Monday, August 15, 2011

Wild Economy Births New Entrepreneurs, CRE Investors

With the market up 600 points one day, down a similar figure the next, in a single week -- and a myriad of uncertainty about world markets -- entrepreneurs are being born with great gusto.

How? We are again starting to receive a number of calls from individuals who have been laid off, or worry for their jobs, but have a substantial nest-egg and want to invest in (buy) a business. Essentially, they want to buy a job. Perhaps the last job they'll ever have. Similarly, we are hearing from more and more individuals who are cashing out of the stock market entirely (I am working with one such couple) and re-deploying their retirement investment dollars toward commercial/investment real estate. The eventual goal being the opportunity to exponentially grow their investment portfolio, retire from their "9-to-5" and work full time managing and adding to said CRE/investment portfolio.

A tough nut to crack? Not as tough as you might think. Motivations are many:
1) While there are some dogs, there ARE a myriad of distressed/competitively priced/under-utilized commercial/investment opportunities out there right now;
2) The movement of REITs, pension funds and other investment groups into secondary markets is raising eyebrows among individual investors who are thinking anew about the value of properties they weren't so sure about previously;
3) The U.S. stock market isn't just volatile but has been wholly unpredictable; Ditto markets in other parts of the world that are experiencing wild swings and sell-offs based not on fundamentals, or even irrational fears;
4) World events and an increasing belief that the White House and the Federal Reserve have no plan, and continue to telegraph this weakness to the world;  has individual investors rethinking their long-term strategies.

I could go on.

Ditto the individuals who want to buy a job. We have been working with a number of people with sizeable net worths, but shaky employment prospects, who are "buying" their next jobs. A guy who has run a chain of restaurants across the eastern U.S. tied to truckstops is purchasing a group of pizza shops and plans to license the name and recipes, rather than franchise. Another individual who is selling several family farms, a couple at a little less than market rate so he can move them, to purchase multifamily properties and set up his own management company. Yet another investor, a chef, who is parlaying a significant retirement nest-egg into commercial buildings. And a long-time investor, selling off a number of shopping centers he has turned around to take advantage of the plethora of retail centers that are languishing at firesale prices. Turning his investment "sideline" into a full-time job.

Whether or not little kids dream of becoming a CEO one day, the present-day economy is giving many people a chance to do just that.

The end game: Call themselves the CEO (if they want), create their own private pension funds via their commercial/investment equity, and more importantly, exert some control over their destiny.

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