Success in Real Estate

Years ago I had a dream of being a real estate investor. I tried buying and flipping houses looking at home after prospective home, estimating repairs, timelines, financing and net payout. I made numerous offers on viable homes and didn’t secure a single one. Someone always beat me out. Eventually I gave up when it didn’t seem viable.

A few years after that, bought a second home in Sunriver, Oregon, realizing a dream. The most inexpensive home in a great neighborhood. Except it was 2007 right before the crash. 10 years later, sold it for less than purchase price. On the one hand it was a great getaway. On the other, my timing was poor and it clearly was not a good investment. Could have rented really nice homes for less than ‘owning’ this one. Which required maintenance, repairs, oversight. And the opportunity cost was in part lost exotic vacations. Sunriver, though, is still a magical place.

The lesson is that investing is all about timing. Whether the markets or real estate. And no one has a crystal ball. Perhaps I should have seen the signs that we were at the top of the market. I was worried about being priced out completely.

When I hear ads to attend seminars for ‘house flipping systems’ and ‘building teams to make money in your spare time’ I am cynical. Especially in the Portland market which has low inventory and high competition for properties, particularly at the lower end. There is money to be made in selling the system and the dream. Realizing the dream after purchase is harder. Doable, but harder.


Because it takes fortitude, tenacity, grit and time. You need to identify the right product, buy at the right price and sell at the right price in the right time to clear a net profit. It’s that way with any business proposition.


It’s human nature to want overnight success. For it to be easy. But if it were, all of us would be tremendously successful. Each of us has our measure of what success looks like. Not all of it is monetary although that certainly opens up many doors.

Key is defining what it is and going after it with gusto and patience. Real estate is no exception. Looking at properties now, I am assessing the cost for renovation and how long it’ll take to recover the costs even if it’s my primary residence. Most all existing homes need updating in a few years. They need maintenance to stay in top shape. I’ve heard recently that lumber prices have skyrocketed because of new tariffs on Canadian lumber. Labor, too has increased with demand and it’s hard to get remodeling projects done affordably or in a timely manner. At least here in Portland.

The New York Times has a calculator for estimating the cost benefits of renting vs. owning based on many factors which is illuminating if you’ve never done the math. And the math doesn’t account for the psychological benefits of owning your own home. Of being able to make it exactly the space you want.

There are few signs that Portland isn’t going to decline anytime soon like some areas of the country did in 2008, yet we don’t know for certain. And if you’re investing in real estate to achieve a return in the short or long term, the math is important. But timing is even more important. And all of this takes grit and a certain tolerance for risk. There isn’t an easy risk-free path to success.

 

Default response

In the heat of the moment we revert to what we know, how we know to act and respond accordingly. We’re not in a state of mind to think holistically. To bring our best self. Unless we’ve trained our mind and body to be that best self.

That’s why it’s important to practice. To do the personal work to become who you want. To show up how you want to show up when things get tough.

Will you navigate such hurdles with grace and style or flail about attacking everyone in your way? And then regret it later?

This is hard work. You will not always bring your best self to difficult moments. I think, though, if you practice, if you make it your mission to take a little step everyday to get there, you’ll do that much better next time. You’ll be able to respond from a place of strength and experience better outcomes. You’ll recognize the situation and check yourself automatically rather than just reacting. Without practice we go with what we know; what is instinctual.

I often share an article entitled “The neuroscience of leadership” from 2006 that talks about how change causes physical pain in the brain and to make it stick you have to transfer the change from working memory to the basal ganglia where habits are stored. And that takes repetition and focus.

What’s your default response and what steps will you take to strengthen it?

We remember the worst

It’s human nature to think the worst and remember the same. We discount happy moments, take them for granted. We assume when change comes it isn’t generally good news. And when someone pays us a compliment it either comes with strings attached or isn’t sincere.

It’s why we think about the ‘good old days’. The way things were. The golden era. Except in the moment there were other ‘good old days’. It’s a moving target.

I venture to suggest that given the current climate of discord that there were better days. More civil. And there can be better days ahead too. It’s a matter of perspective and who wants to lose hope for a better future? And I still believe there are cycles we go through.

There’s big business in nostalgia. And opportunity in getting people to not always fear the worst in the face of change. Especially your teams and colleagues. How do you react to change? Glass half empty or half full? I suggest starting with the latter.

I’m currently reading ‘How to Think‘ by Alan Jacobs which dives into how we can’t think independently because we’re much influenced by our environment.

What comes up for you when you think about how you think?

 

Navigating ambiguity and uncertainty

We want to know things for certain. When unsure, when there’s doubt, when the answers are not staring us in the face, we get jittery. Who’s going to make the decision for us? Who is going to tell us it’s going to be okay?

Fact is, no one, really. Goes back to the fact each of us are navigating our own journey based on the experiences we’ve had before. Capitalism is ruthlessly efficient at optimizing without regard for feelings. For life. It takes human empathy to reign it in.

Even the CEO doesn’t know things for certain. Sure, she can make decisions based on experience and data. But success comes from making strategic bets for which the outcome isn’t known until it is.

Many people have a hard time navigating what’s ambiguous. With sitting with not knowing what’s certain. There’s magic and art in ambiguity. There’s differentiation and courage there.

Successful navigation requires confidence and options. It requires a foundation that affords you the opportunity to fail strategically. Because you will fail before you succeed.

Overcoming ego in building teams

The best teams are selfless. But each of us has an agenda. A lens though which we view the world. Unless each of us commits to the greater vision of the team, we’ll undermine the team success for our own benefit. Yet conversely if we give ourselves selflessly to the team we’ll get the rewards in the long term.

Our lizard brains though trick us into focusing more on short term gains. Just look at Wall Street for how prominent that approach is. Few are committed to building companies with legacies. The norm is on how fast you scale and exit. Grabbing a nice pot of cash on your way out. I get the logic in this. Who doesn’t want to be rich?

Yet for society to thrive longterm, we need to think more about building selfless teams. The kinds of teams that can win. And win big. If we get out of our own way.

I read recently Scott Adams’ focus on systems over goals as a means towards success. If you can build a system within a team and operate effectively within that system, you should hit your success.

Profit and loss

If you don’t make any money you won’t be long in business. That’s pretty obvious. And starting up, you need a cushion to do your best work and secure the best opportunities or you’ll make poor decisions just to keep the lights on. And that’s not confidence inspiring.

Taking more in than you pay out is a basic recipe for business success.

And then there are the other profits and losses. The people along the way you need to be successful and who you lose when you take advantage of them in a zero sum gain.

Big businesses think too much of squeezing customers and squeezing employees to bolster profits. Loopholes, shortcuts, lies can lead to greater profits. And greater losses when it comes crashing down.

How you earn your profit matters. It can even differentiate you from your competition. What if more companies focused on building long term sustainable businesses. Maybe they grew at measured rates rather than exponential. And maybe they were the types of businesses that lasted decades and gave more back to the earth than they took. Made those that worked for them earn enough to live good lives. Created community in the face of a world lacking today in community.

Maybe if more companies did this, we’d be on our way to mending the great divide in the country. Maybe it would even pave the way to sustainable solutions to climate change.

At the rate we’re going, most businesses are making profits at the expense of the earth. And most of us are consuming at the expense of the earth. At some point the profits enjoyed will become huge losses.

You might feel powerless to act. But what if each of us took micro steps each day in our businesses, jobs, lives to reverse course. Might we make more profits in the end? Live better lives?

Just imagine.

You are here

While you were busy checking Facebook wondering what your friends were up to, posting to Instagram, checking Twitter and YouTube, others were creating. Writing. Drawing. Designing. Thinking. Shipping.

We often regret the time we waste on things that seemed productive in the moment, lamenting where the time went. If we’d achieved our goals and dreams we’d look back with satisfaction. Yet how many of us do that? You can’t go back. Time once expended is gone.

On the flip side, parsing your time into massive productivity slices isn’t the answer either. Being busy organizing, cleaning, responding is just that: keeping you busy with the false illusion you’re doing something productive. True productivity is doing the right things. And only you know what those are. Those nagging goals and dreams currently unfulfilled.

I’m not advocating a slovenly lifestyle. Clean. And stay that way as that frees your mind from the clutter of distraction. And dust bunnies everywhere are just gross. Whether in your head or your home or your office.

There’s also the argument that idle time is also time well spent. Time where you sit quietly with your thoughts. Where the digital is not present. Ideas happen here. Do this.

Don’t go another year and look back with regret on where the time went without anything to show for it. Look back next year and smile at the experiences you enjoyed. The work you did. And the difference you made. And if you achieved your dreams this year, where are you going next?

Because they said so

They said this was the best thing.
They said we should go here.
They told us this was the best place to live.
They said fevers are bad.

How often have you wondered who ‘they’ is?

I learned yesterday that since 1955 Tylenol invented the concept that fevers are bad and you need to treat them fast. And Tylenol will do the trick. In reality, fevers are your body kicking into action to heal itself. And fevers of 103 or 104 degrees – considered extremely high and certainly not fun – are not bad for you. Tylenol told you they were and it became the truth. And so you went to the doctor to get help. And doctors had to jump on the bandwagon. Parents everywhere panic when their little ones get a fever.

There are many ‘theys’ telling you what to do. The reality is only you know what is right for you. What ‘they’ tell you is one data point often worth considering. Often not. The best is relative. Your mileage will vary.

We frequently look for someone else to tell us what’s right because it’s easier. We don’t want to get it wrong. Yet oftentimes getting it wrong is how we grow assuming it’s not a life threatening decision. Which most are not.

Ask more questions

How often do you ask questions before blindly doing something you’re asked? Do you seek to understand the ‘why’ behind the mission or just follow it?

I ask a lot of questions in business and personal. I am curious to learn more, to understand why we’re doing something. What makes someone get up in the morning. It’s a way of sussing out a bigger story and perhaps finding more innovative solutions. Or connecting the dots in a counter intuitive way that resonates.

When I interview prospective job candidates, it’s all about asking thought-provoking questions and I enjoy the process of learning about people. I find that those that don’t ask me questions are not so curious. They tend not to think critically and are thus less equipped to navigate ambiguity and change. They are less likely to be able to create a map when there is none.

Be a curious explorer. Questions may beget more questions and take you down a path you hadn’t initially envisioned. A path that leads to stronger outcomes.

What questions are you not asking today But should?

What’s next?

That’s the question we are always asking. In business and personal. If you’re not growing you’re dying.

How we answer the question and then act upon it is where the proverbial rubber meets the road. Reactive? Or proactive? Do you let change happen to you or do you navigate through it knowing it’s inevitable and that you can’t control all the forces that conspire to thwart your best efforts?

Effectively answering the question starts with a good foundation. Your vision. Your goals. A roadmap. It’s asking the question, what’s next with a strong sense of self and mission. It allows you to make the most of change.

Granted none of us have a crystal ball. But we can start with what is in our purview. Adjusting course along the way as we take in new information. It seems we ask this question more frequently towards the end of the year. What’s next for you?