It seems everyone I bump into this summer has an opinion on the real estate market: It’s a bubble; there are too many condos; foreign investors are running us out; it’s going to collapse; interest rates are going to skyrocket and everyone will go bankrupt; it’s better to rent than buy… and on and on.
This is really brought to my attention today as I write this while sitting on the patio of the local Starbucks. I overhear a conversation at the next table. The subject? No, not the weather or the latest app – it’s real estate again. As I listened, I both chuckled at the myths they were sharing and was also a little saddened as to what the future holds for these people.
With supreme confidence, one young twentysomething is enthusiastically sharing her opinions on real estate. In the space of just five minutes, she has asserted:
“You won’t believe the deal I can get on a time share in the Okanagan – for only $80,000 I get two weeks a year at NO CHARGE. That’s like a free holiday every year! The rest of the year it is rented out. Too bad it isn’t by a ski hill but summer should be great.”
“Downtown Vancouver is not that expensive – my friend has a 380 square foot condo and only pays $1,400/month rent. A steal because it is only 10 minute walk from the beach”
“My boyfriend really wants to get a place in the States ’cause the deals are so amazing – I told him that I read that too and it was a great idea. So a bunch of us are going to pool our money then share the profits ’cause there is no tax as a Canadian down there.”
From the gist of the conversation, it is clear than no-one at that table has any experience with even one real estate transaction. Yet, as I have heard many times before, they are speaking in declarative statements, as if their comments are based in fact and real-life experience. People say confidence is good, no matter how misinformed – I disagree.
This one young lady’s declarations were so strong, her friends were accepting them as real estate gospel (even a couple who were substantially older than her). She even stated clearly that she hadn’t ever bought a property, but had read a “ton” on it so she knows how it works. Although not lacking in confidence, what she lacks is what I call the Final 30 Feet experience. Without experiencing that Final 30 Feet, her confidence becomes financially dangerous.
“Dangerous,” Don? Are You Sure?
You’re right, some friends having a conversation about real estate is not overly “dangerous”. We all have to find our way in the world by making mistakes and learning from them. However, the danger quickly escalates when I hear these inexperienced people calling themselves mentors or coaches. Now that is dangerous.
So What is The Final 30 Feet?
My understanding of the Final 30 Feet all began while listening to Buddy Hackett (veteran comedian) warning a young and upcoming comic on how to deal with the mountains of advice that TV executives, promoters, friends and family will give her as she builds her comedy career. Buddy’s advice was simple yet profound: “Listen politely, smile and allow them to feel helpful… then turn around and seek out and take advice only from those who have walked the Final 30 Feet.”
The obvious follow-up question was: “What do you mean, the Final 30 Feet?” When I heard the answer, I saved it and have used it ever since.
“Only take advice from those who have walked the final and most important 30 feet from backstage to alone in front of a mic with nowhere to hide. Then, and only then, will you know the advice comes from reality and not theory. They’ll understand the emotions, they’ll have real life knowledge and know the work it takes to get it right. They’ll have made the mistakes and created the laughs, not just read a bunch of books about how to do it.”
This truism can be transferred into any business, career or investment decision. He is, in essence, saying that there are enough inexperienced pretenders out there who can and will steer you wrong (even if they are confident that their opinions are correct). Be very careful to choose only those advisers who have the Final 30 Feet experience of the subject you need input on.
Back to the conversation at Starbucks. I’m sure that young lady thought she was repeating truths; she wasn’t deliberately misleading her companions. However, without having bought, owned, managed or experienced a lot of real estate transactions in all market conditions, she truly didn’t have the Final 30 Feet of experience – standing alone with the emotions and realities.
Book Theory Is NOT Real Life
Book theory, number analysis, charts and graphs mean very little if you haven’t experienced what it really takes to be a great investor. Books, friends and “experts” can give you theories, math equations, opinions and analysis, but in the end theories are just that – theories. Veteran investors know there is no theory when you are in the trenches making real-life decisions.
That is why Buddy Hackett’s Final 30 Feet advice has served me so very well as I built my business and real estate portfolio into what it is today. To this day, I always seek out people who have already achieved what I want to achieve, who had solved the problems I have in front of me, and who had made the mistakes I wanted to minimize. I let the inexperienced share their theories and opinions, I politely smile, then quickly move on.
This summer and beyond, you will be in social situations where real estate becomes a topic of conversation. These are the perfect situations to keep the Final 30 Feet rule at the top of your mind. If someone has real-life provable experience (both good and bad) in a subject you need answers on, seek them out for advice.
It is true that those with the Final 30 Feet experience are often more difficult to find than the inexperienced theorists (who have never left “backstage” thus leaving them with lots of time to post, share and pontificate). Let these empty theorists have their say. This is your cue to smile, turn on your heels, and speak to those who have taken that critical 30-foot walk. Your business, your real estate and your future self will thank you for it.