Risks and Rewards of Speculation

The Risks and Rewards of Real Estate Speculation
The buzz term “market speculation” gets bantered about in real estate industry circles, but few investors really understand the complexities of recognizing and taking advantage of real estate market fluctuations for profit.

The risks are high, and so are the potential rewards. To be successful requires an intensive study of markets. However, if you can do this and recognize and capitalize on fluctuations, you may well succeed as a market speculator. Here are three points to consider before venturing into real estate speculation:

Understand your market. Real estate markets fluctuate based on several factors, including municipal planning shifts, new or altered governmental oversight, and changes in rent controls. It’s important to be aware of upcoming changes to development regulations in the locations you’re considering; your commercial real estate agent can be a good source of information for you.

Familiarize yourself with the product. Investing in residential real estate development is very different from investing in retail. Key to your success is that you fully understand the prevailing trends and regulations, and the potential inherent in the product of interest. Failure to do so can result in significant losses.

Timing is everything. Once you’ve established an understanding of the market and of your potential investment, consider whether the time is right to invest. For example, some municipalities are experiencing accelerated growth in certain types of real estate; consider whether this trend is sustainable, and whether there is room for continued growth. While risky, real estate speculation can be very rewarding, if you’ve done your homework.

Entrepreneurship, Like Love, May Be Wasted on the Young

Contrary to popular belief, creating a start-up is not just for the young.

As the headline for a May 2017 article in CNBC suggests: “Boomer entrepreneurs are making it big by doing what they love.”

Referring to research data from the Kauffman Foundation, CNBC reporter Kate Rogers notes that “boomers were nearly twice as likely to plan to launch businesses than their millennial counterparts.”

And their numbers have grown; the Kauffman Foundation’s 2016 Index of Startup Activity indicates a 24% increase in new entrepreneurs aged 55 to 64 last year, compared to a 14.8% increase in 1996.

As consultant George Deeb points out in Forbes: “… people over 55 are twice as likely as people under 35 to launch a high-growth start-up.”

While we all know that Silicon Valley is the purview of the young, research shows that tech entrepreneurship among seniors is an emerging reality – a reality that can be seriously profitable.

As Roya Wolverson writes in Time magazine: “There’s no question that starting a business is easier when you’re younger,” but, she adds, “… start-ups in some industries, such as biotech and business software, gain an edge from the experience that comes with a founder’s age.”

Many boomers are returning to the workforce out of pure passion for an idea they believe in. Some go back when they identify a problem for which they believe they have an innovative solution. And others return simply for the paycheck. Whether for necessity or invention, the number of older entrepreneurs is on the rise.

Data You Can Use, Delivered Fast – What a Concept!

Memory-driven computing is new. It’s fast. And it’s offering tremendous opportunities for problem-solving and innovation.

In the age of big data, the volume of available data has surpassed our ability to process and use it. But information technology company Hewlett Packard Enterprise (HPE) has developed a new approach to computing that turns massive amounts of data into secure, actionable insights instantaneously.

The secret sauce? Upgrading processing from the current slow silicon to hyper-fast memory – an approach called memory-driven computing. This technology gives every processor in a system access to a high-performance interconnect protocol, which is essentially a humongous shared pool of memory.

Based on this new approach, in which memory is central to the system and not simply tethered to a processor, the company has rolled out a prototype known as “The Machine” that is up to 8,000 times faster than processor-based computers.

According to HPE (and supported by enthusiastic reviews in many tech publications), memory-based computing will unleash new opportunities for companies of every size in virtually all fields. Consumers can improve the performance of their Internet-of-Things (IoT) devices, and analysts will be able to predict and quickly respond to situations in health care, transportation, retail, and other industries.

For example, a memory-driven computing system could enable doctors and researchers to come up with personalized diagnoses and treatments, as well as predict and head off major epidemics. First responders could simulate emergency situations and prepare for crises. And smart transportation systems could optimize traffic flow. It’s a whole new world. Again.

Self-Storage: A Resilient Investment with Legs?
The idea of a recession-proof investment opportunity is persuasive. Nevertheless, with any investment there is an inherent risk. One area of real estate investment that has shown potential for resilience in the face of economic uncertainty is self-storage facilities.

Lower maintenance and staffing costs, greater resiliency to higher vacancy levels, as well as the movement toward more compact living arrangements have all created an increased need for storage space. The result to date: New customer-friendly models and solid opportunities for continuing growth.

Appeal for large and small investors

In exploring the self-storage environment, one can understand why this niche has become an appealing investment for small as well as large-scale investors, such as Real Estate Investment Trusts (REITs). Both can reap benefits from lower maintenance costs in self-storage facilities, particularly as compared to those of multi-unit residential properties.

In self-storage facilities, managers don’t need to repaint when a tenant leaves; in most cases a quick sweep-up of the storage space is all that’s required. Reduced maintenance also means that you need fewer staff members to operate a facility. As a result, even smaller investors with limited budgets can participate and benefit.

Breaking even at 50% vacancy

Because lower occupancy rates in self-storage facilities have less of an impact on profitability, the industry is more resilient to economic fluctuations and can weather economic downturns more efficiently than other commercial real estate investments. Lower operating costs often mean that a solidly performing self-storage facility can offer better returns than other forms of commercial real estate investments. And many storage facilities can still break even with a 50% vacancy rate.

On-demand delivery

Industry innovators appeal particularly to busy millennial clients with a storage model that includes pick up and delivery options. As well as affordable rates, many new facilities have incorporated value added services. According to a recent Bloomberg article, customers who stored their skis in the summer but needed them for a winter retreat, would likely find their skis waiting for them, courtesy of Los Angeles-based self-storage company, Clutter, which delivered them directly to the resort.

It’s likely this continuing innovation will drive the growth of self-storage companies to create more choice and a greater sense of value for customers.

Potential barriers

In the meantime, many cities have yet to catch the wave. While U.S.-based MakeSpace now has storage facilities in four locations, others have found barriers to expansion. In many cases it’s proven more cost effective to retrofit an existing warehouse or industrial plant into a self-storage facility; it can be difficult to get approval for new construction in some locations, as local governments generally prefer to see increased construction of housing or other commercial/ industrial ventures that are more likely to create additional long-term employment opportunities.

Meanwhile regulations and incentives vary, and investors would be wise to thoroughly research the self-storage industry and the location under consideration. Concerning? Perhaps. But the eventual rewards may make it a worthwhile investment.

SA Realty Watch Group
facebook Twitter Linked In
How to Win Big in Today’s Economy
The altered economic landscape presents innovative and nimble businesses with opportunities to thrive.
Find out how by requesting my free report “How to Win Big in Today’s Economy” by replying to this email.”
Just reply to this email and I’ll send it right out to you.

Quick Quiz
Each month I’ll give you a new question.

Just reply to this email for the answer.

Why are squirrels credited with planting thousands of trees?

Worth Reading
Why Many Founders Should Think Global from the Start
By Jeff Harbach

It’s never too soon for a company to start thinking about global domination – in fact, you should start thinking globally when you launch your business. Why? Geography is no longer an insurmountable barrier. Any company that sets its sights on becoming global now has a good chance of reaching its goals. Find out how to develop your global outlook now.

The Four Ds of a Business Exit Strategy
By Brent Dees


Anyone who has created a successful business knows how much planning is involved (not to mention hard work and luck). But did you know that most don’t plan for exiting their business? Dees quotes Stephen Covey’s The Seven Habits of Highly Effective People: “Begin with the end in mind.” Consider the four Ds: Death, Disability, Divorce, and Departing. Then relax and enjoy, knowing you have an exit plan.

Why Being an Underdog Gives You a Competitive Advantage
By Eric Schurenberg


In an ideal world, you’d likely choose to be Goliath instead of David, but if you take a step back, you’ll see that being an underdog in business gives you a serious competitive advantage. You may not be able to compete with companies that have more capital and bigger budgets, but you have the edge in at least two areas: your workforce and close-knit team culture, and a deep insight into your customers’ wants and needs.

Negotiating Skills
Successful business owners are successful negotiators. Your negotiating skills impact your business from top to bottom and inside out; if you’re a strong negotiator, you’re well on your way to success. But if you lack negotiation skills, or just want to brush up, the following links can help beef up your bartering:

Entrepreneurs must master three key negotiation skills for success:
Three Overlooked Negotiation Skills Entrepreneurs Need To Master

Do you feel you may be a weak negotiator? Strengthen your skills here:
The Most Important Counterintuitive Step to Winning More Negotiations

Telecommuters make up a large share of today’s workforce. Here, 40-plus companies explain how they’ve made these arrangements work:
7 Negotiation Techniques Every Small Business Owner Should Know

Conducting effective negotiations with customers and distributors is an essential skill. Be successful at it:
Grow Your Small Business By Improving Your Negotiating Skills

Read this practical guide to negotiating, and refer to it often:
The Art of Negotiating

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –