Chapter 24 | Some Observations on Real Estate Entrepreneurship


This chapter discusses entrepreneurship in general and real estate entrepreneurship in particular, and it explores qualitative factors and personality traits that correlate with success as a real estate entrepreneur.


Listen to this narration if you prefer


Entrepreneurship can be taught, but studying entrepreneurship does not mean the student is cut out to be an entrepreneur.  Among other character traits, entrepreneurs need to have thick skin to accept hearing the answer “no” until they hear the answer “yes,” no matter how long it takes.  They also need to be comfortable creating an operating structure that aligns with their vision.

Most successful entrepreneurs apply a new, slight variation to a proven business model, rather than invent a new business model altogether.  Successful entrepreneurs generally look at things differently from how other people see things.  While most people see how things are, entrepreneurs see how they could be better.  As a result, entrepreneurs must be able to sell their personal vision to their audience (employees, vendors, customers, capital sources, and advisors), who does not necessarily share it.  Absent the ability to sell effectively, entrepreneurs will fail to muster the resources necessary to implement their idea.  Entrepreneurial sales ability involves being able to describe the vision in a simple, yet, sophisticated and compelling manner.

Successful entrepreneurs are willing to make decisions, knowing that they will need to change course many times on the fly.  The entrepreneur perceives risks differently from other people.  Just as a great quarterback knows he will take some big hits if he is going to throw touchdowns, the successful entrepreneur knows there will be a lot of bumps on the road to success.

Contrary to popular belief, entrepreneurs are not dreamers.  They are extreme pragmatists.  They do not imagine a perfect world where everything goes right and everybody wants their product.  Instead, most are brutally realistic in their appraisal of the challenges they face.

Entrepreneurs have a total passion for what they are doing. It is both their work and their entertainment.  It is how they make friends as well as how they make their living.  It is what they live to do rather than what they do to live.

The truth is that most successful entrepreneurs are in their fifties and sixties and have net worth in the range of $1-20 million after many years of hard work and struggle.  While this is notable financial success by any normal standard, it is far from what students have in mind when they think of entrepreneurial success.

Entrepreneurs do not possess identical skill sets.  Some, like Gerald Hines, Steve Wynn, and Alfred Taubman, are brilliant with products.  Others are masters at controlling production processes, time schedules, and costs.

Another defining skill of some entrepreneurs is being a master deal maker.  Deal-making is exemplified by legendary real estate entrepreneurs such as Mel Simon or Edward DeBartolo.  There is seemingly no obstacle that a great deal maker cannot overcome.  This takes enormous resourcefulness and social connectivity.  It requires understanding what others are seeking and how to help them to achieve their goals without compromising one’s own objectives.

Entrepreneurs manage risk by specializing in a particular market or product type.  Another way entrepreneurs manage risk is to use other people’s money, exchanging their sweat equity for a slice of the profit they create for others who do not possess their knowledge and skill base.  Raising money is rarely fun, but if the entrepreneur is passionate about the objective, has realistic goals, has a reputation commensurate with the objective, and can explain the vision in a clear manner, money will come.  Entrepreneurs must master leverage, which can be either a great friend or a cruel enemy.  Generally, entrepreneurs think in terms of financial leverage, with greater debt enhancing their expected returns.  But great entrepreneurs understand that nothing ever goes according to plan.


These are the types of questions you will be able to answer after studying the full chapter.

1. Can entrepreneurship be taught effectively?

2. What are the primary ways that entrepreneurs manage their personal financial risk?

3. Do entrepreneurs prefer to take risks or mitigate risks?

Audio Interview

Common traits of successful real estate entrepreneurs (5:01)

Chapter Headings

  • Are There Entrepreneurial Traits?
  • What Makes Sammy Run?
  • Better, Faster, Cheaper
  • What Are the Risks?
  • Raising Capital

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