Winning the Losers Game

[Peter Sanchez]

Do you win buy winning?  Or by not losing?  

Or, what can a scientist and tennis teach you about real estate? 

Many of you run a credit check when you rent to a tenant.  And you use one of three credit agencies, Equifax, TransUnion or TRW.  A brilliant man named Sy Ramo was the "R" in TRW. If you google him, you will see that before he started TRW, he was head of the team at GE that created their electron microscope.  And before that, he worked in aerospace and is considered the father of the intercontinental ballistic missile.  In other words, he was a bright guy.

Sy wrote books on things that interested him, like science, management and...TENNIS!  He looked at Tennis like a scientist  and discovered that club tennis (amateur) is different from professional tennis.  In Pro Tennis, 80% of the time you have to do something right to score a point.  In amateur tennis, 80% of the time you "score" when the other person makes a mistake (hits the net on a serve, hits the ball out of bounds etc.).  Therefore, if you are are trying to win at club tennis, you shouldn't try to ace that serve or hit that killer backhand.  Your strategy should just be to get it over the net and keep getting it over the net so that your opponent has more chances to make a mistake.  

A mistake I made when buying the house I currently live in (which I gutted and renovated), is that I used a pro-strategy when I should've used the amateur strategy. Instead of trying to do everything right by renovating a fixer-upper, it would've been a lot easier to buy something that was already done and just not make any mistakes (do preventative maintenance, keep the house painted neutral colors etc.) and just wait a few years for the market to do its work. 

As I contemplate selling now, I realize that I made it harder than I needed it to be.  There is more money in fixer uppers for a pro, but it's a lot of work for an amateur and I could've gotten a pretty decent return by doing it the easier way. (or as my wrestling coach used to say "you don't get extra points for doing it the hard way")

So I think on my next piece of real estate that I buy for living in, I will play amateur tennis. Living in a house that you are fixing up is different from fixing up a flip that you aren't living in, and there is a lot to be said for having hobbies that don't include trips to Home Depot.