One rule never to break when investing in real estate
August 07, 2015
Investing in real estate is no joke, but a comedian – yes, a comedian – helped teach me a lesson that has made all the difference for my business and real estate ventures. More importantly, it can for you, too.
Sitting on the patio of the local Starbucks one day, I overheard a conversation at the next table. The subject? Real estate. I chuckled at the mistaken myths they were sharing, and I was a little saddened that they were making big decisions based on these misconceptions.
A 20-something woman was sharing her enthusiasm and opinions on real estate:
“You won’t believe the deal I can get on a timeshare in the Okanagan. For only $80,000, I get two weeks a year at no charge. That’s like a free holiday every year! The rest of the year it is rented out. Too bad it isn’t by a ski hill but summer should be great!”
“Downtown Vancouver is not that expensive – my friend has a 380-sq.-ft. condo and pays only $1,400 a month rent.”
"My friend really wants to get a place in the states because the dollar is so strong. I told him it was a great idea and that a bunch of us should pool our money then share the profits, because there is no tax as a Canadian down there.”
From the gist of the conversation, it was clear than no one at the table had any experience with even one real estate transaction, yet they were speaking as if their comments were written in stone. They say confidence is good, no matter how misinformed. I disagree.
This one young lady’s declarations were so strong, her friends were accepting them as real estate gospel (even those substantially older than her). She even stated clearly that she hadn’t ever bought a property, but had read a “ton” on it so she knows how it works. Although not lacking in confidence, what she lacks is what I call “The Final 30 feet” experience. Missing this critical piece to the success puzzle makes her confident declarations and opinions very dangerous.
A simple conversation about real estate is not overly dangerous, but it becomes so when I start to hear misinformation and opinions coming from people calling themselves “real estate experts” who also lack The Final 30 Feet experience.
The Final 30 Feet Experience
My understanding of The Final 30 Feet all began while listening to comedian Buddy Hackett warning a young and upcoming comic on how to deal with the mountains of advice that TV executives, promoters, friends and family will give her as she builds her career. Buddy’s advice was simple yet profound: “Listen politely, smile and allow them to feel helpful… then turn around and seek out and take advice only from those who have walked the final 30 feet.”
The obvious follow-up question was: “What do you mean, the final 30 feet?” When I heard the answer, I saved it and have used it ever since. Buddy said:
“Only take advice from those who have walked the final and most important 30 feet from backstage to alone in front of a mic, with nowhere to hide. Then, and only then, will you know the advice comes from reality and not theory. They’ll understand the emotions, the work it takes to get it right. They’ll have made the mistakes and created the laughs, not just read about how to do it.”
This truism can be transferred into any business, career or investment decision. In essence, Hackett was saying that there are enough inexperienced pretenders out there who can and will steer you wrong (even if they are confident that their opinions are correct). Be very careful to choose advisors whom have The Final 30 Feet experience with the subject you need input on.
Back to the conversation at Starbucks. I’m sure the young lady thought she was repeating truths; she wasn’t deliberately misleading her companions. However, without having bought, owned, managed or experienced a lot of real estate transactions in all market conditions, she truly didn’t have The Final 30 Feet of experience – standing alone with the emotions and realities.
Book theory, number analysis, charts and graphs mean very little if you haven’t experienced what it really takes to be a great investor. Books, friends and “experts” can give you theories, math equations, opinions and analysis, but in the end theories are just that – theories. Veteran investors know there is no theory when you are in the trenches making real life decisions.
That is why Hackett's Final 30 Feet advice has served me very well as I built my business and real estate portfolio. I continually sought out people who had already achieved what I wanted to achieve, who had solved the problems I would need to solve, and who made the mistakes I wanted to minimize. I let the inexperienced share their theories and opinions, I politely smiled, and quickly moved on.
So, as you move forward in your real estate, investments and life, keep The Final 30 Feet rule in mind. If someone has real life provable experience (good or bad) in a subject you need answers on, seek them out for advice. What you will find is that those with The Final 30 Feet experience are often more difficult to find than the empty theorists (who have never left “backstage,” leaving them with lots of time to post, share and pontificate).
Let these empty theorists have their say. This is your cue to smile, turn on your heel, and speak to those who have taken that critical 30-foot walk. Your business, your real estate and your “future you” will thank you for it.
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About Don R. Campbell
Don R. Campbell is a Canadian-based real estate investor, researcher, best-selling author and educator. He is a Founding Partner and Senior Analyst of the Real Estate Investment Network, and owner of Cutting Edge Research Inc., both of which have entered their 22nd year of providing unbiased research and analysis on the Canadian real estate markets. He and his experienced team are leaders in providing Canada’s most current real estate investment education programs and economic research materials. donrcampbell.com