Here’s an idea: Take a blanket, add sleeves, then sell it for $14.95. You could call it a “Snuggie” and sell thirty million of them. Or how about this: Make a phone that’s just a big screen and a single button. You could call it an “iPhone” and sell hundreds of millions of them. These are just two examples of simple ideas that took the world by storm and proved the maxim that simple ideas win. The most successful ideas are almost always the simplest—just look at Google’s homepage—so on this week’s show, I shared a simple idea I had come across that is proving to be a great success.
I must first confess that I didn’t stumble on simple and successful this idea myself. Others had discovered it before—most famously Warren Buffett—but I did take the idea and make it my own through investing in real estate. And that idea is this: Buy Low, Sell High. Buy assets when their value is depressed, then sell them when they’re higher. Warren Buffett has made billions navigating business cycles, snapping up high-value companies during recessions and selling them when the economy is booming.
I applied this same principle to real estate and have had tremendous success with it. I started buying real estate in the early- to mid-2000s when house prices were relatively low, especially compared to the highs of 2007-2008. I realized we were in the midst of a massive and catastrophic bubble in 2008 and immediately sold off all my real estate holdings. I then rented throughout 2009, 2010, and 2011, knowing home prices were unlikely to rebound and could even potentially fall further. It wasn’t until late 2011 that I was convinced prices were poised for a steady rebound and I again began rebuilding my real estate portfolio, first by purchasing a primary residence to live in and then accumulating rental properties over the next couple years.
From 2011 until now, house values have been low. They are now starting to approach, and in some places exceed, their historic averages and have nowhere to go but up. It’s a great time to buy. Meanwhile, rents are at historic highs and keep climbing. If you have rental space, it’s a great time to ‘sell.’ I spent the last few years acquiring rental properties so have plenty of rental space to lease out. See how that works? Buy low…sell high. And in the future, when house prices are substantially higher than they are at present, I can sell off the houses altogether.
This is an incredibly simple idea, but the execution of it can be difficult. That’s why I stress education and strive to help my listeners get into the real estate game themselves. In fact, I have another real estate investment class on June 16th, and encourage all interested individuals to get in touch with me and reserve their spot in the class. I suspect house prices may take a slight dip in the second half of this year, offering another opportunity to acquire real estate at historically low prices, and attending this class is a great way to prepare for it!
6-6-15 Simple Ideas Win