Real Talk: Real Estate Rick Rybeck and Ellen Czaplewski
RT:RE [Real Talk: Real Estate] is my new series where we explore real estate from and for a millenial and gen Z audience.
Rick Rybeck has an interesting and different perspective on real estate. “I am not a real estate investor, I do real estate policy.” He’s very involved in the discussion around the value of property in relationship to communities and neighborhoods. Rick’s wife, Ellen Czaplewski, is a real estate agent. She helped him respond to my some of my questions.
“There is ‘productive’ real estate where labor and capital are combined with land to provide goods or services. The goal is for revenues from a productive endeavor to exceed the costs of creating it. There is also ‘speculative’ real estate. In this case, people buy and sell existing real estate assets without creating, improving or maintaining them. The goal is for the value of the purchased asset to increase over time. This speculative activity creates nothing of value. Merely buying an asset creates nothing that was not already there. Increases in the value of existing assets (assuming no improvement or maintenance) simply reflect increases in population or improvements to a community (better schools, better transportation, better public safety, etc.). The value of buildings is privately created. The value of land is generally independent of what the owner does. The value of land is created by what a community does around it to make it a good place to live or work.
From my perspective, ‘real estate investment’ means farming, ranching and constructing, improving or maintaining facilities. By engaging in these activities with wisdom, insight and stewardship, real estate investors might improve their communities and society.
On the other hand, ‘real estate speculators,’ those who merely buy and sell existing assets, are parasites who appropriate value created by others.
If you want to invest or speculate in real estate, you should understand how land markets work. As mentioned above, land changes value due to changes in population or changes in the desirability of a particular location. The value of land is also related to the legal frameworks (property law, development regulations, zoning codes, building codes, business licensing, health and safety codes, etc.) that determine how land can be used. The value of land is also related to the local, regional and national economies that establish demands for particular types of goods and services -- and particular types of facilities to make their production possible.
If you want a career in real estate, there are many options.
- Real Estate Investor
- Architect, Engineer or Builder
- Property Manager
- Real Estate Investment Analyst
- Real Estate Broker, Agent or Appraiser
- Real Estate Lender, Insurer or Attorney
- Community Planner, Regulator or Zoning Official
Some of these jobs exist in both the public and private sector. In the private sector, there are both for-profit and non-profit opportunities.
All these careers require education. Education can be obtained through courses on economics and business. Education can also be obtained by working as an employee in various real estate jobs. When you get a job in a real estate related company or agency, you get a wage or salary and possibly benefits as well. If you are a broker or sales agent, after you get your license, you make money primarily from commissions. In other words, you only make money when you close a deal on behalf of a seller or buyer who is your client.
If you are an investor, you make money from selling or renting the facilities that you own. Investing is very risky. Even people who know a lot about real estate are taking substantial risks and failure happens often. Risks are related to unanticipated changes in population, migration, interest rates, incomes, technologies and business opportunities. If you are going to be a real estate investor, you need to have a cushion of money just in case your investments do not succeed.”