BLACK SWAN EVENTS AND ADAPTABILITY
This week we have been speaking with several realtors about properties and potential deals. We asked one of these realtors for comps and he laughed! “Comps?! There are no comps! Nothing compares to COVID 19! But I can get you my best guess, based on houses that sold relatively recently.” Good point.
This realtor really got us thinking about all the people calling COVID a black swan event. What did black swans do to get stuck with COVID? So we looked it up. Wikipedia describes “black swan theory” as “the disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance and technology.” Yup, that’s COVID in a nutshell—although it was imagined with freakish accuracy in movies.
As we look to experts and strategists for guidance to move forward, we realize no one really has a playbook. But what can we compare? Who deals with unpredictable crises? And then we realized: each time a police emergency response crew (SWAT in some areas) gets called in—they are responding to a highly threatening and unpredictable event. They are literally trained to deal with black-swan-type events. One of the expressions these amazing first responders use is to “stay liquid.” To them it means, being flexible and taking the path of least resistance. They often have a strategy at the beginning—but it might need to be adapted 10 times before the crisis is resolved. Well, daily adaptations certainly seem to be the way of COVID 19, even for the medical experts.
There simply is no “set it and forget it” strategy for anyone during COVID. Many of us real estate investors have been thrown off our game and forced to change our property management, reserve funds, and real estate goals for 2020. Moving forward, it would be lovely to have a clear path, but we are realizing that is not possible. Even our political leaders are looking at “best case scenarios” and “worst case predictions” and trying to plan – anything. We too will create our best strategies, then adapt—on a daily basis, or even hourly basis, as is necessary. The path of least resistance may not become completely clear until we start taking those first steps. If SWAT crews can do this with life-threatening emergencies, we can all learn to “stay liquid” and keep adapting.
P.S. No disrespect to black swans is intended—we actually think they are gorgeous creatures who never deserved this bad rep!
