I read about a tragic accident that happened on a long solitary stretch of Arizona highway a few years ago. A couple about to cross the highway on foot noticed a car approaching quite a distance away. As they reached the road and proceeded across, the car was suddenly upon them. It hit them both at a high rate of speed. An investigation of the accident exposed some psychological principles that I found very interesting and is the reason I’m writing this.
It seems that human beings have difficulty processing things moving at a high rate of speed. There is a “disconnect” between what we see moving fast and how our brains process the information. Our perception restricts us to speeds that we are accustomed to experiencing. Scientists can explain this better than I, as they have researched the process for some time, but we can gain understanding on applications of this principle in the financial arena of our lives as well.
The speed of money, my money, was something that perplexed me for a long time and I didn’t quite understand it until I started working with successful real estate investors. Money travels at a speed faster than that moving car and most of the time it’s moving away from us, not towards us! That’s a big problem! If you think that I’m just making this up, consider this. Most lottery winners are broke within five years of their hitting the lottery! The reason – they didn’t understand the speed of money. They were used to living a certain way, at a certain pace, but money propelled them faster than they could manage. We see this human phenomenon over and over again with celebrities and athletes. They are on top of the world one day and flat broke the next.
The speed of money, you may experience it with your current life-style. It takes you two weeks of hard work to earn your salary, but less than an hour to spend it, using your on-line bank bill pay system. We make money and then “poof” it’s gone, a lot or a little, it doesn’t matter. Money seems to travel faster than light sometimes, but that is an optical illusion, just like that car on a lonely stretch of highway.
As real estate professionals working with investors this is what we’ve learned about the speed of money. Investors are in business and every business has a plan. Small or large, if they’re successful, every business has taken the time to plan, strategically. The speed of thought is faster than the speed of light because it “looks” into the future! Money is slow compared to this thinking and planning process! Some businesses plan fifteen years into the future! Wow, can you see the power in that?
So, if you have a well thought out plan for your money you dramatically increase the opportunity of success! Planning is important no matter what your age or station in life. Only strategic planning can overcome the speed of money running away from you.
How do we know this to be true? Simple, we’ve witnessed it firsthand. As real estate agents and investment specialists, people seek us out on real estate investment matters and pay us to solve their problems. We’ve even been used as an expert witnesses in court for real property. In addition to those credentials we’ve worked with clients who had few resources but the right attitude and helped them succeed in real estate. We’re not talking about expensive seminars and training manuals, so take your hand off your wallet and please read on.
How do we do it? It starts with a Strategic Real Estate Investing Plan™. Every single client we take on must first complete a written, SREIP, and we help them do it. If you come to our office and tell us you don’t see the need for a plan, this is what we’d tell you.
“Your Strategic Real Estate Investment Plan is an essential part of your success in real estate. It is done for several key reasons.
First, it is designed to give you a clear picture of where you are financially and helps determine your attitude as it effects your investment decisions. Before you begin your real estate investment career, you must establish a point of reference. You need to understand the limitations and the possibilities real estate offers based on your current circumstances. With a thorough assessment of where you stand now, we will be able to identify your strengths and weaknesses at the onset. We can determine if you are best suited as an active or a passive investor.
Second, your SREIP helps us identify what we as professionals feel are your best options. The real estate investment business is broad, complex, and in some ways esoteric. Most people including less experienced real estate professionals are not aware of the wide variety of real estate investments available. We are. We have experience in many different areas of real estate. Our knowledge and experience can help you where it’s needed most.
If your credit is weak, we can advise you on what the steps are to improve it. If you have an underperforming Roth IRA, we can advise you on how to make it more profitable. If your goal is current cash flow or creating a retirement nest egg, we need to know so we can help you achieve each goal in a realistic fashion. If you are burdened with excessive debt, we may be able to formulate a plan to get you out of debt faster.
Third, by working together we can come to an understanding and an agreement on how to best proceed, considering where you are now, what your goals are, what your investing disposition is, and what types of resources you have at your disposal.
With that information, as professionals, we are now equipped with the insight to help you move forward the best way for you. This is not theory. It is a practical application of what successful business people do every day. Remember, real estate is a business, and every business that is successful starts with a plan. You must plan on success, there is no other way to attain it.