Experience Is The Best Teacher: Don't Become A Seminar Junkie

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I know of some people who have become totally caught up in the euphoria of newfound knowledge and just couldn’t stop buying audio programs and attending very expensive seminars and bootcamps.  This seminar junkie must have spent at least $50,000 within a 12 month period and still hadn’t bought their first investment property.  They were just bouncing around from one great idea to the next.

I don’t know whether, in their case, it was because they were just caught up in the excitement of that environment, whether it was their way of convincing themselves they were active when they may have been too scared to get started, or they were honestly trying to find the best strategy for them.  I’m guessing it was a mix of these things.

I also know of an investor who took quite the opposite approach.  He stumbled across a pretty good investing strategy and didn’t check out any other alternatives but went ahead and spent over $10,000 getting a good education in that one area.  He went on to build a decent portfolio over a few years but then realized there were some even better strategies out there.

This second story isn’t so bad because he built some success and he could afford the further education he now sought.  However, he told me once that it was a little disheartening because if he wanted to pursue a different strategy he had to start the learning process all over again and it felt very much like he had his “ladder to success” leaning against the wrong wall.  And even though he could now afford the education more easily it was still another $5,000 - $10,000 that he could have avoided spending.  If only he had done his homework first.

I won’t point out the obvious with the seminar junkie in the first story beyond reiterating that it can be a very costly exercise to get an education.  You must do something with the information as you receive it so that it pays for itself.  Remember that a true investor is looking for a ‘return on investment’ rather than speculating and that applies to the cost of education as well.

But aside from the ROI on your education you must stop buying more courses and buy your first property simply because experience is the best teacher.  The true education begins when you go and sign your first contract and then close on your first deal.  Yes, it can be daunting but stop waiting for it to feel comfortable because chances are it never will.

A concept that is important for you to adopt is that of "training deals".  If you recognize that you are not a professional when starting out and it's important for you to get some experience and make some mistakes then you must give yourself scope to screw up one or two deals.

I know, you're probably thinking, "I can't afford to screw up any deals".  Well, the trick is to minimize your risk of financial losses.  You can do that in numerous ways but a couple of the key things you can do are:

1. Analyze the numbers - this is an absolute MUST that is unfortunately overlooked by quite a few amateur investors.  Strangely some people seem to invest on a hunch rather than when the numbers look profitable.

2. Contingency plans - list any possible problems that you think you might encounter and then come up with a contingency plan.  eg. if you have trouble finding tenants you could hire a property management company to put tenants in the property.

If you do these two things along with the obvious risk mitigators such as inspections and insurance you will minimize your risk sufficiently that you should feel comfortable doing a training deal or two just for the experience.  Sure you want them to be profitable but if you give yourself permission to fail (without risk of financial ruin) it makes it a whole lot easier to get started.

And when you do that, you will learn so much more than by buying another course or attending another bootcamp.  I cannot recommend this highly enough.  Getting a real world education will put you miles ahead just as it did with the second guy in the examples at the start of this post.

Update: just read this post by Eric Medemar; it seems Eric is trying to get the same message across.  Fantastic.

 

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