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Your comfort zone

Discussion in 'Investor Psychology' started by Bran, 13th Mar, 2016.

  1. Bran

    Bran Well-Known Member

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    It's amazing what you become comfortable with, and what it then takes to break through into the next zone.

    I had a fascinating talk to an uncle-in-law yesterday afternoon, who is (or was) in the business of acquiring and subdividing lands not-too-far-away.

    As an individual, he told me about being 'johnny on the spot' a few times, and snagging ridiculous deals. These were purchases with no money, writing a cheque that bounces, but having a network to then pick it up. The name of the game was not the money, the terms, the conditions, but getting the contract. The 'how' came later. The network would rings around looking for new sources. He regaled of one particular deal where no bidders at an auction wound up with him buying 2 consecutive and adjacent plots of land. He had no money, but wrote a cheque. By the time it bounced he hoped, and came up with a plan B, securing a 2 million dollar buy which he promptly did very little to, and sold for 7 to a big multinational company (his favourite buyers).

    He describes his best purchases as being 'historical owners' (intergenerational, where the latest inheritors don't know or don't care), and the government - the latter has tightened now apparently.

    He and his associates were really hitting their straps prior to GFC, with nearly 50 million in loans on 110 million in property when the money dried up. This was also the time some big name developers also got shut down with foreclosures - the bank recalled loans despite not being in arrears.

    Wiped them all out.

    He's back in the game as a site-finder for my brothers-in-law. It will be interesting to watch their progress. They are 2-3 years in now, and their sites are starting to tick over.

    It all makes any pipe dream 10% gains on $400,000 properties look decidedly average! (But in his words - "there is no risk in what you are doing", and "I am a grade A idiot".)

    Thought I'd share.
     
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  2. Omnidragon

    Omnidragon Well-Known Member

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    Nah that's a bit too aggressive for me.

    I'm happy to risk $500k to make $5m in a stock I really believe in, and risk losing $250-300k.

    But I wouldn't put down $500k-1m as a deposit to buy a $10m property (if I didn't have $10m), and worry about where to get the funds later. I've seen two people (28 year old kids) do exactly this and lose their $1m deposit.
     
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  3. Xenia

    Xenia Adelaide Property Manager Business Member

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    This is not really a strategy that can be taught, it's making things work for him.

    He sounds like the kind of person that can bring it all together at the end. Well done.
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    fascinating, keep us posted on what he is doing, how much he makes:)
     
  5. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    Interesting story Bran!
    I am always wondering why people who have obviously achieved enough success keep on going an taking more risks.
    I mean, with 110 million in property and 50 in loans, that leaves 60million bucks. There is no way one can spend that much money in an entire lifetime (or 2)!

    Perhaps he was just doing it out of passion?
    Interesting never the less! But wow, would I be gutted if I ended up wiped out of $60mil!
     
  6. Player

    Player Well-Known Member

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    Bran there is a big difference between comfort zone and undertaking prudent due diligence. One can take risks and still be hedged by not over-exposing themselves or betting the farm. Even though he's clearly a networker and a deal maker, looks like he was pi$$ing in the wind and the wind changed direction and started blowing in his face.

    If I'm not mistaken your professional vocation saves human lives. Respectfully, your uncle in law is the A Grade idiot not you.
     
  7. Bran

    Bran Well-Known Member

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    He's no longer in the game where he can make these crazy deals happen. But he is good at finding sites, and the boys are tackling far less risky ventures.
     
  8. Azazel

    Azazel Well-Known Member

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    Ouchie wawa.
    I don't think I could handle that kind of loss.
     
  9. Bran

    Bran Well-Known Member

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    I don't know how much of it was ever tangible.

    (I also cannot personally verify the truth in any of it).
     
  10. Tonibell

    Tonibell Well-Known Member

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    The older I get, the better I was.
     
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  11. Azazel

    Azazel Well-Known Member

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    Hehe.
    I could've done that ages ago.