When I think back at some of the smokin’ deals I’ve done, I mean the true 6-figure home runs, I started to realize that there isn’t one factor to pinpoint that catalyzed the transaction. There were many. A compound effect. The reason is because that’s how life happens, as a collection of events. Sometimes orderly and predictable. Sometimes not.
Take this example
A 50-something school teacher suddenly becomes aware the of disparity between her nest egg and impending retirement date. She decides to buy a rental property. Over the next 20 years she’s accumulated significant equity between her mortgage amortization and market appreciation.
Her long-term tenants just had their 4th kid and have now outgrown the modest-sized rental home. But they haven’t been the best at maintaining the property over the last decade. She’s received several letters from the city reminding her of that fact.
Having retired 5 years ago, she’s not interested in spending her days with a paint brush in hand. In fact, her upcoming knee surgery would prevent her from even trying.
How many life events can you count in this scenario that might make it a marketable opportunity?
Here’s what I see:
- Although she’s owned it for decades, she has no emotional attachment to the property
- She has equity
- Upcoming vacancy
- The property needs work to bring it back to full market value
- Pressure from the city
- Seller’s age
- Her need for cash for medical expenses
Sometimes what looks like a single-event catalyst was really the straw that broke the camel’s back. From the outside, you only observed the last straw being put in place. But you were late to the show. In reality, the straws started piling up the day she bought the property. Because that’s how life happens.
Here’s the point
We need to take a long-term view of opportunities – looking backward and forward – when trying to find ourselves somewhere in the middle.