We all have big dreams and goals. Every one of us aspires to achieve more in life than we do even in our wildest dreams. It isn’t always easy. The going will get tough from time to time and seldom does anyone take a straight-shot ascent to the top.
You will invariably take some bumps and bruises along the way. That’s just part of life.
When it comes to investing, I’ve always believed that lady luck has a lot of influence in determining your outcome.
Last Night’s Dinner
I met up with some close friends (and investment partners) last night for dinner. Over the course of our meal, we of course made time to joke around and laugh it up. For the most part, everyone was in good spirits, which is somewhat to be expected given the present situation of things — Everyone is employed, healthy, making a ton of money investing, and for all intents and purposes, THRIVING!
When it comes to GREED, I try to be as cognizant of it as possible. Even so, I will admit that it has gotten the better of me on occasion, and I am definitely not immune to its reach.
As a part of our discussions, not surprisingly, the subject of Rental Property SH #1 and Rental Property SH #2 entered into the conversation and we started to reminisce about the “good old days” (just 1 short year ago).
Investment Partner #1: “Guys, can you believe that we won SH #1 for just $50 over listing???”
IP #2: “That was insane, man!”
Me: “Yeah. Just recently a good buddy of mine was able to rent out his unit for around $3,340/month. And the next door comp sold for $630,000 (we purchased SH #1 for $490,000 and SH #2 for $521,000) only a few months ago.”
IP #3: “It’s going to keep going up! I’m still waiting for some developer to come in to buy us out!!!”
Me: “Guys, you do realize that we’ve made over $100,000 on EACH property, right? In less than 1 year…”
IP #3: “It’s time to jack up rents!!!”
That’s roughly how the conversation went… For the most part, I believe that each one of us is grateful for the opportunities that were presented to us last year (and that we capitalized on it), but somehow I also got that uneasy feeling that some of us are salivating for more…
More cash flow.
More. More. More.
It never ends… No matter what, when times are good, you’ll always wish you had MORE! GREED can be so insidious, it’s no wonder why many investors never stop chasing after another deal.
Success breeds more success, no?
So, go out and buy some more properties! Leverage it up! And let the good times roll…
Yeah, like it’s really always going to be THAT EASY to make $100,000 in appreciation gains on EVERY single property that you buy…
When I first started off my career in engineering, it was right before the 2008 market collapse. I will never forget the day the Dow Jones fell 7% on September 29. Watching that spectacle unfold from my lab bench was like witnessing a train wreck in real-time.
The air was sucked out of the entire building. My co-workers were speechless. Tensions were high. And you could tell that FEAR was starting to become contagious.
Over the course of the next six months, everything would change. People were no longer smiling and having fun at work. The company started announcing hiring freezes, layoffs, and forced time off. Employees were just grateful to still have a job, and demonstrated their gratitude by working themselves into the ground. Although I had very little to lose amidst this unwinding market collapse, I knew my place as a rookie and quickly fell in line. Yes, just like my peers, I switched gears into overdrive and worked from dust until well passed dawn.
So, I learned from very early on what FEAR was….
Now that I’ve been able to witness both GREED and FEAR, I know this much for certain — GREED is like boiling a frog in hot water. It happens slowly… So you never feel like you’re doing yourself any real harm. Just keep turning up the temperature. Just a little more. It feels good even. A tad more… Until it’s too late.
With FEAR, it’s quite the opposite. Events don’t unfold slowly. By the time you’re ready to react, it’s too late. Kind of like falling out the window of a skyscraper. Look out below! It ain’t going to be pretty. You can only brace for FEAR by being proactive in advance.
As the saying goes: “It’s better to be a year early than a day too late.”
I don’t mean to be a preacher of doom and gloom, but c’mon guys, let’s be realistic here! Let’s not lose touch with reality. Prices go up… but they always go back down again. No investment goes up in perpetuity every second of every minute of every hour of everyday. We made some wonderful investment deals last year, so sure, let’s pat ourselves on the back and have a nice dinner (from time-to-time). We deserve that. But when that’s over and done with, let’s be shrewd investors and figure out a way to protect and preserve our investments.
Let’s form a solid and robust backup plan. Of course, just like you guys, I hope that we’ll never have to use it. But the same applies to life insurance, car insurance, fire insurance, flood insurance, etc. Just because you don’t ever plan on using insurance doesn’t mean it isn’t a wise investment!
If you’ve got the insurance in place, then yeah, let’s go celebrate some more good times! Because when the game of musical chairs finally stops (and it ALWAYS does), there will be mass chaos and devastation in the streets. If you’re well prepared and “jacked up and good to go” then we will be able to immediately make our triumphant return into the marketplace. When goods are being sold off for pennies on the dollar, real fortunes will be made. That’s when you really want to emphatically declare to the world that you are an investor!
They say lightning doesn’t strike twice. Definitely not, if you aren’t well prepared.
Let’s prove them wrong guys…