How do you become a real estate mogul from nothing?

re: Leviev, buy the debt from the banks.

I guess what I really want to do is go bid 3m on one of those 10 room apts...

Start a distressed debt fund. Raise money, use no leverage, sit and wait.

Why, to sell it for 2mm 4 yrs later. just bustin...There is NO money to be made by picking a bottom on single apts. This bubble bursting will not have a "V" shaped recovery. You can't assign a zero probability to this being the big one. There easily is a 1 in 10 chance that prices 5 years from now are 1/2 of what the bears think they are now. Back to your question...to make "SERIOUS" coin from the impending real estate collapse, you need to either buy as an investment..(not owner occupied), and have good leverage. Current problem is that rents won't be significant vs purchase price and heavy leverage is not available. However, I like you, have high hopes. 12-18 months from now when, if, it starts to get real messy, maybe some dumbass govt program will come along to help us do the fleecing.

Right. There is definitely money to be made.

Leverage is what got us into this mess. Ask 10 rich friends for $1Million, then buy a small complex for cash. Then sit and wait.

pc: correct: but leveraging OPM is how the the vast majority of RE tycoons got that way. Who gives a shit if you lose a bunch of the banks or others money, as long as only a small piece of it is yours. I am simply responding to 10023's posit. I may not be proud of losing others dough, but thats how it is.

One of the issues is that you're looking at the ones that succeeded, and ignoring the ones that failed. For every RE tycoon that made it rich, there are many who tried, failed, and often lost a lot of money, time, headaches, etc. in the process. High risk, high reward.

I'm not saying that leverage will never be used again, but that it's hard to come by at the moment. If you can raise enough cash, you can buy big and have zero worries. When the money centers decide to start lending again, you'll have a property to borrow against.

I'm not saying that leverage will never be used again, but that it's hard to come by at the moment. If you can raise enough cash, you can buy big and have zero worries. When the money centers decide to start lending again, you'll have a property to borrow against.

"...leveraging OPM is how the the vast majority of RE tycoons got that way. Who gives a shit if you lose a bunch of the banks or others money..."

Ah yes, the Trump business model.

>>I guess what I really want to do is go bid 3m on one of those 10 room apts...<<

That's not the way to become a 'mogul'. Start by buying a small rental building (or two). Though you might want to wait a bit on that--prices are still coming down.

> How do you become a real estate mogul from nothing?

Lose $10 million.

I'd be interested to see what Bramstar (?) would have to say about this one. Did we drive him away or is he skiing in the Alps? Hmmm.....

two good from nothing stories to learn from:

1 - Bill Gottlieb - buy somewhat shabby properties, keep rents low to keep your tenants, buy more, never sell.

2 - Paul Stallings - bought in LES when it was a heroin den and no one wanted the properties, buy a building on your credit card, rent it marginal rents to keep tenants, buy more repeat, sell certain properties to finance bigger ventures. Still dont know if he regrets THOR or not but all his other properties are making bank even in this economy.

So in summary - if you want to make big money you have to take massive risk. You cant buy high end properties - condo's in top buildings wont return. You need to buy what is not desirable and hold onto until it becomes desirable.

the way to make money on real estate in nyc is by taking on massive risk. that's how it has always been done. getting a good deal on a big apartment to live in yourself is great and all, but not a way to become a real estate mogul.

BJW would tell you not to take risks and the path to riches in real estate is to buy a crappy glass condo in Williamsburg surrounded by a lot of other unsold crappy glass condo's surrounded by a lot of unbuilt land where even more crappy glass condos can be built.

You need to take risks, be a pioneer and buy on the fringes.

The "moguls" are the ones who didn't go bust... yet.

Walentas - bought up the crappy commercial area between the bridges on the brooklyn waterfront. Spend YEARS trying to get it rezoned and then rake it in when you've paid off enough politicians.
Red Hook Cop - buy up a neighborhood no one wants. Want 40 years. Run into shit luck.

We don't hear about the guy who bought up Newark or Patterson or Canarsie.... we only hear about the winners. For every "mogul" there are probably 10 who bet wrong.

Food for thought... Zeckendorf... one of the first "great developers". Went bankrupt.
Trump - bankrupt twice (maybe 3x now).
Olympia & York - owned more of Manhattan than anyone except the church, Reichman was the richest man in the world at one point in the late 80s/early 90s. Probably the only guy to essentially build two major new downtowns - BPC and Canary Wharf. Oh yeah, he went bankrupt, too.

We'll see who else joins 'em.

petrfitz, here I was about to write that your post about risk was actually pretty good, but you go ahead and squash any good will with your ridiculousness. What gives? I actually agree that if you're looking at real estate as a pure investment vehicle, risk is a good thing. I chose to buy in Williamsburg to LIVE there, not to rent it out. Big difference. I would agree, if you're looking to make good money, buying new construction is generally not a great tactic. The key, as with any investment really, is to spot high probability of future appreciation before anyone else. Easier said than done. petrfitz thinks he has this on Pitt Street, but to me, it appears like a very low chance of seeing much appreciation anytime soon.