Experience is the best learning tool in my opinion. It has worked really well for me. The thing I have recently learned (now that I’m almost 40) is experience can also make you very, very, wrong. I was recently at a group meeting where someone was going on and on about what happened in the past. I get it. History repeats itself. But, does it always?
In this day of innovation and information sharing, is it possible that we may actually not repeat some of our mistakes? Is it possible in this new global sharing economy that cycles and patterns are changing? I think so, and if that is the case, leaning on YOUR experience could actually make you very, very wrong. In this age of rapid advancement, what worked a couple of years ago; may be the road to failure now. Too much arrogance (I’m guilty of this a lot) and not listening to your employees/customers/advisers can get you into a lot of trouble. You’ll notice that there is a lot of reference about the customer in my writing. I TRULY believe you can fix any business by simply providing great customer service. Part of that, in my opinion, is listening to them.
As far as applying this to real estate investing goes, consider this. In the 1980’s the UK Buy-To-Let mortgage market developed. That market has now grown to more than $200 billion pounds ($280B US). The most interesting impact this has, is it helps stop housing recessions. It took the great recession in the US to make housing attractive enough for large institutions to chase it. Now, nearly every one of those institutions will give you a loan for investment property. This availability of capital will help shorten real estate crashes and cycles permanently. It will allow smaller investors to step in and acquire discounted assets in periods of economic decline. This alternate demand source (investors have always been at least 18% of the housing sales, and I believe should be 30%) will operate inversely with owner occupied demand. The two will work together to make sure the future real estate cycles are changed.
WOW, all of that to tell you that if you are sitting there waiting for “your experience to be right” and prices to drop; you may never be done waiting!
I have to do a better job listening to others, and the ideas that made me successful in my first 15 years of this business; may limit me in the next 15! I think you should do the same!