Are you open minded?
I have had several conversations recently with BP members and during the conversation I mentioned that I was always open to looking at any and all opportunities. Reflecting upon this statement, I realized how seldom I get that response back from other people.
I am writing this post with the goal to provide some lessons that I have learned from almost four decades of investing experience. I made my first investment in 1977 at the age of 15. I worked a construction job for my Uncle and had saved enough money to purchase a lot. With the assistance of my Uncle, I secured financing for constructing a small single family home. I supervised every part of the process and did much of the work myself. I made $6000 which I turned into another construction lot and a car. I repeated the process and sold the second house prior to departing for the US Air Force Academy in 1979. Here are some of the lessons that I have learned over the past 37 plus years of investing.
Lesson #1: Don’t reach broad conclusions based upon a small sample size.
After entering the Air Force Academy, I used the profit from my second house for a down payment on 5 acres in my home town. I had planned to subdivide and eventually build on those lots. I sacrificially made the payments on that property while I was a cadet and eventually paid off the mortgage for the property soon after graduation. I would sell those 5 acres ten years later for the same price that I paid. Because of that experience, I avoided real estate investing until 2003. Can you say “Big Mistake?” Although I was still investing in mutual fund and stocks, I missed out on some great real estate opportunities in those years.
Lesson #2: Be flexible to changing market conditions:
I became an instructor pilot in gliders while I was at the Academy. We would often use rising pockets of warm air called “thermals” to extend our flying time. One day while I was “Thermalling”, I was spending more time enjoying the scenery and not enough detail to my flight conditions. When a “thermal” collapses, the warm updraft can quickly turn into a strong down draft. The thermal collapsed on me that day and I did not recognize that situation for some period of time. I was lucky to make it back to the airfield that day. I have made a similar mistake multiple times in my investing career. I will share just one of those examples. In 2003, my wife and I decided to jump back into the real estate market. We purchased a vacation rental and 8 duplexes. Our vacation rental did so well that we eventually built three more finishing our fourth vacation rental in the summer of 2007. We had offers to sell our vacation rentals in the summer of 2007 that would have resulted in a 400K profit prior to taxes. As gasoline prices reached $4 per gallon that fall followed by the ensuing recession, the vacation market crumbled. We are now in contract to sell our final remaining vacation rental next month. What could have been a 400K profit has turned into a 300K loss. To state this in another way, what is working now may not always work in the future. Pay close attention to changes in your market and be prepared to make appropriate adjustments.
Lesson #3: Know what you are trying to achieve
I always knew that I was striving for financial independence which I define as the time when your passive income meets or exceeds your required expenses. I achieved that in 1998 through a combination of investments, business income, and low expenses. I left the active duty Air Force at the 15 year point of my career. Many called me crazy but I will not take the time here to share how vital that decision was to my family. I would eventually join the Air National Guard and serve another 13 years: however, I did that because I wanted to and not because I required the income. Know your personal priorities and ensure that your strategy is helping you support the attainment of those goals and objectives.
Lesson #4: Multiple streams of Income
I am a big believer in creating multiple income sources. One of the important income streams that I created in the 1990’s that was essential to my leaving the Active Duty Air Force did not survive. Had I relied solely on that income, I would have been required to find a job to pay for our lifestyle. Today, my wife and I own a portfolio of rental properties which provides our financial independence. I am also working on several other business projects as well. One of those projects is a renewable energy company that I invested in several years ago. This past summer, the owner asked if I could put some time to help on the project. It is very rewarding to be in a position to help because I want to and not because I need to.
Lesson #5: Be a giver
Share your wisdom freely with others but be wise enough to know when you are the one who should be doing the listening.
Lesson #6: Use your resources wisely
It has become common lately to talk about working smarter not harder. In my experience, you are going to have to work smart and HARD if you are going to achieve financial independence prior to traditional retirement age. Your most important resource is your time. Ensure that you are allocating your efforts wisely. By being on Bigger Pockets, you are already light years ahead of me in my early years of investing. I learned much of what I know through trial and error. You can avoid many of the mistakes that I have made just by being a part of Bigger Pockets but understand that there will be many hours of hard work ahead of you on the road to financial independence.
Lesson #7: Keep an open Mind
I am continually startled by those that have nothing and yet are not open to making changes. I challenge you to analyze your thinking to ensure that you are not overlooking opportunities by being closed minded. As I continue to expand my network of business owners and entrepreneurs, I am amazed at the vast number of opportunities for creating and maintaining wealth.
I wish all of you a prosperous and joyous future.
Nice to meet another fellow pilot. My husband is active duty Navy currently an F-18 pilot. So I actually understood your pilot antidote, thanks to all the "dinner table" conversation through flight school.
I agree with your principle. Your comment about being open to all. I will say that we have been might successful but never in the ways my wildest dreams would have imagined. We have done VERY turning lemons into lemonade.
So I am an investor who will "listen" to anything, although I am VERY picky with what I invest and do. I also will say that my Finance MBA background has me analyzing everything. So while we listen to all we act on very little.
The one thing that has kept us successful was having a "goal" and keeping the eye on the goal. Our goal is financing early retirement through navy pension and cash flow properties.
Thank you and your husband for your service. I know that my wife shared equally in my 28 yrs of military service which included 25 yrs of flying the F-16 .
When I say open to new opportunities, I should clarify that I am always open to evaluating new opportunities. Obviously, I do not take action on every one but I enjoy having my thoughts and limits stretched by new concepts.
I am now creating a list for our next ventures.
Thank you for all of the sharing that you do here on Bigger Pockets.
You are definitely a giver.
Thanks so much for the post. I'm an Air Force guy myself and am pretty new to real estate. I definitely appreciate all of your advice and will absolutely take it to heart. I couldn't agree more about have multiple streams of income. I'm always looking on the horizon for other opportunities/ventures and can't wait to see what happens in the future. Best of luck to you!
Very good post. Always love to hear some words of wisdom by somebody who has been there and done it and is willing to share the knowledge they have learned. I myself am very new to real estate investing however I am as eager and open minded as anybody.
One thing you touched on a little bit is the knowing the market and basing important decisions off of what may or may not become. This is something I truley believe to be key in having an edge in real estate. I have read a few articles lately about this and I am searching for more information about it if anybody knows any good sources??.. I want to be able to identify different stages in the market and know the best ways to take advantage of them before expanding my real estate portfolio.
Any and all advice is greatly appreciated. Best of luck to all of you on your journey and Thank you to those of you who have and continue to serve in our military!
Just a lowly Beech Bonanza driver here...
I must admit I am not open minded...at least I realize it. Right now I am overweighted in real estate. I'm almost uncomfortable about it. I'm only comfortable with buy and hold. Those buildings are my financial freedom.
I am in the position to acquire more real estate, but not so sure I want to deal with more tenants. My rental income more than covers my expenses, and I have other sources of income, so my desire for more RE isn't strong. I am not keen on property management companies.
The recent weakness in equities has me interested in owning more dividend stocks, and more financial type investments as opposed to more RE.
Never put all your eggs in one basket.
I'm retired, have more than I need, and see no need to chase the carrot.
@Tyler Flagg Looks like you are off to a great start. Keep up the great work.
@Justin Ashton One of the mistakes that I made several times over the years was assuming that I knew what was going to happen going forward. I read articles that would reinforce my thinking. After taking some rather large losses over the years because of that process, I now try to be more observant and also seek out views contrary to my own so that I challenge my current strategy. That is one of the reasons that I say I am always open to listening to new opportunities. That has a multi-faceted benefit. 1. I might find a new opportunity that I had overlooked. 2. If not, I have another comparison for my current strategy. I know that does not help in answering your question for the forward looking crystal ball but hopefully that helps on my thinking. Good luck to you.
Sounds like you have a plan that is working well for you. That is excellent.
I have not done any civilian flying so if you have your own airplane that is awesome.
Thanks for sharing and best wishes to you.
Thanks for the words of wisdom. It's always great to learn from investors with some real life experience who are willing to share. As a beginning investor, this is awesome. Thanks again!
Good advice Chris, nothing beats experience.
So, you're cleared to runway two four, cleared for takeoff at pilot's discretion, clear and ten, wind calm, altimeter two niner, niner six. Have a good day sir! (Army, ATC LOL)
whats worse about 400k property worth 300k nowadays includes.. hyperinflation
back in the 70s, my folks brag about how they could buy a car for 100 bucks and an older house (or apt in lower manhattan) for 1000 bucks, and that a single buck could buy 10 loaves of bread!
nowadays a buck is just worth pennies compared to what it used to 40 years ago. whats in store for the US dollar within another 40? =/
Be flexible and dont stay away too long.Thanks for sharing your experience
Here is my baby http://flightaware.com/photos/view/218593-6a9d0d34... Check airspeeds on a recent flight http://flightaware.com/live/flight/N2360/history/2...
The 2008 downdraft hit me pretty hard as well but I did get back into the game.
Maybe if I sold the Lancair and bought a couple of rental.... Oh hell no!
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