Saturday, July 9, 2011

What Should Real Estate Investors and Taxi Cab Drivers Have in Common?

By James Gage

Before I get all sorts of e-mails questioning my sanity, please give me a moment to explain what real estate investors and taxi cab drivers should have in common. When I lived in England in the early 1980s while serving in the Air Force, I had the opportunity to strike up a friendship with a local cab driver. What I learned from him has served me well not only in real estate investing, but in investing in general. He picked me up from base one day and brought me down to the local village where I was having lunch at the local pub with some of my friends. When I arrived at my destination I paid for my fare and exited the cab, and by the time I turned around to say thank you – he was gone!

I really didn’t think much of it, in fact I pretty much forgot about it until the following week when I needed to go over to the next village. I called the local cab company and requested a ride. When the cab arrived and to my amazement the same cab driver that I had a week prior showed up to take me on my trek! As I entered the cab and settled in for the ride, I struck up a conversation with the cabbie and politely asked why he was in such a hurry during my last trip? He said that he was the top producing cab driver for the last 3 years running for his company and his goal was to retire in the next 5 years! He further explained that he would be able to retire because he mad 4 times what the other cab drivers made on a weekly basis. I asked him why he was making so much more then his colleagues on a regular basis; what he said is something I have applied to my investing plan ever since that day in the cab- he said…. “It’s all in the meter drop”!

I asked him to further explain, he said that while other cab drivers would sit outside different sites of the Air Force base turning down small fares and waiting for those big money fares to London 75 miles away, he would take those multiple small fares over and over again. When it came to the end of the day he would make 4 times what the “big fare” guys would make, because he was willing to drop the meter for the smaller fares. So what does this have to do with real estate investing? It has a lot to do with it actually! Over my 25 years of investing I have seen many investors walk away from transactions because there was not enough money in the deal for them – is that crazy or what? I tell those types of investors to send me all their “scrapes”; I’ll do them all day long. Why I’m I bringing this up today? I’m I trying to flaunt my success in a challenging economy? No, rather I am trying to encourage people to adopt the philosophy that has served me well over the years. Mainly, stop looking for the big hit and focus on what I call “kibble and bits” strategy!

Why would you sign on the dotted line for hundreds of thousands of dollars on a property in a down market, without any guarantee of being able to sell the property for a profit? Why not do Assignments where there is no risk in the event you can’t get rid of the property? Would you be happy making 3-7 thousand dollars for just assigning your contract over to someone and then move onto the next transaction? Let’s be very conservative here; could you do 2 of these type of transactions per month? If so, that would be 6K on the low side and 14K or more at the top for only a few hours, rather then multiple hours on a traditional transaction with no guarantee of a good pay day. Does this sound good to you? Well, that’s what assignments can do for you; in fact many investors do this in order to raise seed money for their other RE transactions.

If this makes sense to you and you would like to read more about how assignments can get you to the “Hip National Bank” in record time, click on the link provided below now…