6 Key Traits #2: Risk Taker
6 Key Traits of the Financially Independent
#2: Risk Taker
When I started my real estate investment career I had a full-time job. It helped. It gave me good credit to help me qualify for loans. It also gave me a peanut gallery full of mocking co-workers who made fun of my ambitions. It also gave me a boss who doubted that I was fully committed to my job. He was right and eventually I quit the job to pursue my investment career full-time.
One of my co-workers resisted my enticements to participate in real estate investments. A great boom in the local real estate market was in progress and I achieved early success. Then, one day, he announced that he had decided to leap into real estate investment too. But he didn’t want to do it in partnership with anybody else. He was an eagle, he wanted to fly alone looking for opportunity and seizing it wherever he could. He took the risk alone and became even more successful than I did.
My own investments multiplied and fed off each other. I bought and sold, bought and sold, day after day. Sometimes I never even saw properties that made me thousands of dollars for a couple of phone calls. I grew bold and ambitious. Knowing the principles of leverage and using the power of OPM (Other People’s Money) I knew that I could use the risk/reward ratio to reap even bigger profits.
Risk can be a drug. There is an enormous thrill about taking a big risk, knowing the potential reward is equally big. Gamblers feel the same high in the casino. I had “gambler’s high”. The big deals started appearing on my radar screen. Big deals carry big risks. I recall pitching one big deal to an angel investor who wanted me to risk all my assets – including my home and retirement savings – as collateral. I was ready for it but the deal fell through.
I flew out to western Canada and with nothing but testosterone backing me I wrote an offer on a 200 suite apartment building worth six million dollars. My offer was unsuccessful, fortunately. The local real estate market collapsed a week after another of my offers was accepted on a $1.3 million dollar property across town. That was when I had to learn to be a “magic carpet jockey” to find a way to make it safely down to the ground after proverbially leaping out of an airplane without a parachute.
The moral of this post is that you have to be a risk-taker to succeed. But always remember that taking risks has a downside too, so be ready with the magic carpet. And that’s a key trait of the financially independent that we’ll deal with in another post.
