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Scuba Diving Principles for Real Estate Investors – Part 2: The Plan

by Andrew C. MacDonald on August 22, 2011 · 4 comments

  
planning to invest in real estate is like planning to scuba dive

In my first post I discussed the parallel between the most important rule in scuba diving and real estate. The most important rule is to breathe continuously and never stop breathing. In real estate, cash flow is like oxygen – it is what keeps us going.

In this article I will explore another parallel between scuba diving and real estate investing. In either endeavor, planning is crucial.

Dive Planning

Before venturing down to depth, divers will plan out their intended dive to determine the depth(s) of their dive and the time spent at various depths. Whether using a dive table or a modern dive computer, it is important that a diver understand the dive plan before getting in the water.

Having a dive plan makes each dive more effective since divers see more of they want to see, spend more time at depth, and reduce their risk of decompression illness. Likewise, having a plan in real estate will help you produce the results you want to see, spend less time generating those results, and reduce your risk of loss in the process. When the results are known to be significantly better with a plan, why would you dive or invest without one?

Investor Planning

Having a plan always sounds like a logical idea but where do you start? Well, here are a few questions you may ask:

  • What are my objectives?
  • What strategy best meets these objectives?
  • Which geographic area and property type best meet my objectives?
  • How will I fund my transactions?
  • How much leverage am I comfortable with?
  • Who will you include as part of your real estate investment team?
  • What type of deals will you be making for your next deal, next 5, next 10?

By considering these questions you’ll have put some thought behind what you want to do in real estate and how you’re going to do it. Take the answers to these questions and others along these lines and combine them into a plan.

When you get clear on what you want and how you plan to get it, execution becomes much easier and you can take a more direct route to success. Leave the scenic route for your scuba diving.

Creative Commons License photo credit: Adriaan’s Angles

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{ 4 comments… read them below or add one }

Chris August 22, 2011 at 3:10 pm

Stick to the plan man….stick to the plan.

Having a plan is also a great way to measure results. Once you can measure the results, you should be able to determine if the plan is working.

Reply

Andrew C. MacDonald September 5, 2011 at 12:00 pm

Hi Chris, it is important to first have a plan and then stick to it as you say. It’s easy to get distracted or stray from the course as in scuba diving. If we don’t follow our compass under water we are bound to get lost and if we stray from our plan in real estate investing we won’t be as effective either.

Reply

Randy August 23, 2011 at 7:45 am

Great illustration with Scuba Diving… Great to think about our line of work in a new light!

Reply

Sam Sagor March 15, 2012 at 9:49 am

Anyone interested in a modest room(very rustic) at an incredible diving location? 2 words – 2 steps. Hawaii big island of, Bay of refuge it was my back yard growing up. Possibly we could work something out where you trade REI experience for a few hours and I trade room. Did I mention if you’re lucky spinner dolphins serve as a alarm clock?

Reply

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