Albert Einstein said that the definition of insanity is doing the same thing over and over and expecting different results. While this may seem funny, many people consistently do just that. How about you? Are you still operating your real estate business the way you did five years ago?
The world of real estate investing is a decidedly different place than it was just a few years ago. For those just entering this arena they have the benefit of a fresh slate to work with and can tailor their business plan to fit the current conditions. But what about veterans of the industry? Unfortunately too many of them are trying to make old formulas solve new problems, it’s like trying to force the proverbial square peg into the round hole.
A Brave New World
Investors, both new and seasoned, can easily cite changes that have occurred in real estate: foreclosures, difficulty obtaining financing, lack of demand, whole cities like Detroit becoming casualties to the real estate decline, etc. It’s important to remember that throughout history the only constant you can rely on is change. The law of the jungle requires that you adapt to the changing environment in order to survive.
Yourdictionary.com defines adapt as follows: to adjust (oneself) to new or changed circumstances.
On the surface that sounds pretty simple. If you established a system that has worked for you for quite some time it may not be so easy. We are all creatures of habit and it can be very difficult to discard old patterns and ways of doing things. But if what you’re doing now isn’t working do you really have a choice?
Just as various species must adapt to survive and avoid extinction, so do real estate investors. Those who have been around for some time can most likely recite a long list of investors who have failed and moved on to different things. If you’ve attended real estate investment clubs think of how the membership has changed over the years.
I marvel at how the discussions have shifted since the time the bursting bubble first became evident. The initial reaction was often to ride out the downturn, after all, how long could it possibly last? Many investors were in denial and refused to believe that there had been a major paradigm shift. One by one people either changed their strategy or fell by the wayside.
I am reminded of a quote by German philosopher, Arthur Shopenhauer: All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. This is certainly true of the changing real estate investing environment.
We cannot solve our problems with the same thinking we used when we created them. – Albert Einstein