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 youâre wondering how to invest in commercial real estate to maximize your ROI, itâs time to ask yourself: What would Elon Musk do?
Hereâs a look at some of the strategies heâs used when making wildly successful investment decisions.
One thing stands out about Elon Muskâs 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 youâll 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.
Thereâs no pattern to the types of companies heâs chosen to invest in.
Rather, heâs continually diversified â” 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 itâs even more admirable when they consider the public good in their dealings.
Musk always prioritizes investing in companies that promote the public good.
For example, his AI companyâs mission is to ensure that all of humanity benefits from artificial intelligence â” 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 territoryâs power grid.
Yes, profit is the bottom line in commercial real estate.
But, as Muskâs 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 Muskâs investments look like strokes of genius.
But that wasnât 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.
No commercial real estate professional wants to stick with a bad choice.
However, when youâre confident in the long-term viability of an investment that isnât 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.
Heâs 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.
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.
Youâll gain a competitive advantage and make informed moves when youâre intimate with the markets you invest in.
Commit to Excellence
Elon Musk always ensures that âthings are greatâ 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 âfirst principlesâ and boiling things down to their fundamental truths.
As a commercial real estate investor, youâre 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.
Thereâs 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?