On today’s show we’re talking about hunting versus farming. Hunters go out in the morning, they catch their prey. They cook a big meal and they eat for a day, maybe longer. But the work of producing the food magically happened somewhere else. The same is true for fishermen. They catch their prey, but they don’t nurture it or do any of the hard work over a longer period of time to actually produce the food. They simply go out and catch it. They might lure it in and trap it. They might happen across it and tackle it to the ground. Hunters are transactional. They are opportunists.
Farmers on the other hand work in harmony with nature. They know that you can’t grow anything anywhere. There are certain locations that are better suited to one type of crop versus another. You’re not going to grow rice in the rain forest. You’re not going to get Maple Syrup in the desert. If you want to make great tomatoes, you’re looking for a unique combination of soil composition, rainfall, sunshine. There is a season for planting. There is a season for weeding. There is a season for harvesting.
You wouldn’t dream of planting seeds as the weather gets colder in the fall. You wouldn’t dream of harvesting in May in the Northern hemisphere. There is a season for everything.
By now, you’re probably wondering what this has to do with real estate investing. There are hunters and farmers in real estate investing as well.
You know the hunters. They’re the ones who have the business cards that say “We Buy Houses”. They’re looking for deals below market value. They’re going to flip the contract to another buyer for an assignment fee. They’re very transactional. They eat for a day, or maybe a week. But then they have to go do it all over again. There’s nothing wrong with being a hunter. Just understand that hunting is an earned income. It requires you to get up off the sofa and go out into the wild and hunt your prey. If you don’t hunt, you don’t eat.
There are farmers in real estate investing as well. They might be involved in new construction. Farmers are long term landlords. Farmers focus on value creation over a long period of time. Farmers invest in properties years before they expect to harvest.
Well, real estate investing has seasons as well. There are seasons for planting, and there are seasons for harvesting. That doesn’t mean that you need to sit idle when the seasons are changing. Right now I believe we are in a season for harvesting. You could also be looking past the current season and be planting for harvest in 5-7 years from now.
But if your goal is to work the earth like crazy, slam the seeds into the ground, water every hour and hope to harvest in a few weeks, you’re probably going to be disappointed. Farming doesn’t work that way.
We know that better opportunities are just around the corner. Waiting can be incredibly frustrating. It seems like inaction. Waiting feels like analysis paralysis.
You would never tell a farmer to get off their butt and get out into the field and start planting new seeds in the autumn. It doesn’t make any sense. The seasons are clear.
When I speak with established investors and developers who understand the economic cycle, they’re very clear on the seasons as well.
You can start a project that will complete in another two years or even five years. But a project that is projected to complete in the next 6 months is incredibly risky. You stand the chance of being caught out of step with the seasons.
Even hunters need to pay attention to the seasons. There is a hunting season. You don’t hunt for deer in March. There is a season for hunting as well.
You can still undertake projects in today’s environment. You just need to be mindful of being in harmony with the season.
