On today’s show we’re talking about what we can learn from the Boy Scouts and the Girl Guides.
I was speaking with an investor this week who was placing an offer on an 80 unit apartment complex in a small town. We’re talking a town of 6,000 people where the nearest population center is four hours away. This investor is looking at this small town 9.5 hours from where they live.
I asked why they were looking at this small town and the answer was that the apartments were inexpensive enough that they should generate cash flow with relatively high leverage. She thought these apartments were a bargain.
So I asked a simple question:
The Boy Scouts have Apple day every year when they fan out across the city and sell apples. Where should the boy scouts choose to sell their apples? Should they go to the most affluent part of the city with the highest income, or should they go to the most economically depressed part of the city to sell their apples?
The Girl Guides sell cookies every year. Where should they aim to sell their cookies? Should they go to the most affluent part of the city with the highest income, or should they go to the most economically depressed part of the city to sell cookies?
The answer was obvious. The scouts and girl guides should go to the most affluent part of the city to sell the apples and cookie. So I asked her why? Why should the boy scouts and girl guides go to the most affluent part of the city to sell apples and cookies?
The answer was not that surprising either. She said, there is more money. They will sell more apples. In some case, they will get donations, and some people won’t even take the apple. In those cases it’s as if they sold the same apple more than once.
The next question was revealing. If you would go to the most expensive part of the city to sell apples and cookies, why would you treat real estate any differently?
Host: Victor Menasce