What Driving a High Performance Vehicle on a Race Track Taught Me About Real Estate Investing:Part 1
Updated: Jun 14, 2019
I love sports cars. Driving was always one of my favorite pastime activities, whether by the ocean or simply driving around town; but I recently discovered that the best part of driving was pushing myself to do things that are outside of my comfort zone. A few weeks ago, I received a surprising invite from Porsche South Bay to join a women-only driving event at the Driving Experience Center. I’ve been considering taking car racing classes for a while now, so I jumped on the opportunity right away. I knew this experience would force me to get out of my comfort zone, but I also knew that I couldn’t miss it. I knew that it could be greater than anything I’d ever experienced, and I was almost right. It was MUCH greater.
We started the day with a theoretical class given by a race car driver, then went out to the race track and to try some cars out. We ended the day with a great meal overlooking the track. Throughout the entire experience, I couldn’t help but think about how driving a high performance vehicle could be compared to investing in real estate.
Knowledge Gives You Confidence
Before I took my first spin on the race track, I took an intro class in handling a sports car. Learning about the car’s mechanics, the different challenges I’d face on the track, and the strategies I could use to avoid them, I gained the confidence that I needed to sit behind the wheel and think “Oh, I’ve got this!” Knowing what to expect before you experience this has a tremendous effect on your ability not only to embark on a new adventure, but also to make it a successful one.
Real estate is similar. Knowing the market that you invest in is crucial. Especially, you need to know real estate prices, vacancy rates, rents, where the strong locations and bad neighborhoods are. Knowledge will give you the confidence to know that you are buying the right property.
Have an Experienced Coach to Guide You
The whole time I was on the track I had an experienced instructor sitting by my side, guiding me and providing advice on every step along the way. At one of the stations the instructor taught me how to drive the car in a Dynamic Area, which was an open area with cones that I needed to maneuver around at high speed. After a short demonstration, I took my place behind the wheel. Sitting in the passenger’s seat first to see how things are done – how to handle the steering wheel on sharp turns in high speeds and how to use the car’s weight to control it – helped me to do the same once I started driving. After my first lap, I asked “What can I do to improve?” and the instructor gave me feedback based on my performance.
When you start investing in real estate, doing it without a mentor can actually work against you. Having an experience investor that can guide you and allows you to either observe him/her or have their direct guidance is priceless. There’s so much that you might miss and a guiding hand can save you a lot of money and frustration. For example, not underwriting conservatively can cause you to lose money in real estate. Appreciation and rent increases are one of the factors that impact your returns the most. Assuming that you can increase rents by $200 or sell the property at a lower or even similar cap rate to the one you bought the property with can make a losing deal look like a lucrative one. A mentor can help you avoid those pitfalls and provide a security net.
By the way, throughout the day I had several instructors for each station. Each of those instructors focused directly on what I needed to succeed for that particular station, which proved to be infinitely more beneficial than only having one instructor overall. This rule works with much more than race track driving, though. Having several mentors in different parts of your life (personal, real e