Surviving Property Crashes…Learn From Experienced Property Investors

I just read a story about  John Arrillaga [#346 on the Forbes 400], who was a star athlete at Stanford in a different generation. He got out of Stanford and started building little buildings around
Stanford. He kept doing it and was good at it and of course there was no better
market. In due time, he and his family had 15 million square feet, and the rents had
gone up and up and up.

The interesting thing was that instead of doing the normal thing real estate developers
do, which is borrow, borrow, borrow, so that money earned goes up and up and up,
John gradually paid off 100% of the debt on his buildings so that when the great
Silicon Valley crash hit and three million square feet of his buildings went vacant, it
was a total non-event – and, in fact, he could start buying buildings from others [who
were distressed].

Here’s a man who deliberately took some risk out of his life. He has no regrets in his
life. He was damn glad. I think there’s a lot to be said when the world is going a
little crazy around you, to at least put yourself in a position that if something really
unpleasant happens, that it might be unpleasant but will be a non-event in terms of
changing your life. We all might consider imitating John Arrillaga as things get
crazier and crazier.

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