It's all about bouncing back

By Vern McClelland

February 2, 2017 12:00 AM

A slow and steady pursuit of goals will reap benefits

I have been fortunate to meet some very interesting people in this business.
The gentleman I was sitting across from at the restaurant was one of them.
He was in his eighth decade of life, but you’d never know it from the spring in his step and the firmness of the handshake offered 30 minutes before.
I’ve been his family’s Realtor for more than 10 years, working for not just he and his wife, but a son and daughter too.
Maybe I’m getting tired, but as this economy wallows into the third year, there are days when I wonder if the region ever will fully recover.
So, after discussing his latest development plans, I asked, “What keeps you going so strong?”
He chuckled, leaned forward in his chair, and said: “I’m like a rubber ball, made to be thrown around, bounce off hard surfaces, and recover!
“No one promised me being self-employed would be a picnic; in fact, you and I would probably be bored if there was no challenge.”
I had to agree, but what was his secret to remaining so positive?
He laughed again, and said, “In one word: failure. You have to accept it will eventually happen!”
My friend says not to dwell on it; people shouldn’t be afraid to make mistakes.
It’s inevitable in real estate there will be times when we buy high and sell lower. It happens in every enterprise.
Ask any entrepreneur and they will have at least one—usually more—stories of when the train they were driving went off the rails.
Some learned how to mitigate their risks by applying iron discipline to simple policies.
One trucking company owner refused to buy an additional semi until the last one was paid for.
If business slacked off, he drove the newest unit and simply parked the others until things got better.
At times, the companies he hauled for would pressure him to lower his rates by saying that there were others waiting who would.
He always refused, for if they didn’t recognize the consistent quality and cost efficient service his people were known for then it wasn’t worth pulling for them.
This owner knew his cost of doing business and could wait out those that didn’t.
He grew a fleet of 80-plus units, sold out to a larger firm, and hasn’t missed the stress for a minute.
As a real estate investor, it’s about always being ready to buy a property that’s priced right, to hold when there’s sufficient cash flow to pay expenses, and to sell once an acceptable capital return has been reached.
The ones who sleep at night save cash for a healthy down payment and never attempt to leverage equity from one property to another.
You don’t have to make a killing in the market, just steady progression.
Bottom line: it’s about keeping more money than you lose over the longer term.
One of my clients took the performance bonuses he earned on several large contracts and purchased some quality farmland.
Most people would have bought a condo in Kelowna or a lakefront cabin.
Not him, it went into what was considered at the time as a relatively low return, and definitely not a sexy investment.
Today those parcels are probably worth two and-half-times what he paid for them.
The cash flow from annual land rents and surface leases comes in at about four per cent of value, still nothing to write home about, but it beats taking calls about leaking water heaters Sunday evening or finding a tenant has made a midnight move.
In the meantime, he has had several day jobs come and go, but those converted bonuses are still ticking along and paying the bills.
Vern McClelland is an associate broker with RE/MAX of Lloydminster. He can be reached at (780) 808-2700, through www.vernmcclelland.com or by following the Midwest Group Lloydminster on Facebook.

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