While trying to find the perfect CFO for the fund we have wanted to create in the future, I had a very interesting conversation with a CFO for a large Canadian corporation. A topic that came up was the realness of the real estate that we talk about. Oftentimes we do not think about that and are working on paper files and closing docs but all this is connected with something very real, tangible, hence the word ‘real’ estate.
When investing in real estate, one must know that it is not the same as investing in the stock market, commodity market, or any other investment. It is as real as the tree on it and the birds that make a nest on the tree. That is what puts real estate on another scale and that is why I love it.
The fact that you have an asset, whether it’s bare land, or a tiny house on a small lot it is real, hence you can value add it from the get-go or you can develop it. You can partner with your neighbor or you can divide your land size, there are many things you can do with this investment that sets it aside from investing in a currency or a commodity.
For the investor, I would like you to think about that word in a little bit more detail. Real what is real? A tangible asset is real. The first time I invested in real estate was in 2005 when we bought our starter home in Scarborough, ON, Canada. Since then I had lost money in the casino, stock market, and con-men in my life. The first time we bought an MF in Austin was the real ‘investment’ I would say in real estate as it did not have a personal bias of any sort. It was a money deal, money in and money out. We did fantastically and maybe that’s why I was sold to concentrate on this idea or maybe that was the first time I made money in any sort of investment. The thing that still sticks out to me is that even though I did not physically go up and repair the damaged roof, but the financial appointment did that. Doing that we added value to a ‘real’ asset which sold for more money. It’s real. That’s what it is.
