Real Estate Investor Paradox: Great Returns Don’t Require Great Investments
Posted @ 9:05 pm - Filed under Real Estate Investing, Retirement, Weekend Thoughts, Investment Physics, Capital Growth
Sounds a little silly, doesn’t it? It does to me too, but it’s true just the same.
Here’s something empirical to support that.
A single small investment requiring $25-35,000 will grow to a million bucks in 20 years. “Wow!” You exclaim skeptically, “That seems a little optimistic, doesn’t it?” Not really. It includes all real life costs of buying and selling/exchanging on the way. It also includes the assumption you’ll never average more than 5% annual property appreciation — never. Again, going slowly keeps you on the road to Wow!
The thing is, in my nearly four decades of experience, I’ve yet to see a 10 year period without at least a year or two of 10% appreciation +/-.
$25-35.000 in a decently located property, attracting solid tenants, paying market rents. Exchange your equity a few times in the 20 year period, nothing perfect, just prudent investments, and at the end of the road — collect yer million bucks.
It’s not the incredibly perfect properties, or the 5th and Broadway locations, or the sexy Tiffany designed curb appeal that makes real estate investors successful in their quest for impressive capital growth. It’s the year after year after year of steadily plodding, while adhering to the physics of real estate investing.
It’s analogous to baseball — a sport where team has meaning in terms of winning. Brown and Brown has built winning teams in every region we recommend.
You can rely on three run homers, or have a great and strong pitching, reliable defense, and timely hitting. Long term, the superb ‘team’ game wins. Pounding it out slowly but surely. Not swinging for the fences all the time. Those who’ve been trying to double their money every year or two have learned that lesson the hard way.
(The team Buzzie built. Here’s to you Buzzie — you were one of the great team builders. Note: Buzzie Bavasi built the World Champion Dodgers’ teams of the ’60’s. He passed away earlier this week at 93.)
The market, sooner or later is gonna give you the long bomb. Smile, be gracious about it. Then keep doin’ what you’ve been doing all along. A single here, a hit-and-run double there. Before you know it you’ve put another couple runs on the scoreboard.
Great results don’t require incredibly impressive investments. It’s as simple as that. The discipline, knowledge, expertise, skills, and most of all experience, is another thing altogether. The devil is in the execution. It’s not knowing the answers to your questions — it’s answering questions you didn’t know to ask.
The investor who slowly but surely does what we advise over the next couple decades, will most likely retire with more income annually than many of their friends made in their best years on the job. Nice thought, isn’t it?
Contact me, and let’s talk about which slow bus to wealth and a magnificently abundant retirement is best for you. And just for fun, download my White Paper. It’s not a long read, but you might find a few nuggets.
It’s Saturday night and time for some very cool music. In a feeble attempt at congruency, here’s Santana’s Smooth. Remember — You don’t have to be investing in perfect properties — you just have to be Smoooooth about it. (sorry)
This entry was posted on Saturday, May 3rd, 2008 at 9:05 pm and is filed under Real Estate Investing, Retirement, Weekend Thoughts, Investment Physics, Capital Growth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.