Is Hollywood a true mirror of our lives? Clearly not, but extreme depictions of daily events and truths can teach us a thing or two if we are willing to look. There are numerous real estate or finance-related movies that make clear certain mistakes that should be avoided, even if the results are not so drastic as plotting the murder of your neighbor or having a ceiling fall on your head.
Let’s take a peek and see what lessons we can learn from these often-hilarious examples.
1. The Money Pit (1986)
The Money Pit, its title largely self-explanatory, plays out much like an old Cary Grant movie from the 1940s, providing some timeless lessons. While simple in its concept, this film provides one of the most important elements of choosing a good investment property.
When Walter and Anna (Tom Hanks and Shelley Long) start looking for a new house on a very limited budget, they are talked into a house that looks awesome with a price too good to be true. And it turns out that “too good to be true” was exactly right! Enter: some solid due diligence.
Make sure your contract leaves you the time to thoroughly inspect the home—and make sure the inspector is not your brother’s co-worker’s best buddy, but a licensed professional who will know what to look for and recommend further inspection where needed. Walking blindly into an investment can go horribly wrong. Taking the time to check out any factors affecting the property’s physical condition will pay you back in the end, but do not forget other potential areas of impact—verify your zoning use, CCRs, title history, potential liens, etc.
2. 99 Homes (2014)
Let’s talk bad investments.
What happens to Andrew Garfield as Dennis Nash, in the 2015 Golden Globe Nominee 99 Homes, who after a rough go financially is facing foreclosure on his home? Sentimentality clearly gets the best of him, and he strikes a “deal with the devil” to bail himself out and save his home.
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While hilarious in its exaggeration, this film does help us see that sentimentality and pride can firmly stand in the way of wise investment. Recovering from a bad investment or one that you become “attached to” requires the ability to step outside yourself to avoid cost bias and get yourself out of it.
Taking a loss and moving on is the way to learn from your experience and move on to more lucrative projects without losing your soul in the process.
3. The Big Short (2015)
The Big Short takes place in the lead-up to the 2008 U.S. mortgage crisis and provides the background story of risky investment practices. Christian Bale and Ryan Gosling star in this dramatized rendition telling the tale of investors trying to “play” the economic forecast to an extreme level. Reading the market, evaluating the forecasts, and trying to predict social and financial trends resulting from the current economic state is a skill that requires knowledge, experience, and insight.
Don’t simply take the word of any economist. The ability to see through the blind spots in the market comes from years of experience and a specialized focus in real estate investment. Seek out the advisors who can take this data and translate it to real time success for you in your endeavors.
4. Inside Job (2010)
Many of us are still dealing with the ramifications of the 2008 global financial crisis even 10 years later. Trillions of dollars and millions of jobs were lost since the Great Depression nearly led to a global collapse. Inside Job reveals to us the importance of using savvy and cautious practices to guide our financing strategies when purchasing real estate.
After 2008, stricter rules were put in place with regard to banking and financial industry guidelines. Still, it’s vital for investors to avoid overextending themselves, putting personal assets and potentially others at risk. The goal should always be to balance your portfolio for maximum income while still managing risk.
Beware again the “too good to be true” deal, and make sure you have solid financial professionals on your team to give you the best and wisest advice.
Thanks, Hollywood, for the exaggerated but often hilarious peek into the investment world. As wise investors, we can always benefit from another learning experience and a reminder to plant seeds where they will thrive.
What films would you add to this list?