S.E.C. Real Estate Observer

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Everyone thinks Bill Gates popped together a hair dryer and a couple of old telephones in his garage one afternoon to build a computer. Far from it. Bill was obsessed as a boy by the computer. He snuck into the University of Washington computer labs and stayed late while still in grade and high school. His parents indulged his interest by opening new opportunities for him to learn more. By the time he came out with Microsoft, Bill had 20 years of computer knowledge under his belt. He bumped Harvard early as he was already a computer whiz kid. Everyone thought he came on scene with some one time epiphany, when in fact he worked long and hard before making it.

In the same vein, the Beatles came on the scene almost overnight, but the truth is they honed their skills to perfection by playing eight sets a day in a couple of brothels in Hamburg, Germany for months and months. Prior to that they kicked around in bands since high school. By the time they hit the big time their harmonies and playing were almost automatic.
Both of these illustrations depict “Outliers”.

In his book on “Outliers” Malcolm Gladwell contrasts the Chinese proverb ‘No one who rises before dawn 360 days a year fails to make his family rich’.

What is an Outlier? According to Gladwell an “Outlier” is a scientific term to describe things or phenomena that lie outside normal experience. In his book he claimed interest in people who are Outliers—men and women who, for one reason or another, are so accomplished and so extraordinary and so outside of ordinary experience that they are as puzzling to the rest of us. Obviously this rings true of the SEC’s.

The Bill Gates and Beatles examples are a testament to the value of experienced individuals working long hard hours to become better at what they do. So it is with real estate practitioners in this unconventional market place that they are the ones holding fast, finding good opportunities and executing their strategies. Many years ago I wondered why there were no young real estate millionaires. Of course there was the occasional guy who inherited everything from his rich uncle or parents. But few of them made it in the long run. And there is the occasional real estate “comet”. You know, the guy or gal that hits the real estate world with a huge burst of energy then burns out quickly after facing the enormous work of perfecting his or her real estate skills over time. To be good at real estate the learning curve is long and arduous. You must practice, practice, practice.

Experience in today’s real estate environment plays heavily with regard to obtaining loans, completing deals and maneuvering where others cannot. The highly trained expert, who has been tempered in the flames of the markets over time, knows a few good principles that are always prevalent.

There is no problem property, only people problems (Reno). Certainly the SEC’s are Outliers on this issue. Talking to the “regular brokers” about people motivations and benefits is like talking to the wall. Obviously, the “hard physical asset” is a very important ingredient in any contemplated transaction. However, as you know, our main emphasis has been to determine Seller needs and wants and their underlying concerns. It is only when we understand their motivations, can we effectively engage in solving his problem. The “hard asset” is the tool by which the Seller accomplishes his objective.

Down Markets Provide the Best Opportunities. Obviously, this is singing to the choir. An experienced Outlier in the real estate business recognizes that market conditions predict changed behavior. The reason the market becomes better for us is that 1.) We have the “skilled team” approach to handle new developments, rehabs or acquisitions and turning them around; 2.) We look at markets differently. We know that being a contrarian is better than accepting the unfounded fears of the masses in times of stress; 3.) Conventional real estate skills get thrown out the door during a meltdown and everyone seeks new ways to market, develop or rehabilitate property (we are their solution as it takes an Outlier to understand what is really happening).

Creativity Flows Through You…Not In You. Creativity as a philosophy is somewhat maligned as it conjures up a vision of a deep mystic bag where new ideas realm and are always available to us if we just reach in and pull one out. Well, there is no such place. The Creative Outlier mind is a process of doing many things over a long period of time and formulating concepts, which from those experiences can be either combined or used singularly to solve a problem. Quintessential Outlier. As far as real estate goes the Creative practitioner is an independent free market thinker who looks at a problem like it’s a Rubik’s cube and seeks to arrange the cube into its natural color state for each of its six sides. It is a desire to solve problems using the span and width of your Creative process and your Outlier makeup. Additionally, the most important aspect for a Creative Real estate practitioner is to learn from those whose experiences will enrich their Creative Vocabulary. An Outlier learns from others as it is quicker than the blood and guts of making timely mistakes on your own. The SEC’s provide this for all of us. Once the knowledge, the education and the experiences are formalized the real estate Outlier is a skilled technician. Just like Bill Gates or the Beatles.

Realistically, most of us in the Society found a home as we just couldn’t conform to the “blue suede shoe” real estate world. We are all contrarians. I dare say there are not many of us who have ever walked the same side of the street as the majority. I dare say none of us would probably do well with a 9-5 job. Our compass is always pointed in another direction, contrary to the prevailing winds. Our SEC beginning was born in the crucible of doing something contrary to the norm and it has become an unwritten legacy held by all of us. Again that sense of independence and non conformity built on experience and education is a true Outlier mentality.

When everyone is nose diving we are by our very nature and belief the solution to their problem. Why, because to my knowledge few of us ever came into the real estate business rich. That means we had to make it on our talent, wits and knowledge. We became hardened and tough in the meat grinder of deal making. Losing a few battles and winning a few produced a very strong and formidable practitioner. No one more accurately epitomizes this than Jack Hunt, who was probably one of our most successful real estate practitioners. Jack came up the hard way with no family, orphaned, and starting as a laborer and then carpenter. Jack epitomized the tenacity and strength it takes to weather the tough times. He also was a contrarian. If there ever was an Outlier it was Jack Hunt.

Like Jack’s early years I have seen it several times in my career where someone a bit down on their luck, or with little or no resources keeps working hard, against the grain and stumbles into a real estate transaction or two that reverses fortunes. As my old friend and SEC Tom Bateman used to say “It is always the Daring to Do that makes the difference.” Attacking rather than defending is a time honored tradition in the Society. Now there comes a time when pitfalls, problems and head winds shake your footing a bit. But we have all experienced a tremor or two in our lives and we have moved through them. Don’t let temporary circumstances affect your long term belief in yourself. You never know if you win or lose if you are not in the game, so by virtue of being in the game and working hard, you are invariably going to land a couple of those big tuna’s. Use your talent as your primary weapon to acquire, renovate, exchange and otherwise hold real estate. Cash comes to good ideas and investments. If you have the right property and the right game plan, the money will follow.

As SEC’s we are all “Outliers” in the true sense of the word and we should be thankful that we have a home where those of us who are unwashed and uncleansed can lift themselves beyond mainstream expectations.

My Dad always said “It is strange how lucky you get when you work hard”. Outliers always invest time and effort to become a success.