Lessons From The Buss Ride

Learning from the best 

In the wake of Dr. Jerry Buss passing away this week, property investors should look back and see his example as the crowning achievement in how to grow real estate investments. While known mainly for his tremendous success as the owner of the Los Angeles Lakers, and his visionary ways in the sport of basketball, Dr. Buss started from very humble beginnings.  While teaching chemistry at USC in the early 1960’s, he took to real estate investment as a way to simply supplement his income while teaching.  Stop me if this sounds familiar – like the reason many investors first venture forth into property investment themselves. 

Humble beginnings… 

His very first property acquisition was a small apartment building in West Los Angeles – a then up-and-coming community.  He invested $1,000 of his own money in the property.  From there, he, like many first time investors, caught the “bug.”  He found he was not only good at leveraging property to buy other pieces of real estate, but it soon became his passion.  He later took on a business partner, Frank Mariani, and they began their own real estate investment company named Mariani-Buss Associates.  Together they helped grow a real estate empire machine. 

It’s important to note the power of combining resources when trying to grow real estate investment. Many times two heads are better than one. And this was certainly the case with Buss and his partner Mariani. As their empire grew, they were able to continually leverage their different pieces of real estate. Eventually they started investing in very high-end pieces of real estate.  By 1979, Buss himself purchased the former Mary Pickford estate in Los Angeles… 

It seems like Los Angeles in the ‘60s and ‘70s was a great place for wheeler-dealer types and real estate investment. There was plenty of money to be made back then, and many empires were formed in that area. In Dr. Buss’ case it was clear that the power of this partnership helped to greatly propel his real estate empire…much farther than he could have had he tried to do it alone. 

The partnership lesson 

This is a crucial lesson if you are operating in real estate investment today.  You can go it alone and retain control of all your properties. But you pay for that in the long run in many ways. There’s only so much growing you can do on your own.  You won’t have the advantage of two heads to use for business acumen, connections, creditworthiness, searching and negotiating skills. And you won’t have the leverage opportunities available to you if it’s only yourself.  It’s also important to learn from this example that even more than two people may be a good move for some investors when creating a real estate investment partnership.  If all the partner’s skills are complementary, you could really develop your empire that much faster. 

One great thing about a real estate investment partnership is that it helps to even out the lows in the business cycle – and there are always low periods. Losses are more easily absorbed with a partnership than by yourself. So the partnership can more easily take on bigger projects – and riskier projects as well because of this cushion. These could be acquisitions a single individual proprietor may not be able to finance by themselves, nor want to take the risk themself. 

Simplicity and passion = good property investing 

So learn from Dr. Buss’ example of initial investing simplicity. Consider starting early in your real estate investing career. You don’t have to invest your entire life savings, but start small, and look for as many units as you can purchase for your first project. Use the cash flow from this to leverage your next project.  See if you have the temperament – but most importantly – the passion for the business as Dr. Buss did. In addition, look for partners to help you in purchasing new projects. This will increase your leverage greatly. And it will grow your empire much faster. With all the tremendous successes Dr. Buss had in his life, and his great basketball legacy in Los Angeles and the entire NBA, we can learn from his humble beginnings in property investing. And you should try to utilize these simple principles to develop your own little real estate investment empire.

 

photos courtesy of  flickr.com, marinij.com, cbicommercial.com, you-are-here.com, corporatedispute.com, blog.aarp.org