Paradise vs. Parking Lot

While passionate about commercial real estate, I do enjoy a life outside of real estate investing. And Mike Shustek‘s family heralds from the eastern part of the country, it has been my privilege to spend quite a bit of time in Hawaii.

There are a number of hotel rooms in Waikiki where you can see both the breathtaking view of the Pacific Ocean as well as the almost east-cost-thickness traffic of Honolulu. The almost post card stillness of the beach, and the business of industry.

One must find a balance when making wise investmentsNot to wax too philosophical on real estate investing, but as I’ve stared out my hotel window at this phenomenon, I’ve recognized it as a division of different kinds of real estate investors. There are those who busily seek a quick turn around and those who are content to patiently wait for growth of value.

So which is right? In the mind of Mike Shustek, both. And neither. The key to investing, as in so much of life, is to maintain balance, recognizing that there is a time to be anxious and industrious, and time to listen to the ocean and enjoy a drink with an umbrella in it. Put in valuation terms, the key to selecting real estate investment opportunities is to estimate what will happen not only in good scenarios but also in bad ones. It is a challenge I face whenever I do valuation. I have to constantly stop and look at the assumptions I am making and whether I am tilting too much to one side (beach or traffic). If I find myself tipping too much into the “beach” camp, I have to bring in some of my “business” to keep balanced. If, on the other hand, I am letting my pessimistic production side dominate, I have to consciously force my fun beach side to come into play. Balance.

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