For me, one of the most interesting things about being a real estate lawyer over the past quarter century is that I've had the chance, every once in a while, to look at my clients and see what skills, habits, and traits made them successful.
It is very revealing to see what makes one group of individuals more resilient than others, particularly during these difficult economic times.
By the early part of the last decade, it seemed as though many of my clients in the real estate industry could make a handsome living with virtually little effort. Whether they were part-time Realtors, mortgage brokers, builders, or average folks who became involved in flipping properties, everyone was hopping aboard the real estate express. Income flowed easily and the business seemed to roll in.
But the problem was that they all depended on three things:
- That the banks would keep on lending.
- That demand for real estate would remain steady.
- That real estate prices would keep rising.
And of course, as we now all know, none of those things happened. The party did come to an end, the bubble burst, and like kids playing a game of musical chairs, many did not find a place to sit.
So was it luck for those who found a chair or was it some innate skill set that allowed some to survive and even flourish while others perished? Well it is a little bit of both. I believe you can create your own luck through proper preparation and perseverance. I found several key traits among the clients who thrived despite the housing market collapse.
Those that relied on the banks for business and borrowed extensively as part of their business model -- such as small to mid-size builders and developers -- were hurt.
I'm not talking about larger, publicly traded companies who had many more options, but mom-and-pop builders and developers.
Put simply, those who were overleveraged with the banks were either wiped out or became a shadow of whom they once were.
On the other hand, those who ostensibly paid cash for their land were able to pull up stakes, tighten their belts, and go into a type of economic hibernation for five years, strong and ready to get going now that the real estate market has begun to thaw.
A number of my clients showed remarkable instinctive survival skills. They were able to turn on a dime and take advantage of the asymmetry in the real estate market by focusing on distressed properties including short sales and foreclosures.
Buying homes through short sales and foreclosure auctions became a thriving enterprise for them.
My most successful real estate clients would typically pay cash for small properties, usually under $100,000. They would fix the properties and then resell them months later, making a nice little profit. Or, in the alternative, they would lease the properties and produce rental income.
And to be clear, these were not the folks who bought a video course from an infomercial on late-night TV on how to get rich buying real estate using Other People's Money (or OPM). Generally, I have found that the only folks who make money from those programs are the promoters themselves.
Other clients who saw the downturn in their respective industries decided to pursue a whole new field based on their avocational interests.
For instance, one real estate developer client of mine who loved to fly planes as a hobby decided to go into private aviation, helping folks with private jets place them into leasing pools while assisting others looking to book a private craft.
That client now has a dozen jets in his fleet, and is an example of how pursuing your passion brings success and happiness.
Finally, we had some non-real estate clients -- manufacturers, jewelers, professionals, and importers, as well as other service providers -- who remained highly successful during this prolonged economic slump.
Their secrets were simple: They were good at what they did and kept on doing it.
Just like my shoemaker who had been at it for decades, they developed a strong reputation in their respective fields and did not deviate much other than using technology or social media to improve efficiencies and the quality of the customer/client experience.
The recipe for success? All of the traits I listed above. They became more self-sufficient and were able to embrace change, especially in a down economy. They seized on their passions and improved on their crafts.
They didn't follow trends on a whim; rather they set trends.
And perhaps most important: They challenged themselves and had the ability to be flexible.
Real estate attorney Roy Oppenheim is the co-founder of Oppenheim Law in Fort Lauderdale, Florida, and Weston Title. He is also creator of the South Florida Law Blog, where he frequently provides "In the Trenches" commentaries.