Reading the January edition of Bloomberg Magazine, I came across an interesting quote from a segment titled “Advice from Billionaires”
When asked “what’s the best advice you’ve received”, one billionaire replied, “good deals are like bus stops; there is one on every corner.” This advice illustrates that the investor is not as interested in the deal as in his dedication to it. One invests in the guy behind the deal, above all else.
Working for a real estate owner/operator, I’ve witnessed this a number of times. The fact remains that wealthy individuals have their pick of investments. Many times however, ultra wealthy individuals don’t just want to hand off their money to a Blackstone or Carlyle fund; they want to be active in their investments and have a personal relationship with the person actually handling their hard earned money. This is the major selling point of smaller real estate operators. Small owners provide LP investors the opportunity to have an actual say in the operations of the asset and interact with the general partners.
Owner/operators therefore must rely, not just on relationships, but on their reputations as operators and businessmen. How do you get a great reputation? As Peter Linneman says, “always do the best to fulfill what you said you would do, help others simply because you can rather than because you believe it would indirectly benefit you, and do this for the next thirty years, and you will have a great reputation.”
What do you think?