Ask Tom Bozzuto, and he’ll simply say he’s a born optimist.
But the chairman of Greenbelt, Md.-based The Bozzuto Group, is also a real estate veteran, with 40 years of experience under his belt. So the recession survival guide he offered a group of apartment finance professionals this week at the 2010 Apartment Finance Today Conference in Fort Lauderdale is based on decades of professional successes—and missteps.
Having navigated four boom-and-bust cycles, Bozzuto said that the most important thing to remember is that “when times get good… don’t lie to yourself.” It can be easy to get caught up in the excesses of the market, he said, but it’s also of critical importance to make sure that you keep your expectations and goals realistic and conservative.
Bozzuto also emphasized taking care when choosing partners on investments and ventures. He referred to lessons he learned the hard way be being less stringent when choosing partners in 2006 and 2007. He related this back to the lack of individual relationships in the industry during the last cycle. “When you borrow money, and you don’t know who you’re borrowing from, and you don’t know who to talk to if there’s a problem, then the system doesn’t work,” he said. “There is a serious structural issue we need to deal with.”
Finally, Bozzuto said that in down turns “you have to make investments.” Though his firm has gone through three rounds of layoffs since the Great Recession began, the company has also added individuals. One recent hire reorganized The Bozzuto Group’s purchasing operation and saved four times his compensation in the first year of employment. And the company has ramped up investment in its marketing and technology departments in order to save money in the future.
Ultimately, Bozzuto emphasized that this recession, too, will come to an end. “I think of America as the land of perpetual virginity. Everything that happens to us happens to us for the first time,” he said. “But this is not the first recession we have ever had; it is not the worst recession we have ever had; and it will not be the last recession we ever have.”
Hopefully, he added, we’ll not forget the lessons this time around.