I feel compelled to discuss what I call High-Market-Adaptability. I know, sounds really sophisticated and trust me, it is. For short, let’s call it HMA.
Having High-Market-Adaptability or HMA means you expect, anticipate, plan for and almost in a sick, twisted way thrive on the market changes in your industry.
People with HMA are industry leaders because they capitalize on the new demands of a recently changing market and are the first to serve the wants, needs and desires of that changing market.
While they don’t always get it perfect, they seem to time things just right (I think regular folks call it “luck”).
I’ll use real estate to illustrate a point (this is after all a real estate blog). The most successful investors I know are the ones who adapt quickly with the market (HMA). They don’t cling to any particular strategy or technique no matter how well it’s working (right now) because they know it won’t work forever and at some point (sooner than later), what’s working today will become obsolete tomorrow. HMA people understand that it’s either adapt or go out of business.
For people with Low Market Adaptability or LMA, a changing market is dooms day. It has to be that way.
It’s just the natural selection process in the 21st century. Call it the universe re-aligning itself. A long time ago there were two types of humans on the planet. There were homo sapiens and Neanderthals. Both lived in caves. Both were cave men. But only one adapted (homo sapiens in case you’re wondering).
Side Note: We can thank homo sapiens for the Paleo Diet and the real estate industry because eventually, homo sapiens adapted and started dwelling in houses not caves and the real estate industry was born. Although, if I would have lived then I would have been a “cave flipper” and crushed it. By the way, the domain caveflipper.com is available for purchase in case you want it.
Anyways, today you won’t become obsolete from a saber tooth tiger taking you out because you didn’t learn to sharpen a stick or climb a tree or stay in a group (Neanderthal). But in business and especially real estate, the need to adapt and adapt quickly is just as crucial and just as life threatening (metaphorically).
For example, I don’t consider myself a landlord, a rehabber, a builder or developer, a note buyer, a private money lender, a wholesaler or a commercial owner even though I’ve done all of those strategies.
I consider myself a “HMA real estate investor.”
This means I study the market like a nerd, talk to as many experts in the trenches (investors, agents, attorneys, lenders, etc), follow other respected authorities and the second I see change in the wind, I adapt as quickly as possible and do what the current market wants, needs and demands most.
Today (as of this writing), I flip lots and do new construction and development in select markets. Why? Because there is a shortage of new housing in most markets and a strong demand for new, modern homes. Sooner or later all the LMA crowd will catch on. They’ll flood the market. Supply will go up. Demand will go down and the door of opportunity will close. It’s the natural cycle of Market Adaptability. By that time, all the HMA investors will have long since adapted (and moved on).
Many of my rehabbing buddies (with LMA) haven’t adapted to new construction or are just now starting to do new construction and are either out of business, haven’t made much money or left a ton of money on the table. Bottom line, due to LMA they missed out on a huge opportunity or worse, became obsolete. In other words, they were eaten by a saber tooth tiger (Neanderthal).
I know this is deep so let me give another example…
It wasn’t very long ago when the market had a high supply of short sales and bank owned properties (REOs). These used to be the best source of distressed properties that could be bought at steep discounts. The strategy for getting these deals revolved around working with agents since short sales and REOs are listed for sale by agents.
I did a ton of these deals like many other investors but today it’s different. According to recent statistics by the Association of Realtors, short sales and REOs only account for 10% of the market inventory, which is an all-time low. Here’s the problem, 33% of real estate transactions are cash buyers and where do cash buyers get their deals? From auctions and agents (short sales and REOs). Have you tried to buy an REO property lately? Good luck bidding with every Tom, Dick and Harry cash investor on the planet.
Agents and auctions aren’t where to find good deals. You have to get to good deals before they go to auction or get listed with agents. I saw this happening some time ago and put my HMA into high-gear and developed 2 different software’s that find motivated sellers before they ever list their properties for sale or ever go to auction or ever become a short sale or REO. That’s called having “High Market Adaptability” plain and simple.
So, time for some self-evaluation…
On a scale of 1 -10 with 1 being such low LMA that your right to reproduce should be taken away and 10 being such high HMA that you’re destined to be the next Steve Jobs, where do you stand?
By the way, luckily for you and me, one can develop a higher HMA. Here are 6 tips:
2). Adapt the philosophy that if something is working really well right now, do it as long as you can but know it will change and be on the look out for how you will adapt. Don’t get bloated with over-head become cocky.
3). Whatever industry, real estate or any other, become a market expert. Get a mentor, coach, study and analysis the market on a macro and micro level. Donald Trump said, “Know everything you possibly can about whatever you’re doing.”
4). Be flexible. Don’t lock yourself into being a landlord or a rehabber. Be an “investor,” which leaves the door open to go after the best opportunities the market currently presents.
5). Stay humble and always be willing to learn new skills.
6). Read Jerry’s blogs, subscribe to his emails, watch his videos and buy his training programs. Just saying…
Please leave a comment and share your thoughts. Until next time, happy investing…
P.S. We are homo sapiens. There are no more Neanderthals. They didn’t adapt. Don’t be a modern-day Neanderthal…