Years ago, I played tournament chess. Chess has its own jargon. A blunder is a mistake. A brilliancy is a masterstroke, far beyond most players’ capacity. Many players aspire to brilliancies, but few make even one. Even at the tournament level, more games were lost by blunders than won by brilliancies.
After 35 years in apartment brokerage, I think apartment investors are a lot like chess players. Many aspire to brilliancies but avoiding blunders would improve most investors’ results over the long haul. Here are three devastating blunders to avoid.
Don’t wait too long.
You won’t build wealth sitting on the sidelines. Take some half steps. Review property pages, drive some neighborhoods. Write some offers.
Toddlers learn to walk by trying, failing, trying, failing, trying, stumbling, trying, walking three steps, trying, and falling over and over. Later they will learn to run.
What happens if you do no more in the next five years than you did in the last three? When prices have increased 50% will you be pleased that you bought at today’s “stupid high prices” or mad that you didn’t buy at the ridiculously low price of five years before?
Drifting means that inflation is working against you every night while you are asleep. A bias toward action implies that you’ll be richer most mornings for the rest of your life.
Instead of waiting in vain for a perfect deal, take the best option available in the market that matches your investing values and goals. You can’t grow wealth if you don’t invest. Great investors pounce.
Don’t take your eyes off the prize.
I’ve worked with many people over the years. The very best investors shared two things. They knew what they wanted from their investments, and they were clear about their values. Many investing books encourage you to articulate your investment goals. That’s important, but it’s equally important to know who you want to be and the legacy you want to leave.
When you know your values and goals, you’re more likely to make good decisions and less likely to make a decision you’ll regret later. Your goals are the prize you must keep your eye on.
Don’t be seduced by generic “great deals.” Invest in opportunities that help you move toward your goals.
Don’t ignore reality.
Truth is our friend. The truth is not always easy to hear. Often, we desperately want things to be different so much, that we talk ourselves believing that things are the way we want them to be.
A surprising number of sellers hope a rich fool will pay an exorbitant price for their average asset. In real life, investors won’t pay a premium for average. There are, occasionally, rich fools who blunder wealth away. But the odds are quite long against being on the receiving end of a rich fool’s blunder. It would be like winning the lottery.
A great broker will tell you what you need to hear. A great broker will nudge you to act. He or she will help you avoid “Rich Fool Syndrome” and make investments that help you achieve your goals.
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What’s your experience? What blunders should we add to my list?
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Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”