Posted by Chris in FL on May 08, 2011 at 01:38:29:
Circling the wagons is playing not to lose… The problem is, you quit improving/expanding at the exact same time as inflation starts eating away your current income. House prices are super low, rents are fairly high; why circle the wagons? At the peak of the market, it was time to circle the wagons. Now, it is time to buy. If prices go even lower, then buy even more! Plus, if you buy the right homes, at the right prices, rents pay all expenses and mortgages, you can have little to no cash invested, and even have positive cashflow. If you are scared about inflation/economy, first buy some houses, then invest your positive cashflow in some silver and gold (and hope, as I am, that they haven’t already peaked).
Are we playing to win, or just not to lose? - Posted by Tony Colella
Posted by Tony Colella on April 06, 2011 at 17:56:25:
In this recession I see people facing hardships and others facing opportunity. I see people who have completely changed their lives, business and investment approach.
The change is fluid at this point but I find myself reflecting back on different aspects and challenges in my life and the lives of others to seek some enlightment.
In the past when I played sports I noticed that I and most others seemed to stand the greatest chance of victory only when we played to win.
I think we have all seen the favored team lose in the final minutes of a game because they stopped “playing to win” and instead began “to play not to lose.”
I am asking myself this question that I now pose to you.
Are we playing to win or are we playing not to lose?
Let that thought stew a bit tonight and see if it doesn’t shed some light or provide some new perspective to consider.
Most people play to win. When you decide to play a certain game or sport - you do not take the field hoping to not lose - you want to win as you have more fun when winning and you feel much better as well. Looking at the other side of the coin - you have one side that wins and the other side that loses. It is better to strive for a win/win situation where all can leave the field feeling good. The old style “I win - you lose nyea, nyea” hopefully has gone out of style and the win/win attitude is there for investors.
Re: Are we playing to win, or just not to lose? - Posted by Shawn Sisco
Posted by Shawn Sisco on April 08, 2011 at 09:53:54:
Playing to win, or playing not to lose is a great topic for thought. Analogies abound; Life is a marathon, not a sprint. You have got to make hay while the sun is shining. (I recently read this one by Ray Alcorn) ?The sun don?t shine on the same dog?s (ahem) backside every day.? Only buy when every one else is selling. And on and on.
Clearly, one shouldn?t be paralyzed by unreasonable fear- but neither should one risk their capital when they feel they will lose it.
I think the answer is a sustained balanced approach. In order to win, we must have an effective offense as well as an effective defense ? and realize that one of these will be much more out of character for you, so it will require real self-control to work that side of business. Entrepreneurship vs. management comes to mind; both are vital. I know that I have at times been far more adept at making money (gross profits), than watching expenses, or even taking time to learn accounting so as to really understand where I am, and where I am headed. I sure did a lot of wheel spinning until I learned.
Another help is to determine what an unchangeable principle of business is, and what is changeable. When problem solving, identifying the former indicates that I need change and the later indicates that conditions need change.
I also believe that one needs to set aside some time to think these things through. A 60 minute block of time each week with no noise or distractions, and a written list of issues that your business is facing or will likely be facing will be of great use. Sometimes circumstances demand we react quickly, but more often we simply fail to consider our plan of action until the last possible minute ? and these are typically those issues that are opposite our strengths ? seldom the best outcomes are achieved by this method.
Another issue is the tunnel vision that focus on one?s business can bring ? sometimes the best thing one can do is to sit tight for a while, or move in a direction that seems to be the wrong way, those mountain climbers seldom travel a straight course.
If you want to use a game analogy then lets take it one step further. If you’re going to play the game to win then one must first know what the rules are. In my mind at this time I just don’t know what they are. With all the regulations coming out of DC and not hearing anyone saying anything that might actually rescue the nation from third worldism I have decided to circle the wagons and not buy anything else. I am strictly paying off debt. I have about thirty properties and am on target to be debt free in about three years. Hopefully by then I will know what the rules are and how to play the game. But right now it’s about like me playing squash or cricket. Do you hit,kick,throw,or roll the ball?
I don’t know what the trends (rules??) are for the long-term. And I’ve been a buy and hold investor since 1994. I do know that the fundamentals of real estate investing and making money haven’t changed.
That’s why I’ve decided to move into short term investments. I’ve sold off my apartments (for a profit, fwiw) and will be doing some flips of SFR’s in Charleston (about 4 hours away) in the near term. I don’t know what the market will do in the next year, but I’m pretty confident I can buy, rehab and resell a great little starter home in the next few months for a really nice profit in this market that has a lot of foreclosures but also has job growth, population growth, and good demand for below median priced homes that are turnkey.
I just closed on two great deals last Friday.
I’ve paid down debt, too. And I do think high inflation is on the horizon, so I figure I’ve got 18-36 months of these flips before I have to find a different game to play. But I’ll be ready.
Re: Are we playing to win, or just not to lose? - Posted by Ryan (NC)
Posted by Ryan (NC) on April 09, 2011 at 05:47:31:
I used the exact same term Talking to Tony on the phone the other day, I’m “circling my wagons” and trying to get in a better position to come back out swinging… In game analogy I’m calling a “time out” to form a new game plan to deal with the rule changes.