Patience Is the Ultimate Skill In Making Money In Real Estate
"The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. If people are yelling, 'Swing, you bum,' ignore them". Warren Buffett As an active real estate investor and owner of a Tampa property management company, the above Warren Buffett quote always fascinated me. Most people get addicted to deal flow if they get immersed in real estate, stocks, or whatever investment opportunity catches their eye.
There is a huge emotional rush closing on a "good deal."It's a natural high because the body dumps so many chemicals in your body that you feel on top of the world.You want to feel that way over and over again. But that is not the way Warren Buffett made his money or any other super successful investor.They concentrated their bets on the very best deals.In other words, they did higher quality deals at a lower volume.
The problem is most people (including myself) get sucked into doing a lot of deals with a bunch of mediocre ones and a few bad deals mixed in.This causes tremendous stress and financial strain. In my opinion, all truly successful folks survive their mistakes and get more selective over time.Everyone else just loses all their money, because of the thrill of chasing and closing deals…mostly marginal ones.It takes incredible discipline to sit on your hands and do nothing, waiting for the right opportunity.
The real breakthrough for me came while reading Warren Buffett's biography "The Snowball: Warren Buffett and the Business of Life."Somewhere in those pages in finally sunk in that Warren's company sits on over $100 billion in cash for years!It's so easy to miss this message. I used to have trouble sitting on $50,000 without frantically searching for the next real estate investment.After reading that book, I tried making a real effort just to let my money accumulate until a great deal came along.
The idea of having patient money was the biggest step up of my investment career.Now instead of trying to force a deal to make sense, I pass.I'll look at 100's of properties on the Multiple Listing Service over months and not buy one of them because they aren't good enough deals.I spend my time learning more about my investment and business craft.And every once in a while a good deal shows up.It doesn't show up completely ready.
The key is patience and the willingness to explore deals that have problems.That is where the money is, but you have to watch a lot of deals go by and constantly be improving your investment craft.
