They have a strong understanding of the condo market in New York City, and tend to have buying power and liquid capital. Strategic partnerships help to accomplish mutual goals, drive profit, and stimulate the economy. A good partner is a source of stability when you take risks, too.
As a risk-taker myself, I’ve seen my fair share of failure and success. But if there’s one piece of advice I can leave prospective entrepreneurs with, it’s that it’s worth it to not just stay comfortable. Mark Zuckerberg may have said it best: “The biggest risk is taking no risks.”