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Sunday Digest
Edition XVII

Every morning this summer, fishermen have been on the beaches of California. Their days start before dawn, lines in the water, waiting patiently for a bite. Metaphorically, this is akin to real estate investing, patiently casting, ready for the right opportunity to hook a big one. Ok, maybe the big one won’t be caught from shore, but there are plenty of opportunities for those with their lines in the water. When I next head to the office, I’ll leave this note for my wife…Gone Fishing.

My morning routine hasn’t changed much over the years. Up by 5:00 A.M., computer ready and my reading begins. Wall Street Journal, New York Times, Bloomberg, Los Angeles Times, Financial Times, London Times, Luxembourg News, Al Jazeera, Fox News, and CNN. By 6:30 A.M. I am up to speed on most of the current financial developments, politics, and the local scene, and then I am off to the gym for some physical awakening, thereafter a bit of protein to fire up the brain and body, and after three hours of this morning therapy, I am happily off to go fishing. If you are ready for a deep dive, here goes:

  1. Catch and Release: This is the essence of fly fishing. The sport of teasing the fish out of the water with the right line, the proper fly, and the perfect cast is truly a learned skill. It may look easy, but there is tremendous talent and experience required to execute the best catch. Of course, no matter the talent of the fisherman, factors outside of his or her control weigh heavily on the outcome. Water moving too fast, temperature too high or too low, the number and types of insects floating on the surface, etc. are contributing factors to the level of success. Real estate investing is the same. Patiently awaiting the right catch, bringing it in, and releasing it quickly if the catch doesn’t size up to the expectations.
  2. Eat what you catch: Bring in a good catch, prepare it well, and you will reap the rewards of your efforts. In real estate, it all starts with a good catch. With preparation, patience, and care, the good catch provides scrumptious benefits.
  3. Build a meal around what you keep: This requires following a recipe. In real estate, the recipe is the business plan. While the catch may be awesome, creating the meal requires an excellent plan, the right cooks in the kitchen (team members), and all of the best ingredients (talent, vision, patience, and grit).
  4. Don’t compare your catch: Real estate is often valued against comparative analysis – what other properties have sold for, who is buying, and what is planned. This is all good data to know for sure. But each property is unique and the good fisherman may have a recipe that the other guys haven’t even considered.
  5. Take inventory of the factors you can’t control. As in fishing. There is no better example than the current health crisis we are experiencing. Many office buildings and shopping centers that were thriving in January of this year are on life support today. Being mindful isn’t akin to predicting the future, it’s about being prepared.
  6. When the fishing is good, catch as many as you can. This takes guts and vision. Borrow when lenders are shy, buy when sellers must sell, and be patient. The fishing may get even better.

Currently, real estate investment opportunities are appearing daily and becoming increasingly more attractive as vacancies increase, rents decrease, and prices drop. The first wave of investors, flush with cash, are out there fishing. While the early ones may catch a few good deals, there is far too much uncertainty to go all in. It’s best to be prepared with the right talent, experience, cash, and a great rolodex.

Warmest regards,

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Lawrence N. Taylor

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