By Karen Hanover
The author has permitted the reprinting and redistribution of this article.
“1. Go commercial. Billionaires who make their fortunes in real estate don’t do it in residential. They are moguls with an empire of owned and operated office buildings, shopping centers, apartment complexes, and luxury hotels. That strategy works particularly well for “America’s richest landlord,” 73-year-old Newport Beach Resident Donald Bren, the wealthiest man in American real estate. This self-made millionaire, with a net worth of $4.3 billion, made much of his money as chairman of The Irvine Company, a privately held real estate investment company known for creating balanced, sustainable, quality communities like the 93,000-acre Irvine Ranch in Orange County. Finished plots sell for more than $1 million an acre. The ranch also has 400 office buildings, 35 shopping centers, 80 apartment complexes and 2 luxury hotels. Bren is 6th wealthiest real estate billionaire and the 122nd richest man in the world. He is also one of real estate’s great philanthropists.
2. Do more than invest. Making big money in real estate goes beyond buying property and waiting for it to appreciate in value. It’s all about improvements. John Sobrato of Sobrato Development Companies calls Atherton, home, but he made his fortune in Silicon Valley – for more than 40 years, Sobrato’s SDC has developed real estate in Silicon Valley – specializing in facilities for high tech and R&D companies. Another self-made man, he began in 1953 with one of the first “tilt-up” buildings in Santa Clara County. Sobrato, who owns and manages the buildings it constructs and maintains single tenant occupancy, boasts a portfolio of $1.5 billion. His assets include land throughout Silicon Valley, San Jose, Fremont, Newark and Santa Clara and he has developed in excess of 7,000 rental units.
3. Be able to see the property for what it could be.
Just because you buy a shopping complex doesn’t mean that’s the highest and best use of the property. Know the local zoning codes and be open to the possibilities…Los Angelino Ed Roski did just that. Roski is the founder of Majestic Realty, the largest commercial builder in Los Angeles, boasting an office, retail and industrial portfolio totaling more than 55 million square feet. The USC grad with a net worth of $1.1 billion saw the highest and best use of the formerly blighted area near the convention center and built the Staples Center with Philip Anschutz. Roski is also a minority owner of the Lakers and the Kings. Headquartered in City of Industry, Majestic Realty also has offices in Atlanta, Dallas, Denver, and Las Vegas – where they have a 400-acre business park and 3 million square feet of casinos.
4. Be tenacious and relentless. Billionaires don’t let obstacles or pitfalls keep them from achieving their goals.
Newport Beach billionaire George Argyros is the grandson of Greek immigrants. Argyros began by running a Palm Springs grocery. He graduated to buying and selling corner lots at busy intersections for gas stations. Turned to apartments in 1968. Today, as part of Arnel & Affiliates, Argyros manages apartments and commercial properties in southern California. He has a net worth of $1.2 billion.
5. Have a thick skin. People can be resentful and jealous of successful people. Don’t let criticism of your work deter you from your goals. Consider Red Emmerson – the second wealthiest real estate titan in California. Emmerson is the largest private forestland holder in North America – assets include 1.52 million acres in Northern California, timberland stretching more than 350 miles from Mount Shasta to Yosemite National Park. For the last 20 years, while other logging companies retrenched or relocated, Emmerson, and his company – Sierra Pacific Industries – quietly grew into the second-largest private landowner in the United States. Needless to say, Sierra Pacific is a darling of environmental groups.
6. Have superior information. If you do more research than your competitors, you’ll have an advantage in any transaction. Self-made billionaire Carl Berg was a loan processor before investing in Silicon Valley commercial real estate with John Sobrato in the 1960s. He struck out on own, forming Mission West Properties, a real estate investment trust (REIT) in Silicon Valley. Berg owns a controlling stake in the REIT, which focuses on single-tenant research and development and office properties in Silicon Valley. Mission West now owns and manages more than 100 properties, major tenants include Microsoft and Apple Computer. Currently, the Atherton-based businessman boasts a portfolio of $1.2 billion.
7. Don’t accept the cards you’re dealt.Forbes notes that while one-third of the world’s 46 billionaires who make their money in real estate inherited and then grew their fortunes, two-thirds are self-made. Stockton-based A.G. Spanos Companies are known for building, managing, and selling multi-family housing units; constructing master-planned communities, and developing land. Although California based, they have expanded to build more than 100,000 apartments in 18 states since 1960. A.G. Spanos Companies have also developed top-class office space in San Joaquin County. Alex Spanos, owner of the NFL’s San Diego Chargers, operates the company with his sons Dean (president and CEO) and Michael Spanos (EVP). Spanos, whose net worth is $1.1 billion has pledged $200 million to San Diego for a new stadium for their football team.
8. Live in California. Of the 21 U.S. billionaires who made their fortune in real estate, more than one-third live in Atherton, Los Angeles, Newport Beach, Palo Alto, or Stockton.
9. Get, and stay, married. Of the 43 real estate billionaires whose marital status is known, according to Forbes, 37 are married, while only three are divorced and three are widowed.
10. Go back to school. Of the 26 real estate billionaires whose educational attainments are known, 20 have a college degree or higher. Five made it on high school diplomas, and one is a high-school dropout. John Arrillaga is a big donor to alma mater Stanford University. Arrillaga and Richard Peery are two of 2 of Silicon Valley’s biggest commercial landlords. In the 1960s, they converted farmland into pricey office space. Peery and Arrillaga are lifelong business partners who avoid debt, and the media. Each has net worth of $1 billion.”
Karen Hanover is a Certified Commercial Real Estate Advisor and commercial real estate broker. She founded the Commercial Investment Education Institute for both beginning and seasoned investors. Take a FREE Online Course at httpwww.cieinst.com
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