As the story goes, Dad was earnestly explaining to his sixth grade teacher why his assignment wasn’t completed on time.
After finishing he was confronted by a no nonsense look from the eyes of a man who didn’t brook excuses other than death or dismemberment. He solemnly leaned over his desk, pointed his finger at the cringing 11 year old, replying, “Don’t make excuses, Brown. Make good!”
If I’d received a thousand bucks for every time I heard that story, I coulda paid cash for my first home as a high school freshman. In our home, excuses were for those who simply couldn’t produce as expected.
It was far better to simply admit failure, ask for help in illuminating the reason for said failure, then go to the ends of the earth to produce those results the next time out.
Why Do We Fail?
Is that the gazillion dollar question, or what?
Let’s eliminate the obvious first. There are those among us who’re apathetic. When they say they don’t care, they’re givin’ us the straight scoop. But why then do almost 90% of us either retire poorly, or worse, must work ’til their age or health won’t allow it?
Let’s talk about the empirical numbers first, shall we? In a recent Forbes piece, the highest estimate available for ‘average 401k balance’ at age 65 is $100,000 — quadruple what independent experts have estimated. But, let’s believe the retirement planning folks on this one, ok?
Whatever your age as you read this, does having just $100,000 in your 401k plan at 65 scare you, big time? If we were to query a million 65 year olds today as to what led to that sad reality in their lives, we’d be hearing the same type answers Dad gave to the teacher in that — wait for it — little red schoolhouse. Yep, one teacher, eight grades.
Related: Real Estate Failure: My Story
Thank the Lord, that teacher refused to accept anything but the expected results assigned to the students to produce. To his death, Dad insisted that teacher profoundly altered the course of his life. He became a results oriented machine.
Excepting those who don’t even fake the effort towards a decent retirement, why the universal lack of results? It’s something that’s busted my chops since I transitioned from houses to investment property, back when Ford was in office. Dad first told me his take on the question during our first lunch together as partners in our new real estate investment firm, back in January of ’77. Loosely paraphrased,
“As a people we’ve lost the belief in the proper ways to achieve what we want. Principles are principles, and no amount jawboning will change that one fact. There’s a proper way to do things, sometimes more than one proper way. But when we deviate, for whatever reason(s), we doom ourselves to either mediocre results at best, or abject failure at worst. The phrase ‘thinkin’ out of the box’ has guaranteed more failures than Marie Calendar has pies.”
When I pressed him on that, he freely admitted that thinkin’ out of the box has begat countless positive breakthroughs in almost every aspect of our lives. What he meant was that it had become the go-to excuse for taking shortcuts, or simply not ensuring what was the genuinely correct way to successfully complete a given task, no matter how big or small.
However, he never failed to point out that even when outa the box thinking was applied, applicable principles were not violated in the process. For example, bodybuilding has been improved infinitely in just the few decades I’ve practiced it. Yet, the one fundamental principle — ‘hurting’ the muscle cell so that it ‘rebuilds’ itself bigger ‘n stronger — has never changed. In other words, the actual muscle building happens outside the gym. Muscle destruction is what we do inside the gym.
There’s No New way to Retire Well via Real Estate, Notes, Insurance, and the Rest. Period.
Wanna know why it’s gettin’ harder ‘n harder to flip properties in most markets?
Cuz the bulk of the flippers still standing are the hardened pros who’ve survived the last several years of bone crushing competition. Same with long term investing for retirement income.
Those who’ve followed the advice of the cash flow sages have learned the hard way, (or will, and usually too late) that the timing of cash flow matters. It matters? Yeah, like having brakes on our cars ‘matters’. Or, if you’d rather, think of something as miraculous as penicillin. It will injure our health if wrongly timed, or if used to battle the wrong illness. It’s an antibiotic that if wrongly applied can cause serious damage.
Those who chronically mistime their retirement agenda to achieve cash flow from Day 1 soon learn they’ve not only severely retarded the potential for ultimate retirement cash flow, but often find themselves the not so proud owners of decrepit, old, and costly properties in less than stellar locations, attracting tenants not found in the Happy Dance Songbook of real estate investing.
Or how ’bout the principle of leverage? Everyone knows leverage is all about down payment, right?
Who doesn’t know that?!
And there resides the cancer that will eventually triumph over all the good intentions of real estate and note investors everywhere. Regardless of the down payment utilized, if the property’s yield isn’t greater than the cost of money, you lose. Every time, no exceptions.
We simply can’t succeed in the long run when our modus operandi is consistently flawed to some extent. What exacerbates this is when market forces overcome investor errors, as we’ve seen three separate times in the last 40 years.
Thousands of investors since the mid 1970s have tragically thought themselves astute investors, when in fact the market appreciation rescued them from themselves. When appreciation ceased being their parachute, they hit the ground with a cringing thud.
Long Term Success in Real Estate and Note Investing for Retirement Income is Mind Numbingly Boring!
Think of the areas in our lives in which we’ve become legitimately successful.
No bodybuilder will tell you that being in the gym 5-6 days a week is exciting. It’s not that we don’t/didn’t enjoy the results. It’s that the real work wasn’t exhilarating. In fact, if you were serious, it often felt like flirting with death. Same with running. Are you a runner? Done a few marathons have ya?
Were ya just thrilled to the bone upon awakening Sunday mornings so you could get that thrilling 20 mile training run in? No, most of the time you weren’t. But you loved the feeling of being in better shape, and were indeed thrilled by how you felt as you crossed the marathon finish line. Having competed in both sports, I can look you straight in the eye and tell you how boring so many of the weight workouts and long training runs were.
But, like bodybuilding and running, real estate and note investing for retirement isn’t about having loads of fun on the way. It’s about RESULTS. Even though gettin’ there was many times so boring your IQ dropped, the results were well worth the years of effort. The short cuts so many of us use to create wealth and robust retirement income, are in actuality fantasies missing the happy ending.
If we wanna be the average 65 year old American with not much to show for 30-45 years of hard work, then keep on violating the principles the proper approach dictates. Keep on following the DIY crowd into Mediocre Land. At some point we all realize that time is no longer our friend. What we don’t wish on anyone is having that epiphany with just $100,000 — or much less — in our retirement accounts.
It has always been about RESULTS, as it’s never been about anything else.
Tell me about some results you’ve gotten as a real estate investor.
Be sure to leave your comments below!