Archive for November, 2007

Investment writer Paul Talacko recently wrote an article on billionaire
investment powerhouse George Soros.

Soros has a number of useful and unique philosophies that can
show you how to become a better real estate investor.

For example, George Soros believed that investments can affect
the profitability of a business.

Rather than just supposing that the quality of a business affects
the price of a share, Soros saw that the opposite is true. When a
share price increases, so does the possible value of a business.
 
In a real estate business, this holds true as well. While the value
of a property affects the market price, the price an entrepreneur
pays for a piece of property can also impact the value of the property.

That is, when an entrepreneur buys a home and sees value in it, the
act of paying for that home increases its potential value.

Understanding this can have a big impact on your investment business.
Purchasing a property is like voting for a property with your money, so
that your purchase can shed light on the real value of a property.

The very act of buying a property can establish the value of a property
and make it more valuable.

That’s why many real estate entrepreneurs can make money simply by
purchasing properties and reselling. It is possible to make money this
way, even without extensive renovations.
 
What Soros calls his “theory of reflexivity” is exactly the opposite of
what many real estate investor entrepreneurs come to believe. Most in
the real estate business shape their business decisions based on the
current market or on what they expect the real estate market to do.

They become conservative when the market flags and take more risks
when the real estate market booms – or seems about to boom.

If you believe what Soros teaches, it is actually the decisions of
entrepreneurs that shape the market.

Rather than trying to chase the market, then, Soros believes that
entrepreneurs should shape the market. This is actually what mega-business
types such as Trump and other big name real estate investor firms actually
do.

However, the actions of many business people also shape markets – but
less dramatically.
 
What does this mean practically?

On one level, it means that it is important for the real estate investor to
research what other investors are doing. Speaking with others in the field and
keeping abreast of news is crucial, because according to Soros’ views, these
are the factors that will shape the future real estate market from a localized
micro-economic level (e.g. where you live) to a macro-economic one (nationally).

The market is not some “thing” impacted by the economy that impacts entrepreneurs.

Rather, the market is something that entrepreneurs shape in his opinion.

According to Soros, entrepreneurs can indeed consciously shape a market’s direction.
For example, if you see a neighborhood with some potential, you can possibly begin
to transform that neighborhood by building a powerful enough business that takes
run down homes, and rehabilitates them into something beautiful.

Rather than speculating – purchasing a property and hoping it increases in value – you
can, using this belief, transform a property into something more valuable yourself, and
over a short period of time, raise the overal property values in that area…

This kind of advice leveraged from Soros’ interviews, is akin to you receiving your very own
billionaire real estate investor strategy.  Over time, you can multiply and scale your own
business to maximize profits and change market direction’s.

For many a real estate investor, the theory of reflexivity is a radical way of thinking.

However, it is also a very powerful way of thinking, since it places the power to make profit
right in your hands, not in the market.

Read more on becoming a great real estate investor here