The Secret To Real Estate Success: Keep It Simple

I have watched the sixth sense four times at different intervals. I am a big fan of M. Night Shyamalan films. The main reason why I find them intriguing is that the plot twists make my brain spin and form knots.

Christopher Nolan movies are also intriguing to me. They are always full of plot complexities that make you think more than you will ordinarily. Movies like The Prestige, Inception, and even Batman are fascinating to me because they make me think of movies in a different light.

I noticed that all the movies I loved have something in common, brain-twisting plots. So, I asked myself why humans love plots that make the brain spin? Why do we always want to buy books and watch movies that push us to struggle in an attempt to understand the plot? I wanted to know why we love the thrill of complexity. I wanted to know what pushed me to watch these movies over and over again and struggle to support their theories.

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During my research, I discovered a few things. According to psychologists, humans thrive on intrigue. The human brain is designed to yearn for and unravel a mystery. It always wants to solve riddles and make discoveries. Our brains are designed to invent, explore, create, and do business as entrepreneurs.

The complexity stimulates the brain, and even if we long for mystery, complexity can damage our business as a real estate investor. To succeed in real estate, you must learn to keep things simple.

Entrepreneurs, by nature, are competitive. We always want to solve mysteries, unpack complex situations and create real-time solutions. We are willing to do what it takes to succeed.

Warren Buffett’s Thought On Complexity In Business

Warren Buffett has been my investment mentor for many years. I love his insight and how he sees things from a different perspective. This isn’t the first time I am writing about him. I wrote about him some time ago and explained why I placed him in such high esteem. I intend to keep working with John Jacobus, and Bryan Taylor, my Bigger Pockets cohort, to thrive in real estate by unpacking the wisdom of Warren Buffett. It will be for the benefit of all real estate investors who care to listen.

Buffett is one of the most successful investors of all time. If you want to succeed, it’s important that you learn from those who have already succeeded.

Since Buffett doesn’t want to succeed alone, he has been generous enough to share his investing wisdom with us. It is left to us to either use it or discard it. Buffett has sent out over 50 annual letters to shareholders about the pillars of investment success.

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Of particular interest to me is his 2013 annual letter which states:

“Being an expert is not a requirement for achieving satisfactory investment returns. Not everyone’s an expert but what matters is that you acknowledge your limitations and follow a course that will work specific to your situation. Make sure there are no complexities. Keep things simple. When you get a deal that seems too good to be true, say no and look for something reasonable”.

Also, in his 1996 Annual letter he said:

“As an investor, your goal should be to make purchases rationally. A rational investment is expected to bring in earnings that are materially higher years after”.

What Does Simplicity In Investment Mean?

What Buffet means is that your investment thesis should be so simple that you can easily explain it to your grandmother. If your grandmother cannot understand your investment thesis, then something is wrong. It’s too complex and needs to be reviewed. It’s either that or you don’t understand the thesis correctly.

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Apart from advising investors to keep things as simple as possible, Buffett also emphasizes the need to remain within your circle of competence. Don’t try to outdo yourself. Stick to what you know and understand your limitations. Buffet hardly ever ventures into technology investments because he doesn’t understand technology companies well enough to predict prospects. This is because the tech industry is changing rapidly.

So, if you want to succeed in real estate, keep things simple and stay within your limits and be sure to check our real estate investment calculator to avoid making costly mistakes.