You can see it. You can touch it. You can build on it. You can demolish whats on it. But at a basic level, you cannot destroy it. It has been here since the beginning of time, and it will be here long after our lives have come and gone.
Prices can certainly rise above a healthy valuation as we saw during the mortgage bubble. At that time in the lending industry along with the government had created unsustainable lending patterns to homeowners who could not afford to pay their debts back. That is a whole different blog post for another day. But the principles of a good real estate investment stay the same during any economic cycle. Cash flow and value add.
Tim Pool was on the Joe Rogan podcast last week and he exposed some very troubling controversy going on in the tech industry. Many people have equated the tech industry to the new industrial revolution, and we won’t argue that. And with that, online presence equated to the new real estate. We will kind of argue against that. And here is why.
It is extremely easy to lose it all on the internet. Someone with an extremely loyal following and monetized platform, can be shutdown in a click, as exposed in this discussion between two, true investigative journalist. Joe Rogan would probably never consider himself a journalist, but he curates better content than those who do consider themselves such.
Tim Pool discusses how online media platforms are essentially buying “click portfolios” to boost their own metrics. So imagine a domain pushing crap media that gets millions of clicks, and then a legitimate company purchasing that domain in order to “own” those click counts. And imagine a tech company taking their portfolio of click count metrics into a meeting with investors to raise capital on non-organic value.
This would be the equivalent of a commercial real estate developer buying a traffic count report of another property on a busier street, and inserting it into their feasibility report that they give to investors or lenders. It may secure the money… but they committed fraud and their development will be based on false value, which will certainly come back to destroy them.
Even worse, as exposed by the interview with Pool, is the small non-diverse echo-chamber of opinions that circle this media, and prop each other up as a validation of their opinion. From an investment standpoint, this makes for a very shaky scenario when there are billions of dollars leveraged into tech and online companies fighting to be the next big thing.
And how timely is this interview about falsified values in the tech and media industry when one of the top trending Netflix right now is the infamous Fyre Festival.
Tech is a great tool. And it has changed the real estate industry and investing industry tremendously. But just like we learned during the mortgage crash, inflated values make for poor decisions and disappointing outcomes.
Platforms can be deleted. Influence can be stripped. But you cannot create, and you cannot destroy land.