I’m in the final stages of a major property deal now…
It’s an amazing property, at a great price. I hope to have it under contract by the time you’re reading this.
The thing is, I’ve been working on this one particular deal since 2012. It has been a convoluted process…
Trying to figure out how to make a deal happen on this property has been like trying to crack a coconut with my bare hands. That’s how I described it to my brother, at least, who was at one time a real estate lawyer for a major law firm.[ad#Google Adsense 336×280-IA]There are many parties involved, with different goals.
But I think I’ve finally cracked the code to make it happen…
My brother is skeptical of the deal.
He doesn’t want in.
“Too many warts for me,” he says.
I understand what he’s saying.
The deal has become convoluted and complicated.
But I wouldn’t be getting the price I’m getting if it was clean and simple. If everything was rosy, it would sell at a much higher price.
The same thing happens in the stock market…
Most people wait for everything to seem perfect before they buy. That doesn’t work.
For the best value, you have to buy investments with warts… as long as you can see a day when those warts go away.
For example, Netflix was one of the best-performing stocks in 2013 in the S&P 500 stock index, up over 300%. Before it soared, it had warts…
Three years ago, Netflix was a high-flying tech stock set to revolutionize how we watch TV. Then the company overhauled its entire strategy and spooked investors. The stock fell over 80% from the summer of 2011 to the summer of 2012.
If you were willing to buy shares of Netflix in the summer of 2012 – warts and all – you’d have made a lot of money by now. Shares of Netflix are up more than 600% from their lows in the summer of 2012.
Electronics retailer Best Buy was another top performer in 2013, up 243%. Delta Air Lines was also in the top five in performance in 2013. These aren’t sexy businesses. If you were buying them in 2012, you had to know you were buying businesses with plenty of warts. But you would have made more money buying these businesses with warts than any other businesses in 2013.
Getting back to my real estate deal… I’m excited about it…
I know it has warts. I realize I’m taking a risk. But I believe I can make those warts go away.
So I buy an investment with warts, at a low price. I try to make those warts go away. And then I sell that investment at a higher price.
I don’t look for perfection in an investment… Because if I find it, I know that I’ve already missed the biggest gains.
Instead, I look for warts in an investment… And I try to determine what that investment would be worth if those warts went away.
So if you see an investment that you like… but you’re a little worried or embarrassed about some warts on it… take my advice here…
Instead, embrace the warts – they’re allowing you to get a good price.
If you know there’s a high probability those warts can go away – or if you can do a lot to make those warts go away – then make the investment.
Chances are good that you’ll make a lot more money on that investment than on one that is already perfect…
Trust me on this… It will make you a lot of money if you do…