Issue #5: Real Estate is not an Asset Class
Issue #5: Real Estate is not an Asset Class
It is a basic human need first, like healthcare or public transportation
Welcome to the Good Neighbors Newsletter - except you early-January 2021, you were a Terrible Neighbor - where we’ll explore the ways in which real estate development and entrepreneurship can combine as a force for good in our neighborhoods.
Below you’ll find 3 sections: (1) A Few Things Worth Sharing, (2) An Exploration, and (3) Parting Thoughts.
Dive into whatever looks interesting, and don’t hesitate to respond and say hi if you have a moment. Would love to hear what is getting you excited for this year.
A Few Things Worth Sharing
Designing a New Old Home - Part I & Part II - Love these posts and how practical they are for how to design for timelessness (and ways to save money in the process). Please read this if you are a builder, are going to build, or simply want to learn about ways to do things differently than our modern construction system
The Little Book of Lost Words - A random, joy-inducing gift that showed up in the mail from my mother-in-law (thanks Chantal!). I want to memorize all of these. A couple favorites here, and please note that if you use any of these words in conversation with me then we will be best friends forever
Gongoozler: noun | gahn-gooz-ler | A person who stares. A nonparticipating spectator. “Keenan was a Facebook gongoozler, always lurking, but never posting.”
Doundrins: noun | down-drinz | Afternoon drinks. “After the divorce, Kevin was susceptible to doundrins of white zin.”
We’re Not Good Enough To Not Practice - a short, hard-hitting piece about writing, but it could be about any skill really. Here’s a quote, so you know what I mean:
“You gotta commit and, as Jamilah Lemieux says, know that this ain't some ol' easy sometimesy shit. Practice.
When it comes to learning, here’s to not expecting a life of some ol’ easy sometimesy shit. And don’t be a gongoozler, let’s meet up for doundrins sometime soon.
An Exploration:
Thoughts to challenge how we think about our places, our neighbors, our work, and our future
Real Estate is Not an Asset Class
Ok sure, real estate is technically an asset class. In the sense that it can be an investment, or has similar characteristics across different properties. But the mindset of treating our homes, our offices, our land, and our neighborhoods as primarily a financial instrument is a problem.
We have it backwards.
Real estate is a basic human need first. It is more of a service, like healthcare or public transportation. Any other interpretation leads to a disconnect between what people need and what is built.
Making money from real estate is a necessary part of the equation, but it is a result of meeting this human need. Instead, most people think of it as an asset to make or preserve money, and maybe it meets a real need as an added bonus along the way.
You see this in the real estate forums and Twitter threads, teaching us how to grow our rental portfolio without a single mention of what a neighborhood needs. We learn how to minimize costs and maximize rents, cash-out refinance, rinse, repeat. You learn how a self-storage deal can provide great cash flow, but only find out later that the value of your soul should have been included in the purchase price.
(I’ll concede that there should indeed be some self-storage facilities in existence, but surely we’ve met the need to stack our unused stuff in places outside our actual homes by now, no??)
I know what you skeptics are saying right now. “If there is a market for something, it is because there is a need.” This is not true. An active market means there is a want, not a need. There’s also a want for cigarettes, Roundup, and oxycontin. We are better than hiding behind the “give the people what they want” free market argument, and we are capable of thinking more deeply than financial return metrics.
I believe there is a massive opportunity in flipping this script.
Instead of thinking of ourselves as real estate investors or real estate developers, we are Placemakers, Neighborhood Builders, & Entrepreneurs. While this currently makes things harder in some ways - especially with banks - there is very little competition for this approach. Paradoxically, we can reduce risk and boost returns in the long run by building places and communities that last, that unlock vibrant, magical neighborhoods.
And when the storms come, we’ll power through like the Bubba Gump shrimping boat and have the waters to ourselves on the other side. Our neighborhoods will be resilient because we’ve invested into our small businesses, and we’ve built an ecosystem to educate, house, and bank our community.
See you on the other side.
Parting Thoughts & Updates
Comal 864: Partner Spotlight @ Chapel
Comal 864: Coming back home to Greenville from Austin, TX, with very high standards, I sought out the most delicious, authentic Mexican food I could find in Greenville. Comal 864 is exactly that. Owner Dayna Lee has been serving tacos and quesadillas at regular popup events at The Whale and Fireforge for a while, and will be the first restaurant to join the Chapel community.
Give her a follow on Instagram, and go try the most delicious Mexican food in town.
More announcements soon!
Finally, the little share button below is the Good Neighbors version of bringing over a tin of cookies to someone who just moved in across the street. You want to be a Good Neighbor, don’t you?? :)
Until next time,
Matt