How Elon Musk Would Run a Commercial Real Estate Company

Elon Musk invested early in some of the most successful and innovative companies of the last 25 years: PayPal Holdings Inc., SpaceX, DeepMind, Tesla Inc., and The Boring Company, just to name a few. 

The diversity and profitability of his roster demonstrates that his investment decision-making process can be applied to a range of industries, including commercial real estate.

If you’re wondering how to invest in commercial real estate to maximize your ROI, it’s time to ask yourself: What would Elon Musk do?

Here’s a look at some of the strategies he’s used when making wildly successful investment decisions.

Diversify

One thing stands out about Elon Musk’s investments when you run through them one by one: The companies are vastly different from one another.

Consider the companies mentioned in the intro and you’ll see a payment processing platform, electric vehicle manufacturer, and a commercial space explorer. 

The entrepreneur invested in these companies after achieving his first success with an online phone book called Zip2.

There’s no pattern to the types of companies he’s chosen to invest in. 

Rather, he’s continually diversified — a traditional but essential strategy to reduce risk.

Commercial real estate investors often adopt the same approach. 

We diversify by balancing investments in single-family properties, multifamily, office buildings, and other types of real estate. 

A high level of diversification insulates your business from risk and supports long-term growth.

Consider the Public Good

Investors buy and sell commercial real estate to make a healthy profit. 

But it’s even more admirable when they consider the public good in their dealings.

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Musk always prioritizes investing in companies that promote the public good. 

For example, his AI company’s mission is to ensure that all of humanity benefits from artificial intelligence — not just a privileged few.

Musk lives by this commercial-plus-altruistic principle.

When Puerto Rico suffered a devastating storm, Hurricane Maria, he took a voluntary stake in rebuilding the territory’s power grid.

Yes, profit is the bottom line in commercial real estate. 

But, as Musk’s career demonstrates, financial gain and public good can coexist under the same corporate umbrella. 

Weather the Storm

Looking back at his track record, we see many of Musk’s investments look like strokes of genius. 

But that wasn’t the case when his ventures were fresh and the companies were still journeying toward success.

PayPal, as ubiquitous and successful as it is today, was voted the worst business idea of 1999.

Tesla and SpaceX have also received heavy criticism at times, even though they’re generally considered successful companies now.

No commercial real estate professional wants to stick with a bad choice. 

However, when you’re confident in the long-term viability of an investment that isn’t going well at the moment, make sure you persist through the criticisms and downturns. 

Get Your Hands Dirty

Elon Musk is notoriously hands-on with his investments. 

He’s never been one to kick his feet up in the corner office and delegate to those beneath him. 

Instead, he gets involved in day-to-day operations to push his companies toward success.

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When Musk first launched SpaceX, he cold-called rocket scientists to learn more about the industry. 

Today, that commitment to learning and understanding operations has helped him create a company worth billions.

As a commercial real estate investor, stay as close to the business as you can. 

You’ll gain a competitive advantage and make informed moves when you’re intimate with the markets you invest in.

Commit to Excellence

Elon Musk always ensures that “things are great” at his companies. 

This dedication to excellence drives the success of his investments.

Musk even uses a specific tactic to practice excellence on a daily basis. 

He focuses on what he calls “first principles” and boiling things down to their fundamental truths. 

As a commercial real estate investor, you’re operating in a competitive market. 

Indeed, finding a strategic advantage based on principle is the difference between a strong portfolio and one with lackluster performance. 

Skyrocket Like SpaceX

Musk is undoubtedly one of the most successful investors and entrepreneurs of his generation. 

There’s much that commercial real estate investors can learn from his career, motivation, and approach.

Your investment business is only limited by your willingness to look beyond the industry for lessons from leading entrepreneurs to apply to your commercial real estate vision.

How can Elon Musk influence what you are doing in your investments?

Originally posted to my blog on September 1st, 2021

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