By: Stephen Foti

Grain by Grain a Loaf, Stone by Stone a Castle

Tags: Grain by Grain a Loaf, Stone by Stone a Castle

If you google prayer of the procrastinator poem you’ll come across a poem that we have framed and displayed in our office. For those of us – myself included – who are proponents of investing in real estate, the poem serves as a not so gentle reminder that obstacles that we think we face today (pick your favourite – too late, missed my opportunity, real estate bubble, over built, over priced, too expensive) are not new at all. The poem ends with: “and now lifes saddest words I pen, if only I’d invested then”. It first appeared in print in 1917.
A friend recounted the financial advice given to an acquaintance about the perils of investing in Real Estate. The paraphrase goes something like this: “If you buy real estate, and you find you need money, you cant go to your house, take a brick, and sell it”. True enough I thought. On the bright side however, if you own real estate, you cant go to your house, take a brick off and sell it! If you need money to buy a car, you should thank your lucky stars you cannot take a brick off and sell it. The less than fully liquid nature of real estate that financial planners like to point to as a negative, is more truthfully a safety valve that serves to save us from ourselves. Although banks are doing their best to make our equity more accessible, real estate should not be viewed as a bank account. (Unless you think amortizing your F150 over 25 years is good financial planning – in which case, you could probably stop reading now) Rather, think of real estate as a squirrel thinks of a nut – bury it and leave it alone. It will feed you when you’re hungry. Or, as more eloquently articulated by Franklin Roosevelt, “real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world”. Not only is it the safest, it is the simplest. So simple, its boring. Real estate is the tortoise to the stock market hare.
The ebbs and flows in values of any investment vehicle make market timing a tempting notion. A more sensible notion would be to remember that its time in the market that counts – not timing the market. Its not a new theory. If you find yourself lamenting that you should have invested yesterday, remember the ancient Chinese proverb that reminds us the best time to plant a tree was twenty years ago, the second best time is now. The only difference between paying too much and a bargain – is time.
Thanks for reading!