You Gotta Know How To Pick 'Em
Learning To Surf, Improving Your Batting Average, and Buying The Right Rental Properties (4 min read)
A central key to successful real estate investment lies in buying the right rental property to begin with. You need to start with your goals and do your homework to fully understand the neighborhood and history of the area you’re looking into to ensure that everything aligns. This ability to choose the right option is another universal key to success across so many areas. Last week we talked about Charlie Munger. He and Warren Buffett have built Berkshire Hathaway into a company worth over $500 billion due to their uncanny ability to make the right investment choices. In talking about why he’s been such a successful, highly touted executive coach Marshall Goldsmith quips, “because I choose the best clients”. There is no doubt that learning the art of “how to choose correctly” is at the heart of success.
LEARNING HOW TO SURF
Surfing is not an overly difficult activity and like riding a bike, once you’ve got it, you’ve got it. But unless you live in a region of the world where waves are consistent, finding the right conditions to learn can be really tricky. Here in New England, summer comes around and temperatures rise, as does surfing enthusiasm, but the quality of waves is actually far better in the fall and cold winter months. Learning to surf is far less exciting when the reality of a wetsuit, boots, and gloves is introduced…but far harder in the summer.
Regardless of where you live, you can more of less pick up the basics of surfing mechanics and know-how online and by watching Youtube. There are countless videos that will get you paddling correctly and standing soon enough. Within a year or two you’ll be able to ride most of the waves that roll through your local beaches or point breaks…but you won’t.
Just like anyone (with money in hand) can buy a rental property, most anyone (with a basic knowledge, some courage, and a board) can catch a wave. But you’ll never be a successful surfer until you learn to read waves better than those around you. There is almost always a best place to sit as waves come in: with the wind and tide in mind, can you find it and stay there? Wave shape and potential length varies on most days…can you spot the approaching wave that is going to close out and dump on you versus the one that will continue to wall up on the left after its initial break? And just as importantly, can you recognize that good wave early enough to get yourself in position so it’s yours (there are specific surfing etiquette guidelines) and you’re not dropping in and getting in someone else’s way?
Yes, just like so many other things, the first key to surfing success is simply: choosing the right waves.
IMPROVING YOUR BATTING AVERAGE
As a high school baseball player who was never a strong hitter I can remember quite vividly coaches trying to simplify the process by yelling out, “see ball, hit ball”. The idea of simplification when a task is difficult makes lots of sense, but we know this approach is wrong. Just like surfing, successfully hitting a ball with a bat comes down to making the right choice, better known as “pitch selection”. The hitters who can recognize which balls are going to be in the zone they hit best separate themselves from everyone else very quickly. Similar to someone sitting out and looking out at waves on the horizon, batters are locked in on the pitcher’s release point so they can learn as much about that pitch as early as possible.
Paul Goldschmidt is an All-Star first baseman for the St. Louis Cardinals. As you can see above, there are spots in the strike zone where he absolutely crushes baseballs with success. When he is hitting at his best, it is his pitch recognition and selection that makes all the difference. If he can accurately guess that a ball is going to be on the inside half of the plate (where he hits over .440) he’s going to get on base often. If he’s struggling to tell if that ball is going to be a bit further inside (where he’s hitting about .120), results will be much different.
Last year, Atlanta Brave’s outfielder Ronald Acuña was off to one of the hottest starts in baseball. He led the Majors in nearly every offensive category because of one major change in his game: he developed his plate discipline. His chase rate (swinging at balls out of the strike zone) was down to just 10% and that subsequently cut his strikeouts in half, with the lowest rate out of the 19 players with the most extra-base hits. Acuña might’ve gotten stronger or quicker, but his coaches attest to how much effort he put toward being able to make better choices in the batters’ box.
BUYING RENTAL PROPERTIES: CATCHING MORE WAVES AND MAKING MORE CONTACT
The common theme between the two examples above is an ability to recognize potential value early and consistently. Is that wave going to be a great opportunity or is it going to break on my head? Is that an inside fastball that I can crush or is it a slider that’s going to dive out of the zone? These athletes use history and experience to inform their best decisions. But there’s no equivalent for you in terms of spending hours in the batting cage or sitting out on the ocean when it comes to buying the right property. So what can you do to avoid making “rookie mistakes”?
You can always do your homework and research (so many resources online these days) to try to learn from what others with experience have to share, but there are obvious limitations as markets change and there’s so much variability from place to place. What you need is a coach whose experience you can lean on. There are many realtors that can help you better understand your local markets, but beware of their natural bias toward their own profits. A realtor isn’t going to give you the ins and out of a property’s potential because more than anything, they want you to buy it, preferably quickly. Your incentives don’t align.
PROPERTY MANAGERS WANT WHAT YOU WANT
The goal is always to find someone with the same incentives and you can find that in a property management company. They make their profit when you have tenants in your property so it’s important to them that you buy a property that is of great value for you and those potential tenants. They’ll know the local area not just based on market values but also in terms of expected rental prices, demand for tenancy, and a full cultural competency that could include the quality of the schools and crime rates.
I am the Director of Brand Operations for Nexus Property Management®, a franchising property management company. With four offices in Southern New England, we continue to grow and add value for clients after being named the largest residential property manager in the region by Providence Business News back in 2019. Our teams offer Nvest® buyer’s agency services to our clients and it’s by far our most successful initiative. We meet with you to discuss and analyze your options and price range and compare your wants and needs to rental properties across our regions that would be a good fit for you.
Whether you live in an area we service or not, I highly recommend you search for similar services in your area. Property management isn’t well understood or appreciated, but we’re out there in the batting cages and we’re out there reading the waves. Just like those millionaire Major League Hitters have hitting coaches, there are property management experts who want to see you succeed just as much as you do…you just need to find them. Contact our team for more information.
Notes:
https://www.si.com/mlb/2021/04/16/ronald-acuna-jr-atlanta-braves-the-opener
Photo credits:
https://www.swellinfo.com/gallery/photo/pid/28955
http://reddyforthree.weebly.com/reflections/quarter-3-reflection-baseball
JD Martinez is the best disciplined hitter I’ve ever seen. Jeter was good too. He sold the ball inside call by reaching over the plate like it almost would have hit him