Shiny Object Syndrome – How it can derail your investment strategy and how to avoid it.
In our daily conversations with investors inside and outside of our community we find certain consistent and repeated trends. One of the most prevalent trends is Shiny Object Syndrome.
Shiny Object Syndrome is the malady of always looking for the next “best” or “new” thing instead of focusing on and executing on a pre-determined business plan or goal. Many times people get into pure activity mode and confuse activity with productivity. Activity consumes your time and energy. Productivity in Real Estate investing is quite simply the act of executing on your goals and strategies.
We work with investors that make over $25,000/month in cash-flow on $2,000,000 in equity in their properties and we also know individuals with the exact same real estate asset value, but they are cash poor and actually have negative cash-flow every month. Which would you rather be?
What we’ve noticed time and time again: those that don’t have the results they want simply aren’t focused on the right things.
We almost always recommend you focus on cash flow. Cash flow is functional. You can use it to pay your monthly bills. You can use it to invest in other properties or you can save it to increase your liquidity balance (an increasing need in today’s lending environment.) Additionally, cash flow from real estate has some of the best tax advantages available. It’s a great feeling to look at your Personal Financial Statement and see over 1 million in Net Worth. But if the available net worth isn’t in the right cash-flow vehicles, where’s your security?
This is where avoiding the Shiny Object is required. There are probably a hundred ways to make a million dollars in real estate. And we know successful people in almost every segment of the market, even in today’s economic conditions. It all depends on your goal, though. Do you want to hustle 60 hours a week to make $10,000 per month? Or do you want to work 5 hours a week to make $10,000 per month? Do you want to take a month off and still get checks in the mail? Cash flow gets us what we want (and it isn’t 60 hour weeks!) so that’s what we’re focused on.
To avoid Shiny Object Syndrome you have to focus. It’s not optional. Success in real estate has far less to do with education or who you know (although these things can help tremendously if you are focused.) It’s about directed consistent effort every week on the right systems to reach your goals. Don’t try an appreciation play here, land-banking there, help with your brothers first rehab project one month, then purchase a special private bond that is “guaranteed” to double in 60 days, etc. This type of intellectual zig-zagging is a perfect example of activity, and is the total opposite of productivity. We strongly advise you focus on one thing: building a stable portfolio of cash-flow real estate (1-4 unit homes, multi-family apartments, storage centers, etc…)
As we have discussed previously, a well devised plan reviewed on a consistent basis helps keep you on the productive path and away from Shiny Objects. If you ignore the Shiny Object and instead focus on building a portfolio your monthly income will always increase. You won’t have wild swings in income. You won’t look at your personal financial statement and wish you had the income to match your net worth.
It’s not often that you will be told in life that boring is good. In Real Estate however, nothing could be truer! So go ahead, be dull and avoid Shiny Object Syndrome. Your personal wealth will thank you for it!