How Being Almost Right Can Improve Your Wealth

Has there been a time where you confidently made a statement about something you know of but ended up being wrong? As you grow older, you begin to realize that certain things you thought were right re actually false.

A lesson in Pride

There was an evening where I was with my friends in my living room telling them about one of my new business ventures. At that point, I was thinking of employing their services for assistance. I was so sure about this business venture that I assured them that it would not fail. I was able to support my claim with reasonable data to prove my point and my confidence was almost to a point of arrogance.

The business did not last long because I had to shut it down eighteen months down the line. I made a few sales and lot plenty time including one friendship. My business partner had quit his job for this business even though he had eight kids to look out for.

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The truth is that there are many business opportunities that look promising but end up with significant loses. Many business owners and investors are able to survive their during their period of over-confidence sometime in the past. People are used to making decisions from their gut and try to justify our decisions by conducting research to support our claims. It doesn’t matter if we critically analyze the data we receive in as much as we perceive it to be useful to our cause.

What you can learn from Warren Buffet

Warren Buffet is my mentor even though he doesn’t know me. I have gone through Warren Buffet’s investments to apply his strategy to real estate.

Mr. Buffet’s 1993’ letter explains that it is a wise option to be absolutely right than precisely wrong.

Warrant Buffett expects investors to be able to identify several critical items that would make a difference in the investment and that the investors focus on these critical items intensively. Warren’s ideology is that an investor should be approximately right than been correctly wrong.

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In his opinion, there is no point in wasting so much time in every detail of the investment instead one should focus on the critical items that are important and follow them without compromising.

A personal experience

After getting my degree in Petroleum Engineering, I did an internship during summer in an oil company in Denver. I estimated the amount of oil that was likely to be produced from the Rocky Mountain oilfield.

The estimates I made were based on assumptions that I had compiled from some other data that was also probably an estimate. AT the end of my analysis, I had come to a conclusion that the information I supplied was accurate.

I also put the matter forward before my boss who encouraged me to continue and gather all necessary information for the big presentation

I was to give before the vice president of the company. My boss also wanted me to impute additional estimates of about a decimal point or two which I did even though I was not comfortable with this decision.

All my guesses made my calculation become questionable but the presentation had a positive outlook.

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I was disappointed when I realized that all the work I had put in throughout the summer on this presentation was not worth it and It was also painful to now that the company would have spent so much had they worked on the data I provided. Fortunately, I had to go back to school.

How can you drive real estate investment?

For instance, when going into real estate, what matters is the purchase price, the area, the vendors and the value of properties in the area. The location and the type of professional property manager chosen are what drives the return. We believe that these two items drive success in real estate.

The type of locations we look at are:

• Places where there is affordable rent
• Low crime rate
• Availability of average schools and average income earners
• Places that are low on unemployment
• Places that have a high migration rate

The type of property management firms we look at are:

• Companies that do not have competing interests
• Companies with strict policies
• Firms that have a regional presence and uses up to date property management software.
• Firms that are familiar with our Apartment Life programs