Look Beyond Your Nose

[Tom Goans]

Look Beyond Your Nose

When I got out of high school, I went to work for a construction company driving an extremely large belly-dump at an earth dam project for a new lake.

Once a week there was a mandatory safety meeting. During each weekly meeting, several times we were reminded to drive beyond our nose. The supervisor would explain the larger the heavy equipment, the more dangerous. They can be deathtraps. It takes longer to regain control or stop larger equipment.

Thus, look way beyond and plan for trouble and what to do.

The same can be said for life and investing, especially real estate investing.

Many are now concerned about interest rates rising to 5 percent or more.

• What if they rise to 10 percent? Can you survive?
• What about your investment strategy?
• What about your ability to rent or sell your property(s)?
• Can you adapt? Or, is your business model setup in such a way you cannot adapt.

I have stated it is my opinion that a seasoned investor is one who has more than 30 years of experience. One reason is a person with this many years or more has experienced and learned how to survive the ups and downs of the real estate market.

• Ignore the fact that there are major real estate market swings and you may become a casualty.
• Do not plan for major market swings and you may become a casualty.

Each real estate market swing is different and teaches new critical lessons. I experienced one major depressed market during the President Carter days when the interest rates rose to 21 percent and stayed there for what seem like an eternity.

21 percent interest rates - could you survive this? Will your investment strategy survive this? What would you do if this or something similar happened?

Drive beyond your nose. Consider the possibilities and incorporate them into your business plan. Expect the what-ifs - they will occur. Challenges will influence your investment strategy and ability to survive no matter how prepared you think you are and no matter how good the numbers appear to be at this moment.

Your comments and thoughts are welcomed. This is how we all learn and expand our skills.

[Bryan Hancock]

Risk is a necessary evil unless you're blessed with heaps of capital to protect yourself to wealth.

“Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows neither victory nor defeat.” ~Theodore Roosevelt

Being cautious is certainly admirable, but returns and risks are inextricably linked. Worrying about what interest rates will do in 5 years is a fool's errand. You certainly want to diversify and avoid concentration risk that can sink you if things don't go as planned or the dynamics change. One simply cannot grow their capital stack if they're paralyzed by fear though.