Zillow Founder Doesn’t Invest in Real Estate ‘For Any Income’ — Should You?
Written by
Nicole Spector
Edited by
Nicholas Morine
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Real estate investment has become increasingly popular, with many experts recommending it as a way to tap into an asset that will appreciate over the years and hedge against inflation. But not every money mogul embraces the trend — including those who’ve earned a fortune in real estate. Case in point: Spencer Rascoff, co-founder and former CEO of Zillow, who recently told Arrived (via Benzinga) that he doesn’t invest in real estate for any income.
“I own a couple of homes for my own use, and I own a Pacaso, but no, I have not done any proper real estate investing,” Rascoff told Arrived CEO and co-founder Ryan Frazier.
According to Benzinga, Rascoff is worth around $131.78 million. It can’t be finances alone holding him back, so why does Rascoff shy away from investing in real estate? The reasons are all too relatable. He told Arrived that he finds the process “unapproachable” and “complex.”
“I didn’t know where to start. It seemed really expensive. I didn’t really know how to do it. I didn’t want to deal with the operational elements of it,” Rascoff said.
Is Rascoff right? Well, he’s only sharing his experience — so he isn’t wrong. However, his stance of staying on the sidelines opens up dialogue around whether or not investing in real estate is, as he said, expensive, complex and unapproachable. Is that really the case?
It can be.
There are a few different paths to investing in real estate. One way is through homeownership, which Rascoff is clearly already doing. But what Rascoff is probably referring to are the other ways to invest in real estate — methods which are typically more complicated. These methods include flipping homes and renting out properties, or investment in commercial property or in a REIT (real estate investment trust).
It’s not that it’s hard to become a real estate investor — what is hard, perhaps, is becoming a successful real estate investor. To get started investing in real estate, you’ll want to master the following, according to The Investor’s Edge.
Foster Desire and Commitment
This can’t just be an idle daydream. This has to be an all-consuming dedication. You must want to live and breathe the world of real estate in order to drive massive success.
Cultivate Knowledge
You need to know a lot about real estate to successfully and consistently make money off it. And you’ll need to know the market(s) you’re buying in, as well as the industry as a whole. One can presume that Rascoff does not lack this key knowledge, but it’s not the only piece in the puzzle.
Stick to a Proven Method
There are many different approaches to real estate investing. You could go the wholesale route, the “bird dogging” route or opt for the “fix and flip” strategy, among others. Dedicate your knowledge and commitment to one method and work your way to a profit.
Know How To Reverse Engineer Success
What does creating a strategy to reverse engineer success entail? It means looking ahead to your next real estate deal and then going backwards to pinpoint and define exactly how you got from your last goal to your most recent deal. It’s probably not that difficult to do; but it does require a little bit of mental mathematics and an almost obsessive attention to detail. If you’re already a serial entrepreneur balancing a lot of businesses like Rascoff is, do you really have the time to do all this?
The Discipline To Execute
Once you’ve mastered your strategy, you need to have the discipline and dedication to stick to it constantly. The Investor’s Edge recommended working through key steps to success every week. That’s a lot for most people who have other jobs and responsibilities.
Here’s what it comes down to: If you have the knowledge, interest and means to invest in real estate, it’s a perfectly plausible way to make money. But if that knowledge and interest does not absolutely enrapture you to the point where you are confident putting money and supreme effort into it, you could end up in a less than ideal place. Not only might you start to feel overwhelmed — and begin to believe investing in this area is indeed “unapproachable” and “complex” — but you’ll also likely lack the stamina and perseverance to quickly and sufficiently profit from your investments.
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