RJ 80p headshotLet me clue you in on a little secret that took me about 30 years to figure out. I’ll share it with you in the hopes that you will avoid some of my mistakes.

As I was growing up in the business world, every time my friends were making money doing something different, I wanted to be involved.

Did you ever hear the saying “The grass is greener on the other side”? I’m here to tell you it’s the same everywhere, it just depends how you fertilize it and take care of it.

Here are just a few of the ways I lost money:

When we had the tech boom, a few of my friends made over one thousand percent on their money. So naturally I refinanced some houses and bought as much stock as I could and I financed the stocks so I could buy as much as possible. I still remember when that stock salesman called me to say I had a margin call.  My brilliant response was “What’s that?” Of course you all know that my stocks dropped in value and I had to cover the loss.  I got out and have never returned to the stock market because it’s out of my control.

FastHomeAuction.com was a startup I was involved in and I lost more money than I can summon up the courage to write down. The coin store, the texting company, lobster businesses, Salvador Dali art and on and on.

The truth is, every time I bet on someone else, I lost. The grass is not greener on the other side.

I invest only in single family houses. This is my area of expertise. Unlike everything I wrote about above, it pays a dividend every month in the form of rent and when bought in the right areas, it goes up in value and there are tax benefits to owning real estate called depreciation. There is nothing better for me out there and this is my comfort zone.

The lessons for me and the lesson for you is that if you are good at what you do, invest in your business. You’re in charge and you make the decisions and most successful business people need to just stick at what they are good at.

When the conversation comes around to diversification I tell customers, “I am diversified, I buy houses on different streets.”

You see, for me, and you might not feel this way, but it’s not about being diversified, it’s all about focus. I’m focused on what I do and when I invest in what I know, I win.

And that’s the point for you. You may be a lot better off by just investing in your business. If you don’t have a business, invest in what you know and everybody knows something about houses. Most people live in houses and know how to take care of them.

Save yourself a lot of time and money and always count the cost before you invest outside of what you know.

The last point I want to make, and it’s a painful one is this: When you lose money, you didn’t just lose the money you invested. You lost the future value of what that money could have made for you – forever.

Try this exercise, at age 38 I lost $180,000 in a maintenance company I ended up owning as a result of factoring their accounts receivables. Simply take $180,000 and compound it at only 8 percent for 33 years to age 70. That’s over $4,000,000 I lost at retirement but it gets worse. I can make 12% in my sleep and that’s over $7,500,000 that I would have had at retirement.

Agreed with RJ? Disagree? Go to the Leave a Reply section below and let him know. He will respond to you.

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  • R J Palano

    RJ Palano is the acquisition director of BuyCashFlowProperties.com, a Tampa, Florida-based company that primarily provides turnkey houses for investors in the metropolitan Atlanta and Tampa Bay areas. His property management experience spans more than 35 years, and he has been involved in more than 3,000 real estate transactions in 12 states and more than 50 cities. Contact him at 813-495-3006 or rjp@buycashflowproperties.com.

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