"Careful Investors Often Miss the Biggest Opportunities.”????
Now, I suppose that's technically true.
Careful drivers miss exits. Careful gamblers miss hands. Careful people occasionally miss the opportunity to explain to their spouse why the $750,000 investment they made last Tuesday is now worth less than the family minivan.
But what exactly are we selling here?
The sentence seems to carry a rather obvious message:
Caution is costly.
Hesitation is the enemy.
Winners act.
And if you're careful, you'll be left behind.
So, naturally, join the Zoom.
I'll present the dreams, show you the projections, and somewhere down toward the bottom we'll have the familiar disclaimer:
“Past performance does not guarantee future results.”
Of course it doesn't.
But here's my question: when the past performance is lacking, what exactly is the future projection based upon?
A spreadsheet?
A model?
A particularly enthusiastic Excel formula?
Because there's a considerable difference between saying, “Here's what we've actually done,” and “Here's what we think might happen.”
The first is history.
The second is a forecast.
And forecasts are wonderfully cooperative. They never complain, miss rent, break an air conditioner or ask for more money.
Real estate does.
That's why I have a problem with the suggestion that carefulness is somehow an obstacle to making money.
Especially when the person making the pitch already has investors waiting on promised returns from other investments, including a multifamily deal in which investors reportedly lost roughly $15 million.
That doesn't automatically make the next investment bad.
It does, however, seem like an excellent reason to ask more questions, not fewer.
And that's the part I find missing from so much of modern real estate marketing.
The message isn't:
Do your diligence.
Verify the numbers.
Understand the downside.
Ask what happens when things don't work.
It's:
Know, like and trust me.
That's an old real estate sales line, and ordinarily there's nothing wrong with it.
Except we now have a rather strange definition of “know.”
You can watch someone for thousands of hours.
Listen to their podcast.
Follow their family.
Buy their course.
Join their community.
Hear them talk about real estate until you feel like you could recognize their voice from three counties away.
And suddenly you feel as though you know them.
You don't.
You know what they've chosen to present.
You know the public character.
You know the personality built for public consumption.
That may be a perfectly genuine person.
It is still a curated version of that person.
And that distinction becomes awfully important when the next step is:
“We're raising capital.”
This isn't unique to Brandon Turner.
Look at the ecosystems surrounding people like Pace Morby.
Education.
Ahem.
Entertainment.
Courses.
Software.
Masterminds.
Communities.
Partnerships.
Investment opportunities.
Then another opportunity.
Then another capital raise.
At some point, I'd like to see the rather boring part:
Performance.
Not followers.
Not testimonials.
Not how many people attended the mastermind.
What actually happened to the investors?
And then there's Grant Cardone.
His similarly constructed ecosystem is currently dealing with a class-action lawsuit alleging misleading projected returns, risks and the use of investor funds. Cardone denies the allegations, of course.
Whether those allegations are ultimately proven isn't the point.
The allegations themselves illustrate the questions investors ought to be asking.
What is the basis for the projected return?
What historical performance supports it?
Are the risks presented with the same enthusiasm as the upside?
How is the operator compensated?
What happens when the investment underperforms?
Those are not hostile questions.
They're investment questions.
And apparently we've reached a point where asking them can make you sound negative.
I've seen 25-year-olds with less than a year of real estate experience, operating inside these online communities, raising capital for projects with remarkably little demonstrated experience behind them.
In some cases, we're talking about RV parks where the actual asset isn't even clearly identified, the legal structure and disclosures appear thin, and the whole thing gets treated as perfectly copacetic because it's sitting on a fractional investment website.
Yikes.
Now, attention and education as customer acquisition aren't inherently unethical.
Far from it.
Build an audience.
Teach people.
Create a community.
Make money.
Good for you.
The ethical line gets much more interesting when the community becomes the mechanism for creating trust, trust becomes the mechanism for investing, and actual diligence becomes an afterthought.
“Don't worry. You know me.”
That's not diligence.
That's branding.
And the larger the check, the more this matters.
If you're asking somebody to move hundreds of thousands or millions of dollars because they trust you, your ethical responsibility shouldn't end with an SEC disclaimer.
Frankly, that's where it should begin.
Tell me what can go right.
Then tell me, with the same enthusiasm, what can go wrong.
Show me the assumptions.
Show me the history.
Show me the downside.
Show me what happens when you're wrong.
Because careful investors may miss opportunities.
I'll grant you that.
But sometimes the careful investor isn't missing the opportunity.
He's simply waiting to see whether it survives five minutes of scrutiny.
And if it doesn't?
Well, perhaps it wasn't much of an opportunity after all.