Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

The ‘Excitement’ Of Real Estate Investing — Really?

by Jeff Brown on July 29, 2014 · 5 comments

  
Real estate Excitment

We humans can be unintentionally funny and frustrating at times. One of the ways we do it is through how we interpret new information.

There’s a saying that goes, “May you live in interesting times.” Dad had two Chinese agents back in the 1960s whose second language was English. In fact, one of ‘em was born in what we now call mainland China, before Mao Zedong came into power.

In fact, Benny was born in the same decade as Mao, the 1890s. He taught me the lesson allowing me to learn more quickly, and to recognize the power of the phrase, ‘words mean things’. With Benny, one had to have consistent daily chats in order to understand most of his words. He may’ve been the smartest single agent Dad ever hired, but understanding his version of English was definitely an acquired skill.

One day I mentioned the old Chinese saying/curse that told your enemy, “May you live in interesting times.” He gave me his smile that said, “You’re so young and naive, but I shall now now teach you a lesson in life, Grasshopper”.

I was then surprised to hear that the Chinese saying wasn’t, at least to his knowledge, even Chinese. What he then taught me was pivotal. He told me that the vast majority of people think that wish is very positive. But, given the meaning of the word, interesting, WWII was incredibly interesting. Not the kind of interesting most of us want.

Ah, Words Mean Things. Who’d a Thunk?

Owning a real estate investment brokerage is exciting.

Investing in real estate is even more exciting. Being the lead car in a traffic accident is also exciting. See what Benny meant? Words mean things, but the real insight is to understand they can be misdefined by our expectations. In Benny’s view there were two kinds of people.

A. Those who saw and heard what they expected. Put differently, they defined words to mean what their predisposed biases said they must mean. This tends to obfuscate the author’s/speaker’s meaning, when taken in the full context of the subject matter. It also tends to destroy the potential for accurately digesting the lesson being taught.

B. Those who waited ’til they’d finished the whole course, so to speak, before developing their understanding of all that was written/said/taught. They did their best not to put their meanings on words sans the greater context of the subject at hand. Instead, they apply the definitions the author/speaker intended. 

“Real estate investing for retirement is exciting!”

In my experience most read that as ‘fun and exciting’not as being potentially as exciting as a car crash. Learning to do anything at the expert level can be, and for most is very exciting. However, the process of learning is almost always heavily infiltrated by boredom. Same goes for the process of hitting retirement with more annual income than you ever made at your day job. If there’s one thing I’ve come to endure, um, accept, is that the mother of all learning, both physical and mental — is REPETITION. And if repetition can be anything, it can be boring. Can I hear an Amen!?

What’s Boring About a Six Figure Retirement Income? The Process, that’s What!

Back to Benny.

He took me under his wing, showing me his various investments around town. He knew years before I did that investing was gonna be my ultimate niche. I didn’t know that for another three years. He was wicked smart that way. Know what 90% of his portfolio was?

Downtown warehouses, most of which weren’t set up as traditional type storage facilities. Back then, downtown San Diego was a scary proposition. They were populated by dozens and dozens of small Chinese businesses powered virtually 100% by family.

They lived in those warehouses too. Yeah, I know, different times to be sure. When I asked why they lived that way, he accurately interpreted what I meant by ‘live that way’ to mean in relative poverty and lack of privacy.

That’s when class really got started.

Related: Real Estate Investing is NOT Easy

“See that section over there in the corner? They have five kids. One just graduated from Stanford University. Two are goin’ there now. The other two are almost finished with their private school education. Now, Mr. Jeffrey — what he called me when I was in Grasshopper mode — just how many families do you know who will have sent five kids to Stanford while paying cash?” Their lives, based upon my wildly inaccurate observations, were living documentaries of merely existing to survive.

Yet, they could buy ‘n sell most of the folks I knew back then, before lunchtime. That was a huge teaching moment for me, not to mention massively humbling. Turns out I was a typical 22 year old know-it-all, arrogant twit, and that’s likely being kind.

Those families and their various businesses did the same ol’ thing, hour after hour, day after day, decade after decade. Yet, in the positive sense of the word, the R-E-S-U-L-T-S that boring process spawned were indeed exciting in the most beneficial sense of the word. The same principle dominates the process of producing a six figure retirement income via real estate, notes, EIULs and the like. In other words? Yawn . . .

One Might Ask, ‘What’s Boring About the Process?’

It’s a trick question, cuz the day to day mechanics are boring.

The constant need to jump on the hurry up and wait bus is beyond boring. Watching Strategic Synergism work its magic is often analogous to watching paint dry, but for years and years at a time. It’s one thing to grasp concepts, but quite another to watch paint dry for 15-40 years. Not an ‘exciting’ picture, is it? ;)

  • You can use arbitrage to create mountains of retirement income. You can use the pre-retirement income to increase the velocity of debt elimination. You can then rinse ‘n repeat ’til ya drop.
  • You can create completely standalone pillars of income that are just as totally independent of everything else you’re doing. Yet, those independent pillars can be funded by the positive results of multiple and separate strategies.
  • By Purposely Planning to interweave 2-4 strategies synergistically you can turbo charge the results of all of ‘em. This can only be done on Purpose, and with a Plan. Those sorta results simply don’t happen by way of a happy accident.
  • The best part of all is that as you enter retirement, the incomes from the various ‘pillars’ don’t rely on each other. If one should have a so-called dry period, it doesn’t mean the others fall like dominoes.

The boring part is all the mechanics and paperwork. The seemingly never-ending years of waiting for the right time to make your next move(s). The patience of sittin’ pat while the market goes through an adjustment in which you don’t wanna participate. The day to day of simply stayin’ on top of things. Boring. Boring. Boring.

Here’s what’s not boring at all, ever.

When, like all those families in Benny’s many warehouses, you retire with as much or more income than you ever made at your day job. Gettin’ your kids college degrees without soul killin’ debt. Not being able to spend all your monthly after tax/tax free passive income in retirement. Buying a new car just cuz you feel like it.

Related: Is Real Estate a Good Investment? (Nope, However…)

There is one thing you’ll learn that may not be boring, but is certainly frustrating.

Nobody’s yet figured out how to enjoy more than one vacation or one cruise at a time. We can’t be fishing in Montana while simultaneously snorkeling in Hawaii, while drinkin’ the best wine ever, as we watch the Parisian sunset. I hear ‘they’re’ workin’ on it though. :)

I mean this as literally as you can make it. At some point you’ll become apathetic about your after tax income.

Imagine what that feels like.

Email *
  



{ 5 comments… read them below or add one }

James Pratt July 29, 2014 at 9:15 pm

Good post. Tried to raise my kids on the Chinese philosophy at no avail. Kept showing them how they live together, work together and were able to pay cash on their purchases regardless of the cost. By living below your means and everyone contributing, the results will be spectacular.

Reply

Ben Leybovich July 30, 2014 at 6:42 am

I want to be bored. In fact, I will have achieved the zenith of my desires when I can sit in that rocking chair and just be bored watching my kids live life!

Reply

Roy Schauer July 30, 2014 at 9:45 am

Good article and a principle I’ve learned much later in life than I should have. But at least I’m learning it now. The majority of people I know seem to assume nothing will go wrong and pay checks will always keep coming. The rares ones are setting themselves up because they know they need to. Thanks for taking the time to write the article. I like hearing how other cultures think because I believe we have allowed ourselves to be brainwashed to some extent.

Reply

Steven Harlow July 31, 2014 at 12:30 pm

Jeff, your right on. Started planning for retirement 30 years ago and lived way below my income. When I hit my late 40’s I could retire. Now I just stay busy managing the checks coming in and taking my child to all the fun things 7 days a week and watching all the working folks all stressed out driving the freeways Managing the checks is pretty boring but it beats working for a living.
Its all a process and you need to have a plan (and a Plan B and C) and then diversify into different asset classes because something always goes wrong if you wait long enough.

Reply

James Evertson August 3, 2014 at 8:01 am

Good post. Reminds me of Jim Collin’s hedgehog concept in Good to Great. The Fortune 500’s that have demonstrated periods of the greatest success find a simple concept/strategy and repeat it and repeat it and repeat it whereas comparable companies that have chased the new thing or “diversified” their business for the sake of diversifying instead of in meaningful synergistic ways did not. See Walgreens vs. Eckerds in the late 20th century.

Good post.

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: