Real Estate Investing Basics

Are You Willing to Lose in Order to Win?

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110 Articles Written
winning

“I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot, and I missed. I have failed over and over and over again in my life. And that is why I succeed.”

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–       Michael Jordan

Thomas Edison failed more than 1,000 times before he successfully invented the light bulb.

Abraham Lincoln won a seat in Congress – the second time he ran for office.  And Honest Abe was defeated twice more before he finally made it to the Senate 

Oprah Winfrey was once fired from her job as a TV reporter because her hips were too big.  Okay, that’s not exactly accurate.  Oprah was fired, but she was told it was because she was “unfit”.  Ironically, she was fit enough to spend 25 years on the air as a talk show host while simultaneously building a $2.4 billion multi-media empire. 

History is proof that in order to win in business, politics, sports, or anything else worthwhile, you must be willing to lose.

So what about you?  Are you willing to lose in order to win?

My investment firm has flipped 50 houses in the last 24 months.  We net about $400,000 in profit but lost $90,000 on deals that went bad.  How did we lose money?  Here are a few reasons:

–       I overestimated the value of the home.

–       I underestimated the extent of the repairs.

–       Values dropped unexpectedly because of the tax credit expiration on April 30th, 2010.

–       Appraisals came back low.

It’s easy for me to look back now and see where I made mistakes.  No doubt I’ll make more.  But I refuse to let failure define me and neither should you.  

Most new real estate investors are scared to lose money.  That’s perfectly natural.  You certainly shouldn’t invest money you can’t afford to lose.  But it is unrealistic to think that you’ll make money on every house you flip.   A deal will go south eventually – sometimes for reasons behind your control.  The good news is that being right 4 out of 5 times can still be very profitable.

It’s like Theodore Roosevelt once said, “Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure than to rank with those poor spirits who neither enjoy much nor suffer much, because they live in a gray twilight that knows not victory nor defeat.”

Now get out there and start losing!  It’s the only way to win.

    Jim Pratt
    Replied about 8 years ago
    Marty, good article. Like many others, I faced loosing everything on at least 3 occasins in the over 40 years of R.E. investing. I’m not a flipper like you, but do have problems once in awhile with values and rent not being what I thought they should be. Throuh it all I came out OK, knock me down and I get back up stronger and smarter. Heck, if this was easy everybody would be doing it.
    Marty Boardman
    Replied about 8 years ago
    Jim, I tell my daughters this all the time. Anything worth doing is difficult. Unfortunately, our culture (and education system) punishes those who make mistakes. By the time most kids reach high school age they’re scared to fail.
    Loretta
    Replied about 8 years ago
    Marty, great article and thanks for reminding us that losing is a part any business. I printed your article and posted it in my office, highlighting the various quotes.
    Marty Boardman
    Replied about 8 years ago
    Lorretta, that’s very flattering. Thank you.
    Thach Nguyen
    Replied about 8 years ago
    The list can go on how many mistakes I make and all the successful people in the world. I tell people all the time not to worry about their mistakes from the past. Live in the now. Great post! Reply Report comment
    Thach Nguyen
    Replied about 8 years ago
    The list can go on how many mistakes I make and all the successful people in the world. I tell people all the time not to worry about their mistakes from the past. Live in the now. Great post!
    Marty Boardman
    Replied about 8 years ago
    Thach, you are right. Most people live their life looking through the rear view mirror. I prefer to look through the windshield. Yes, bugs may splatter on it from time to time but at least I’m moving forward. I’m sure I could drag this metaphor out a little longer but I think you get my point.
    Shae Bynes
    Replied about 8 years ago
    Marty, this is a great post! I’ve definitely made mistakes in the business and I know that I’ll make more….however, they won’t be the same mistakes! They’ll be new and better ones mistakes 🙂 LOL! Thanks again!
    Marty Boardman
    Replied about 8 years ago
    Shae, my brother-in-law likes to say you only regret the things in life you don’t do. Good for you for embracing better mistakes!
    Marty Boardman
    Replied about 8 years ago
    Shae, my brother-in-law likes to say you only regret the things in life you don’t do. Good for you for embracing better mistakes! Reply Report comment
    Marty Boardman
    Replied about 8 years ago
    Shae, my brother-in-law likes to say you only regret the things in life you don’t do. Good for you for embracing better mistakes!
    Marty Boardman
    Replied about 8 years ago
    Shae, my brother-in-law likes to say you only regret the things in life you don’t do. Good for you for embracing better mistakes! Reply Report comment
    Shawn
    Replied about 8 years ago
    Only $400K profit with 50 houses? Thats average $8,000 per house…not much for the effort.
    Marty Boardman
    Replied about 8 years ago
    Shawn, I guess I’ve never really tried to quantify how much money I’m making “for the effort”. If you measure “effort” based on how many of hours a week someone works then I’d say I’m well compensated. In the past 12 months I haven’t had to work a single holiday or evening. I’ve had five weeks off. I pick up my daugthers at the bus stop a few times a week and take them to karate practice. I even play golf occasionally, although you’d never know it if you saw my swing. Most of my working days are spent in front of the computer doing market analysis. My trades do all the heavy lifting. I’m grateful for what we’ve accomplished and our investors are too. That’s all that counts. Thanks for reading.
    Mathew
    Replied about 8 years ago
    I think a dollar figure per deal is meaningless, and that total profit against total effort is what matters. Surely, someone who does a lot of work for a flip probably wouldn’t be happy with a $8000/deal average, but I assume Marty has team that can take on a large number of deals including ones with slimmer profit margins. You can’t say Marty put in too much effort if you don’t know how much effort he put in.
    Marty Boardman
    Replied about 8 years ago
    Mathew, thanks for having my back on this one. Yes, I have a contractor, Realtor, attorney, and accountant that handle most of the work. My job is to find the deals – my partner finds the money. It’s a good system and no one is complaining.