Real estate is an industry of high stakes, with fortunes made and lost based on market trends and the risks involved in multi-million-dollar projects. We’ve seen firsthand how these gambles can take both an emotional and financial toll on even the most seasoned developers.
Whether it’s navigating lawsuits, facing a market downturn, or dealing with the personal impact of failure, every real estate executive knows that the journey to success is filled with challenges.
In this blog, we’ll explore how high-flying, risk-taking real estate executives handle disasters and setbacks. By learning from industry veterans, we aim to share valuable lessons for today’s developers and investors.
The Fragile Nature of Success
Take Josh Schuster, founder of Silverback Development. Before the pandemic, his company held $2 billion in projects across six states. Then, COVID hit, and six of his developments were put on hold. One of his projects on Second Avenue was reduced to a hole in the ground due to shutdowns.
Defaults mounted, lawsuits followed, and Schuster found himself isolated, trying to maintain a facade of success while struggling with financial pressures behind the scenes.
At our firm, we believe success in real estate requires more than just financial risk-taking—it demands mental and emotional resilience too. When unexpected disruptions hit, whether they’re caused by economic shifts or new technologies, being able to pivot is key.
For example, trends like cutting-edge technology continue to reshape industries like healthcare real estate, which forces executives to adapt in real-time.
Bluff and Borrow: A Common Strategy
Many developers, like Schuster, try to bluff and borrow their way through rough patches. Schuster maintained a lavish lifestyle—his Upper East Side apartment, private school tuition, and club memberships—even as his financial situation worsened. He only started seeking help when facing total collapse.
In real estate, the belief that “the next deal will fix everything” can be tempting. Bruce Eichner, for instance, secured a $167.5 million loan for his Madison Park condo development, and sales eventually picked up, temporarily pulling him out of the red. However, this strategy is risky, and it doesn’t always work out.
One of the key lessons we share with developers is the importance of diversifying their investments and maintaining liquidity. Our approach emphasizes having multiple revenue streams and hedging against market risks, ensuring that developers are ready for the inevitable ebbs and flows of the market. Learn more about how we approach capital markets in our projects.
The Emotional Burden of Failure
The psychological toll of failure in real estate is enormous, especially when personal assets and relationships are at stake. In Schuster’s case, many of his investors were friends and family, which added emotional strain.
According to real estate psychiatrist Dr. Michael Freeman, developers often fail to acknowledge the role of luck in their success, leading to increased mental health challenges when things go wrong.
There’s a prevalent “cowboy mentality” in the industry—executives feel that they must face challenges alone. Schuster only started to recover once he shared his struggles.
It’s crucial to recognize when to ask for help. The tragic deaths of developers like Artem Tepler and Brandon Miller remind us of the consequences when support is not sought.
At our firm, we encourage executives to build and rely on strong support networks during difficult times. Whether it’s a fresh strategy to overcome challenges or having open conversations with trusted peers, building resilience often requires a collective effort.
Rebuilding After a Fall
Not every story ends in tragedy. Some real estate executives, like Harry Macklowe, have made legendary comebacks after failure. Macklowe lost a $7 billion portfolio during the 2008 financial crisis but returned by 2011 with the development of 432 Park Avenue. His “second act” is now an iconic example of resilience.
Similarly, Schuster regrouped after losing much of his portfolio during COVID. By taking responsibility for his mistakes, he launched SolarBack, a new venture focused on sustainable development—a trend we’re closely following in our projects, as it represents the future of the real estate industry.
Learning from Failure
Real estate development isn’t for the faint-hearted. Success requires risk tolerance, optimism, and mental toughness. We believe that having a long-term strategy that accounts for market volatility and unforeseen disruptions is crucial for thriving in the real estate world, whether it’s managing properties during economic downturns or adapting to new global trends.
The most important lesson for developers is clear: failure is part of the game. But how you respond to failure defines your career. Those who take ownership of their mistakes and learn from them will ultimately thrive.
If you’re looking for guidance on how to navigate the complexities of real estate, reach out to us. We’re here to help you build a resilient and successful future.