SENSIBLE OPTIMISM
This week has been a wild ride for stock investors, or financial advisors, or even governments whose income is affected by oil revenue! What’s an investor to do these days? We even hear stories of people who are saying, “it can’t be done in today’s market.”
In honor of St Patrick’s day, that’s a lot of Blarney.
Now, before anyone jumps on their high horse, we are not fans of the ostrich maneuver (sticking our heads in the sand while a storm passes). Nor are we advocating a blind optimism that things will all work out for the best.
But today I heard a fabulous expression that describes successful real estate investors very well: sensible optimism. It was described in an auditory book I was listening to, “The Psychology of Money” by Morgan Housel. It’s about “Timeless lessons on wealth, greed and happiness.” He describes sensible optimism as a belief in long term growth, with a good outcome, even if some of what happens between start and finish is filled with challenge, or even misery.
We think this is perfect for 2023. Certainty is a cute little bird that seems to have flown out the window this year. And with adversity and challenge, many real estate investors are seeing their mindset, and their “sensible optimism” tested.
When a mortgage renewal comes up, $500/month higher than it was before, that bites! Our positive cashflow might be less, or might have evaporated.
As the real estate market slows, flips might linger on the market, or we might see signs that property values are decreasing in some areas. (Just a reminder, if we are not selling today, that property value estimate is simply anecdotal—it does NOT affect the day-to-day running of the property).
When a bank comes up with yet another roadblock, or rule, or requirement for a mortgage, at the last minute—well, there might be some four letter words involved in that moment.
But with each “problem” there are solutions. Nope, that is not a nice euphemism. How many times have people told us we couldn’t do X or Y or Z. Oh good heavens a lot! And sometimes it even looks impossible for a while. But then we find a way, and X$&@ gets done.
We’re not afraid of problems anymore. We really do expect them, and it’s quite tricky to surprise us these days—although some properties still do. That’s why we specialize in “outside the box” properties, renovations, builds, etc…. The cookie-cutter builders have a fabulous and repeatable business model. However, there are still people that prefer a custom home, to all of their specifications. Or an addition, where somehow the old floor and the new floor need to be level. Or a real estate investment property that is different. Yes, different still scares a lot of people and investors away.
Just because the investing landscape has changed since last year, doesn’t mean it’s impossible. There might be hard work required. There might be some necessary trimming of expenses. A completely new approach might work better these days, compared to what an investor has been doing for the past decade. And yes, profit expectations may need to be adjusted in the short term.
We are evaluating opportunities weekly, if not daily. Some are a “yes,” some are a “no,” and some are “tell me more.” We are seeing our colleagues go from impossible to done on a regular basis. For real estate investors, it is most definitely not time to give up. Consider every “impossibility” with respect to return on time, return on investment, and yes, even return on happiness. Then decide, is your Financial Freedom worth finding a solution?
