2/28/10: In Pursuit of Excellence – What Real Estate Investors Can Learn From Olympic Athletes
Athletics are such a visceral metaphor for every form of human endeavor - including investing. During an athletic competition, years of dedication to a single pursuit are tested in a matter of moments. Every decision, sacrifice and whim of fate are focused into one measurement of success: the scoreboard. And so it is with an investor’s financial statement.
To celebrate this year’s Winter Olympics, we strapped on our skis for a cross country trip to Vancouver (via our TV remote) to consider the excellence that is Olympic athletic competition – and to glean practical lessons which can be applied to an investor’s daily life.
In The Real Estate Guys™ bobsled for today’s broadcast:
- Your Pilot and Host, Robert Helms
- Brakeman and frostbite strategist, Russell Gray
- Sled owner and Godfather of Real Estate, Bob “that’s my sled” Helms
With a strong push from our engineer, we jumped into our seats behind the microphones and began our rapid descent into a lively discussion. With so much to cover in so little time, the show took a lot of twists and turns.
Right out of the gate, we talked through the many parallels between the mindset of an athlete and that of an investor. As each attempts greater achievement, each must deal with issues of distraction, fear, criticism, injuries, competition and all types of adversity. How do gold medal athletes handle all this – and how does a real estate investor apply those same coping strategies to their efforts?
We also observed that desire, training and commitment aren’t enough. To get to the highest levels, there are several other critical items top performers must have in place, including proper technique and strategy. Pros make it looks easy, but they don’t win by hard work alone. Bob shares a great real estate example of how quantity of effort is largely wasted if good technique isn’t employed.
We also noted that even those athletes competing in an individual sport still have a large number of people on their team – people who affect their physical, emotional, intellectual and spiritual vitality and effectiveness. The people and personalities an athlete surrounds himself with can be the difference between a trip to Disneyland with your face on a box of Wheaties – and just fading off to obscurity as an also ran. The same is true with investing. So who should an investor have on his team and how does he know they’re the right ones?
As the show progressed we picked up speed and delved into the role of external conditions. An athlete can’t control the weather any more than an investor can control the economy. When it’s our turn, we have to compete, no matter what the conditions.
We cross the finish line talking about the power of passion – and how it drives an athlete to push and sacrifice not just for glory and victory, but for the thrill of the sport. The most successful real estate investors love the game. When you combine your passion with great technique, strategy, training and the right team – you may still not win – but you have a legitimate chance. And the difference between a true competitor and a delusional dreamer is that a true competitor isn’t looking for a handout or an easy path, they are simply looking for a chance to compete and win. As John F. Kennedy said when challenging the US to put a man on the moon, “We choose to do this not because it is easy, but because it is hard.” Overcoming the internal and external obstacles is what makes victory sweet.
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Problem or Opportunity?
Sorry – not a particularly catchy title for this post – but it’s still an important concept that merits reinforcement. In Equity Happens, we talk about how real estate investing is a business of fundamentals. When you master the fundamentals, then you master the business. In this case, the fundamental we’re talking about is one’s attitude towards “adversity”.
Watchers, victims, people who are waiting for “someone” (like the government) to do “something” see adversity as a problem. “Oh my gosh. There’s a big problem. Someone needs to do something!”
Doers, entrepreneurs, capitalists (you know, the people the government likes to take money from to fix the problem while often blaming them for causing it – oops, didn’t mean to let that slip out) look at adversity and say, “WOW! What a great opportunity! Everyone is crying in their soup, brain-locked with fear and unwilling to act. All I have to do is be creative and bold, and I can convert this adversity into an opportunity!”
Case in point: Today, the Wall Street Journal reports that real estate developer Young Woo is planning to convert the top 40 floors of AIG’s 66-story building into luxury condominiums. The Journal reports that Woo bought the distressed building (though actually, it was the OWNER that was distressed, not the property) for $150 million or $105 per square foot. If you don’t know, that’s cheap. He couldn’t build it for that.
After conversion, Woo hopes to sell the condos for close to $2,000 per square foot. Even after all his expenses, he could realize a profit of $500 per square foot or roughly $600,000 per condo! Not too shabby.
Of course, the plan looks good on paper and Woo has to actually execute the plan in order to realize his profit. But that’s what America and real estate is all about.
You may not be ready to take on a 66 story conversion project, but the principals apply at any level. The marketplace is full of distress and adversity right now. That means there are lots of opportunities IF you can see them, and IF you have the courage to lead.
Think and DO is better than Wait and See.
Start with education. Learn the fundamentals. Watch other investors. Learn from their successes and mistakes. Build relationships with experts you can call on when you’re in the middle of a deal. It’s always good to get lots of brains on the problem. But remember, it’s YOUR money and YOUR opportunity, so do NOT wait for someone else to empower you or assure your success. When you’ve done your homework and you see your opportunity, then YOU make the call – and go make equity happen for you.
