Last Thursday on the 13th of November in 2008 Todd Gooding, President of SKB Real Estate Investors, gave a presentation at my school the University of Oregon. Todd was also an Oregon Duck. His company is very successful in the western part of the United States and is located in Portland, Oregon. They focus primarily on aquiring retail, office, and industrial real estate and then enriching their value to turn a profit. You can visit their website here if you’d like.

I found his presentation to hold a lot of gems about investing in general, but in particularly about real estate investing and I’d like to share a few. As a novice to real estate investing some may seem pretty obvious, but they still sparked thoughts for me.

• Real estate value is driven by employment growth and population growth.
• To up a property’s value there are multiple things to consider: is the property fully leased? are there construction issues? entitlement issues? environmental issues? –When these things exist they can be fixed to find a profit on the investment, ideally an investment should have more than one of these issues to be truly profitable.
• A tenent shouldn’t be leasing more than 30% of the property. This is because you don’t want the tenent saying how the lease works, you don’t want them to have the power. This way you diversify your income stream. Keep in mind that Todd’s company deals with retail, office, and industrial properties, not housing. If you were renting a house it would be difficult to be able to have multiple tenents, but when you’re renting an office building or a strip mall, it’s much easier to have multiple tenents.
• Real estate is a local business. This is because you must be very knowledgeable about the area and you should also be available to go there in person, otherwise you assume a much greater risk.
• You want the worst buildings in the best locations.
• Stick to what you’re familiar with. (I say: then become familiar with more! haha)
• You don’t need to squeeze the last ounce of value out of an investment, leave some meat on the bone for the next guy.
• Port cities tend to have less votility in their cap rates.

An important thing to note about Todd and his company is that when the real estate bubble burst they were not hurt as much as the next guys. Todd attributed this to “not getting caught up in the euphoria”. Not getting caught up in the euphoria of any bubble, a “the price is never going to go down!” mentality, is an important discipline for investing in any market.