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By Adam Eiseman
As I spend 5 days in the mecca of culture that is New York City, I'm always awe struck of the mass amounts of spending going on in Manhattan daily. The intriguing factor is that as the most visited city in the US by international tourists, every major company has taken out high cost real estate in Manhattan. Clearly, for the well renowned business man and company chairman or even small time entrepreneur, the dollars earned on the tourists dime override the pennies spent on prime Manhattan real estate. The question I posed is why? Why are all of these tourists willing to spend freely for the prominent brand name in NYC?
The answer lies within the team and credibility of the product or service. Could I save a dollar on traveling a few miles to a jewelry store years or frequent a local knockoff….of course, but like the tourists, I'd much rather swing by the local Tiffany's, pay the premium for the peace of mind and accomplish the same goal. How about a simpler model, like say a deli? Could I visit the quickie mart deli on the corner for a quick snack? Sure thing, but why not save myself the time and headache, instead paying for an elite sandwich at the Carnegie Deli. The large variance lies within the comfort level of paying for customer service and the experience. "Price is related to the experience, not the product!"
The parallel to our JWB Real Estate Capital model is staggering. As an aspiring real estate investor, could you save a dime and build a successful real estate investment? Absolutely! However, similar to my NYC examples above, I'd advise you to enter with caution, because at the end of the day, after several missteps and struggles, will you have the "experience" worth the price of the headaches.
P.S. Kudos to the NYC work ethic, everyone is hustling one way or another to live, from the cab driver working 80 hrs a week to the guy selling bottled water for a buck on the Brooklyn Bridge to the executive sprinting on Wall St back from lunch, the efforts to pay for the high cost of living is inspiring! Love the work ethic not the cost of living. No cash flow in Manhattan, in the words of my good friend, "my landlord hopes to take a minimal loss each month to sell later for a profit."