“Anyone can do it” does not mean everyone can do it.
Posted by markharrison on July 2, 2007
I’ve been thinking about the “anyone can” argument that us property investors who also sell information promote.
The logic goes as follows:
- People claim that <insert disadvantage here> stops them investing in property
- The experienced investor either:
- Had/has that disadvantage or
- Knows a successful investor who had/has that disadvantage
- Consequently, the experienced investor reasons that the disadvantage is “in the mind” of the person complaining.
The following logic has been applied to lack or time, lack of money, physical disability (hell, I was stone deaf as a child and grew up with a speech impediment as a result of not hearing sounds properly while learning to talk, and went on to become a professional speaker.)
A counter-argument I sometimes hear is that most people WILL NOT go on to become property millionaires! After all, every let property needs a tenant, and while the landlord may do well, the tenant won’t go on to become a property millionaire.
This is true, but I’m not convinced it’s relevant.
I’m making up figures here, but compare the three possible scenarios:
- Scenario 1: You have a 100% chance of winning £0.
- Scenario 2: You have an 80% chance of winning £50,000 and a 20% chance of losing £50,000
- Scenario 3: You have a 70% chance of winning £50,000 and a 30% chance of losing £5,000
Which would you pick?
In scenario 2 the chance of winning is highest, but the cost of losing is also high.
In scenario 3 the chance of winning is lower, but the benefits of winning are ten times the risk of loss if you lose.
Personally, I’d go for scenario 3 every time. The reason I like investing in property is that, providing you do your homework properly (and this does, indeed, take time and effort) it is normally possible to find deals that have a minimal downside even if they don’t show the upside hoped for.