15 lessons from Arnold Schwarzenegger and other celebrity investors
In addition to their acting careers, many of the world’s most successful celebrities have built vast fortunes through real estate investing. From Oprah to Leo, and Ellen to Arnie, stars are leveraging their wealth to strategically purchase and develop real estate. By studying their methods, you can take essential lessons from these smart actors to become a real estate mogul yourself.
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Start small to learn the ropes
When first starting out in real estate, look for affordable properties to gain experience before expanding. For example, Leonardo DiCaprio bought his first home in the late 1990s in Los Angeles’ Silver Lake for $769,500, according to UpNest. Arnold Schwarzenegger began buying a small apartment building in the 1970s which gave him a steady rental income early on. Starting with lower-priced homes or multiple units builds knowledge so you can confidently advance to larger deals.
Look for potential value-added fixer uppers
Target low-priced or rundown properties with an opportunity to renovate and sell for a big profit. Jennifer Aniston bought a $13.5 million Beverly Hills home, renovated and expanded it, then sold it for $36 million. Ellen DeGeneres is known for buying the homes of celebrities who need work, improving them and making millions. Focus on homes with untapped potential that you can unlock.
Convert rents into long-term assets
Owning rental properties provides continuous income streams. But the real value comes from holding rentals for decades at their discretion. Arnold Schwarzenegger still owns several apartment buildings purchased early on that now generate huge rental income. If possible, hold on to promising rental properties to accumulate value over your lifetime.
Invest in real estate markets with strong economic winds
When deciding where to purchase property, conduct thorough research into local market conditions and demand drivers. Oprah owns 70 acres in ritzy Montecito, California, where property values have risen due to high-income residents and celebrity demand. She also owns homes in upscale enclaves in Colorado and Washington. Choose locations that are primed for growth and benefit from increasing property values over time.
Create a diversified portfolio across property types and locations
Don’t put all your eggs in one basket. Diversify your real estate assets across residential, commercial, retail and other property types. Own real estate in several thriving global markets as well. Robert De Niro owns homes in New York and London as well as restaurants and resorts in prominent cities to spread the risk and profit from various real estate cycles.
Learn from experienced mentors to avoid costly mistakes
Amateur real estate investing often results in substandard returns or losses. Look for an advisor who knows what they’re doing when it comes to accurately evaluating trades and minimizing risk. Early on, Arnold Schwarzenegger learned from a heavyweight real estate investor who showed him the ropes and helped him buy wisely. Take the time to learn valuation techniques, market analysis, finance, and regulations.
Target niche opportunities and emerging trends
Look for areas of real estate that are undervalued or emerging and poised for growth. For example, David Charvet’s homebuilder Charvet Estates targets demand for sustainable luxury homes. Monitor emerging trends and changing buyer preferences to find and ride new real estate waves early.
Use the features to generate multiple income streams
Maximize income from your real estate in different ways. Ellen DeGeneres makes money by flipping homes that she renovates. It also leased unsold investments to generate cash flow. It relies on real estate values rising over time as markets rise in value. Use each asset for immediate returns as well as long-term portfolio growth.
Retain properties for the long term whenever possible
Flipping houses can be risky if the markets turn suddenly. When possible, buy and hold properties long-term to benefit from decades of appreciation. Arnold Schwarzenegger still owns commercial buildings purchased early on that are now worth astronomical sums thanks to long-term market growth. Resist flipping in volatile markets, and build wealth with patience.
Look into business developments for additional income
In addition to residential real estate, consider investing in income-producing commercial properties such as restaurants, hotels, shopping malls, and office buildings. This strategy has worked very well for Robert De Niro and Brad Pitt. Gain experience in commercial markets and build real estate assets through partnerships if necessary.
Leverage your existing fame and fortune
Famous actors often have an advantage in luxury real estate markets. Their fame enhances interest when listing homes, such as Rupert Grint who is capitalizing on his “Harry Potter” fame in the UK as well as his current high net worth allowing for the purchase of superior properties. If you have any sphere of influence, use it to land deals.
Partner with other investors to share risks and resources
When you find an investing partner to share money and knowledge with, you both succeed. Brad Pitt has partnered with a businessman to buy a casino development project in Las Vegas. By working as a team, you reduce the chances of losing everything by spreading out your investments, and you can work on larger, more complex projects.
Think big about custom designs when the opportunity allows
For ultra-high net worth individuals, tailor-made dream projects can provide huge returns. If money is no object, build passion projects like Leonardo DiCaprio’s eco-resort on the island of Belize. For the elite, one-of-a-kind trophy estates attract attention and can fetch top dollar when sold.
Allocate time to your projects and purchases to maximize market cycles
Monitor real estate cycles and adjust strategies accordingly. Economic ups and downs create profit opportunities. Robert De Niro has developed a resort in Barbuda that will benefit from it On the island’s recovery from damage Suffered in Hurricane Irma. Buy when markets are falling and sell when they are rising.
Pursue projects that align with your passion and lifestyle
The most successful real estate tycoons have assets that they are passionate about and that support their lifestyle vision. David Charvet builds sustainable luxury homes that reflect his values. Ellen DeGeneres flips beautiful homes with her taste and design aesthetic. Invest in ways that bring personal happiness and enrichment beyond just profits.
Read: Grant Cardone reveals 6 cities where he will buy investment properties now (and where he will avoid them)
By applying the lessons learned from the world’s famous real estate tycoons, you too can build an impressive real estate empire. Start small, take calculated risks, leverage your strengths, and work with trusted partners. With the right real estate, team, and strategies, profitable real estate success can become a reality.
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This article originally appeared on GOBankingRates.com: How to Become a Real Estate Mogul: 15 Lessons from Arnold Schwarzenegger and Other Celebrity Investors