Monthly Archives: July 2012

Do You Think Like an Investor, or a Consumer?

When dealing with lenders (Banks or otherwise) I’ve found that even bankers can have absolutely no clue what it means to think or operate as an investor. I read one time where bankers are nothing more than custodians of money. In many ways thats true. In the banking world just like everywhere else, just because you handle money does not mean you really understand the principles of investing. Take two different bankers, one does investment loans and one does consumer loans. I’ve dealt with both and I can’t get a rock solid, golden opportunity investment deal through a conumer loan banker because I don’t fit the profile of a consumer. (No Job = No Income in their eyes) I couldn’t even get aloan on a 5 year old pick-up because I just didn’t fit the profile. On the other hand with an investment oriented banker, I can make a phone call and get a quarter of a million dollar deal approved (just send me the details they say and we’ll get right on it) And about the pick-up? they say, “tell the dealer to call me and we’ll take care of it!”

Thats just the difference in bankers who supposedly understand finance.What about us regular people. I’ve developed a way of looking at almost everything related to finances in my life as etither “an investment” or “everything else”. Because in my world there are investments and there is everything else. (at least related to finances) Obviously, the investments exist to create income. Everything else is there out of necessity or pleasure. The investments consume capital but returns a profitable income. Everything else consumes capital but not return any income. Thats why its referred to as a “Consumer Loan” in the case of a loan.

Thinking like an investor means that everything is judged by its income value. Thinking like a consumer means everything is judged by its expense value. When thinking like an investor, the value of anything is completely relative as far as size or expense. When thinking like a consumer, everythin is relative compared to your ability to earn enough to pay for it.

I think that is the biggest difference betweeen people when I present them with opportunities. The few investor types see the outcome, the consumer types see only the cost.

Just an observation. Make of it whatever you want.

Milestones

This week, our investing business hits a big milestone eight years in the making. I’ve been thinking back to our very first property deal in September, 2004 and what it represents for us today.  I posted a quote the other day that said “Success is the sum of small efforts repeated day in and day out”. That first property means almost nothing by itself. It’s not much more than one small effort when compared to the total scope of the business. However it does represent one of the two most significant events of our business and its worth a mention.

It is probably the most important deal we’ve ever done simply because it was the first one. It’s the one that the second one was built on and those were the ones that the third one was built on. Our excitement over the first property was so profound that we began immediately to share our passion and belief for the business with whoever would listen. In eight years, only 4 people we know have also chosen to take their first steps into the world of real estate investing. My lightning quick mind figured out that that’s an average of one every two years. Of the hundreds of people we’ve talked to and the dozens that said they were interested, four have made the critical first step. All four have also taken the second, third and forth steps (and beyond) by continuing to add additional properties.

Our big milestone event this week would never have become a reality had the first milestone event never happened. I’m excited about it but at the same time I’m  actually a bit saddened. I have so many friends who are still wrestling with their fears and apprehensions and “what ifs”. Maybe that will never change. If not, it’s too bad.

I’m kind of at a loss for where this post should lead and how it should end. Eight years worth of small efforts repeated day in and day out has changed the course of our lives and our children’s lives in ways we never could have imagined when we started. They say a man with a “theory” can never persuade the man with an “experience”. If you’ve based your potential financial future on a theory, (yours or someone elses) maybe its time to get the perspective of someone with an experience.

Oh well. Heres to our milestone. Cheers!