Note: I’m spending much of this month open-sourcing business ideas. Feel free to copy, fork, use them, etc. All I ask is that if you become a bazillionaire, you must take me to dinner.
One of the interesting things about new destinations is that they become more valuable as they become popular. If you could get together with 100 of your friends and all decide to buy a lake house on the same random lake in Minnesota, you’ll find all the property on that lake and around that lake will likely triple in price really fast.
People don’t go to Aspen or the Hamptons just because they have great mountains or great beaches. There are plenty of places that are beautiful. They go to these well-known destinations because everyone else wants to go there.
Places are popular purely because they are popular. There is a recursive loop. Popularity breeds investment which breeds exclusivity which breeds more popularity.
So let’s say you find a really beautiful lake in Minnesota. It is gorgeous as a summer destination. It is close enough to a major airport. It has natural beauty. It is close to some amazing restaurants. The people are really friendly. And, oh yeah, you can buy two lake-front acres for $100,000.
How do you profit from that?
A traditional real estate developer will buy up a massive amount of property on the lake, build a community, and maybe some shared tennis courts and a golf course. Then the developer would market it as “Lakeside Commons” or something trendy like that and target rich people in Chicago or Houston (to escape the summer heat) to buy into the community.
Traditional real estate is very risky so it is in the real estate developer’s best interest to reduce those risks. Things are kept cookie-cutter. Things don’t deviate much from the tried-and-true approach.
enter kickstarter for real-estate
Now let’s revisit a new business idea. A community that forms online that wants to start a in-real-life community together. 50 to 250 families getting together to use their joint buying power to purchase a place. Each person is committed to marketing and building the new area so they see price appreciation (and a community that they want to spend time in).
Envision an entrepreneur scouting an amazing place and creating a vision for what it could be in the future. She negotiates to buy it. Then she recruits people to her vision and, if enough of them commit their dollars, they buy in. But not buying in just as investors … they buy-in as members of the community.
“We will buy this property if we raise at least $10 million from 100 different families.”
And sure, some of the community members will flip their holdings and make a quick profit. But most of the community will be formed with committed members that want to invest the next decade into seeing it blossom (and then benefit from the real appreciation).
Just think about getting together with your 20 best friends from high school and all deciding to focus your energies on owning a second home in the same place. You’d have an instant community.
Summation: if you start a kickstarter for real-estate, invite me to join your community.