Amazon CEO Jeff Bezos just set a new price record with his purchase of a new property. What can we all take away from his recent bold property moves?
In early 2020, Amazon’s founder broke the record for the priciest home in LA. His purchase of a 9 acre estate in Beverly Hills is reported at $165M, a big bruise to the ego of the previous record holder who forked out $150M for bragging rights just a few months before. That sale was for the old Beverly Hillbillies Mansion. Jeff bought the old Warner estate. A property last sold for just over $40M.
Jeff Bezos’ Investment Portfolio
It’s no secret that Amazon has become one of the world’s largest landlords. They control 40% of the office space in Seattle, after having invested around $4B in property there according to The Seattle Times.
In addition to his new pad in Los Angeles, Bezos has been buying up homes for himself across the country. That includes properties in Washington DC, a Texas ranch, and four adjoining apartments in NYC, all on top of his place in Seattle.
Even as far back as 2015, Forbes reports he was one of the largest landowners in America, with over 300,000 acres in his personal portfolio.
4 Takeaways We Can All Apply To Our Financial Plans
The Smart Money Keeps Investing More In Real Estate
Bezos is certainly not driving this trend on his own. Mark Zuckerberg, Larry Ellison, and Bill Ackman are just some of the others. All the biggest people in tech and in fund management are investing much more of their corporate and personal money in real estate. They are extremely bullish on it.
Bezos is a great example of diversification. His real estate assets are spread all around the country. Some he uses for business and investment purposes too. It’s never smart to bet your entire portfolio on one neighborhood or city.
It’s An Essential Part Of Their Financial Plan
Even for billionaires, real estate is a cornerstone of all of their finances. They may be selling the world on one thing, but when it comes to their own money, it’s easy to see they are often doing something else. It suggests that they are creating a substantial plan B to weather any business interruptions and aren’t betting their own livelihoods and retirement on even the most desirable blue-chip stocks.
They See Returns Others Don’t
Honest operators of real estate investment offerings are often cautious to downplay their advertised rates of return. It’s better to under promise and over deliver.
In addition to the prestige and bragging rights, which is clearly a big part of this recent race to buy up $100M plus homes and $1B plus commercial properties, there are a lot of hidden returns.
There are the tax breaks. Above and beyond the net monthly or quarterly cash flow there is debt pay down by your tenants, which adds a lot to your net worth. Then there are value add and equity appreciation opportunities, which dwarf what can be gained elsewhere. Creative landlords can also always find ways to increase revenue, from alternative leasing structures to amenity upgrades and access and experiences.
What are you investing in this year?