Here’s Why Real Estate is a Game-Changer
When’s the last time you or one of your girlfriends casually threw around the term “retail therapy?” We’re all guilty of it. We lean on material things to make us feel better—the new “it” handbag, a pair of expensive jeans that you must have because they flatter your shape like no other, a fresh stash of cosmetics because no one likes clumpy makeup, and so on.
The problem is that we allow the ephemeral joy of these micro-acquisitions to eclipse our sense of the big picture, and as such, we gradually spend our money on all the wrong things. Don’t get us wrong: it’s not a crime to treat yourself, or spend your hard-earned cash on things that make you feel good as a woman. But if it is truly a self-made mindset that you want to cultivate, you have to start thinking of your economic big picture.
Going Big – A Case Study on Why Real Estate is a Smart Investment
The best way to illustrate our point is to share a real-life example. Nely Galán, SELF MADE’s author, had a robust and successful career as a television producer, but it really wasn’t until she dabbled in real estate that her career—as a self-made woman—truly kicked off.
When Nely went to work for Fox, they offered her the chance to rent office space on the 20th Century Fox lot in Century City. She jumped at the opportunity because working on the lot was very glamorous, not to mention all the business advantages that came with it. Just by virtue of being there, she could hobnob with movie stars, producers and directors. From J. Lo to Denzel Washington, she mingled with the best of them and for a while, she felt star-struck and part of the Hollywood dream.
The Reality Check
Everything was glam perfection until her bills started coming in and she realized that Fox was charging her a fortune in rent for an office space that was practically a trailer. As the staggering bills came in, Nely realized the money she was spending on her expensive rent could be saved, or spent on her business, or as investments.
Nely chose to sacrifice her Hollywood fantasy and instead started looking to buy a building that could house her office. As she looked for an inexpensive place that was close to the Fox lot, all roads kept pointing to Venice, a funky beach town known for its canals, but also for its gang violence. Was it fancy? No. But guess what else it was? Cheap! One particular building caught Nely’s eye. It needed a renovation, but right away she saw its potential.
She found out that a musician owned the building, that he bought it for nothing and that he wanted to turn it into a live/work space, with a music studio downstairs. When Nely inquired, he told her it wasn’t for sale. Some time passed, and she kept looking, and then she read in a Hollywood trade publication that the musician had gotten a movie deal and was moving to London.
Nely, keen on her plan, jumped on it, and got in touch with him again. She was persistent and eventually he wrote back and offered to sell it to her for one million dollars. “Are you kidding me?” she replied. “I know you bought that building for nothing. Are you trying to take advantage of me?” The guilt-trip worked and eventually he sold it to her for practically nothing…plus 10 percent.
Nely was beyond thrilled that she was able to buy that building, but not everyone saw her point of view. When she went back and shared the news with her staff, some of them freaked out, unable to understand how she was okay with swapping the Fox Lot chaché for a Venice dump.
“We have to think about what’s best for our company, and what’s best isn’t having all of our cash flow go right out the door. We can visit the Fox lot all we want. If Fox ever stops doing business with us, what’s our value? We have to build our own company and our own brand,” Nely explained.
Nely knew it was smart business move then, but she had no idea that “Venice dump” was also going to allow her to retire in her forties. In real estate, they say the normal trajectory for a property to fully appreciate in value, to the point where you can create positive income from it, is twenty to twenty-five years. But Nely’s Venice building appreciated in less than ten years. The revenue from it and other buildings she subsequently bought allowed her to dedicate herself full- time to her mission. None of this would have happened if she had continued to rent on the Fox lot, which is why one of her best pieces of advice to women to this day is “don’t buy shoes, buy buildings!” How’s that for a motivating mantra?