Do you ever daydream? I sure do.
In your dreams, are you ever the hero in a tale of a new gold strike or oil gusher? Or the inventor of a new cryptocurrency that outpaces Bitcoin? Or a new car that outperforms Tesla?
These types of dreams are as old as time. And they’ve motivated the human race to incalculable discoveries and inventions. Many succeed—but countless people lose their lives or fortunes every year seeking adventure and treasure in previously unknown realms.
I’ve done it myself. When real estate was on the ropes after 2008, I briefly fell back on my petroleum engineering degree. A group of my friends and I invested in a high-risk, high-reward speculation on a wildcat oil deal in North Dakota. We dropped over a million dollars on a hole in the ground, expecting to see a 10x or even 50x ROI.
Our dreams came up dry.
We weren’t alone. But to be clear, some investors struck it rich.
But speculations are a roll of the dice. And it’s not the way I want to invest anymore.
A modern gold rush
If you haven’t noticed, we’re in the midst of a modern gold rush. Many who had never invested in real estate are now in it full-time. And I think that’s wonderful.
Many who limited their previous investments to Wall Street’s casinos have discovered real estate’s joys and wealth-building potential. And many who started in residential have migrated to commercial real estate, an arena formerly reserved for wealthy insiders. Relaxed crowdfunding rules and the explosion of social media and online marketing have provided practical access for millions of investors.
But there are dark clouds on the horizon.
There’s a new breed of real estate syndicators who had no real estate experience before the last crash. There is nothing wrong with that. Many are making millions for themselves and their investors.
But a problem arises when the herd starts overpaying for assets en masse. And when these folks…