Every real estate investor should make sure to be an avid reader and they should not simply limit themselves to real estate books. General business books are also extremely important. On that subject, there is no one better than Jim Collins, the author of Good to Great and Built to Last.
Jim Collin’s most recent book is called Great by Choice and it contains an extremely important nugget of wisdom for anyone in business, but especially for any real estate investor. He refers to it as “20 mile marching.”
The phrase is borrowed from the philosophy Joe Brown used when marching to the South Pole. It involves diligent preparation and a consistent and patient approach. Each day, Brown would march 20 miles, no more, no less. He didn’t allow impatience or fear or greed or even boredom to dictate his behavior. Instead he followed a consistent approach that got him and his team to the South Pole and back without losing a single member of his team, a feat many others died while attempting.
Jim Collins relates this to business as follows:
“The 20 Mile March is more than a philosophy. It’s about having concrete, clear, intelligent and rigorously pursued performance mechanisms that keep you on track. The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions. (P. 45)
Contained in this idea is the important albeit simple advice to never give up. Every investor I know lost money on deals and made mistakes. My brother even has a sign in his office with the words “make more mistakes” on it. As Thomas Watson once said, “If you want to be more successful, double your rate of failure.” Even when things gone badly, one must continue to push ahead.
In addition, however, Collins also gives a warning about how to deal with success. In Collin’s book How the Mighty Fall, he discusses another concept called the “undisciplined pursuit for more” which he points to as the primary catalyst for decline. Decline is generally does come from resting on one’s laurels or refusing to change as many would expect. Instead, it usually comes from an undisciplined gamble brought on my overconfidence. After one has had some success in real estate, the temptation is to go bigger and faster instead of following a diligent, consistent plan. And if you are moving into a new niche, do so carefully. “Fire bullets” instead of “cannonballs” as Jim Collins would say.
Once you start having success in real estate, it is important to stay focused and not get overconfident. It is important to stick to your plan and not get too far ahead of it. Of course that doesn’t mean to turn down a great opportunity that knocks at your door, but it does mean to test your limits carefully.
When we first moved from Oregon to Kansas City, we bought a 29 unit apartment that was in a much worse area than we originally anticipated. We moved too fast and it ended up biting us badly. Once we learned the market, though, we’ve found a consistent formula for success. And we’ve followed it, even when it got kind of boring.
And that is the lesson here. After all, it’s better to be bored and succeed than excited and fail.