Real Estate Lessons from Jason Bourne

Have you ever seen Matt Damon in the movie, "Bourne Identity?"

If not, you should. Great movie.

Or better yet, read the book by Robert Ludlum.

Now, there's a particular scene in the movie though I want to talk about that's really relevant for real estate investors.

Here's what I mean.

Remember when he's in the diner having coffee after just escaping from Paris? He's at the cafe table with Marie, the German girl from the embassy, trying to figure out where he's from and who he is and why he can't remember anything. Yet, at the same time, he's incredibly in tune with everything around him.

And I mean everything.

From the movie:

Bourne: "Who has a safety deposit box full of... money and six passports and a gun? Who has a bank account number in their hip? I come in here, and the first thing I'm doing is I'm catching the sightlines and looking for an exit."

Marie: "I see the exit sign, too, I'm not worried. I mean, you were shot. People do all kinds of weird and amazing stuff when they are scared."

Bourne: "I can tell you the license plate numbers of all six cars outside. I can tell you that our waitress is left-handed and the guy sitting up at the counter weighs two hundred fifteen pounds and knows how to handle himself. I know the best place to look for a gun is the cab of the gray truck outside, and at this altitude, I can run flat out for a half mile before my hands start shaking. Now why would I know that?"

Here's why Jason. It's called Situational Awareness.

From Wikipedia:

Situation awareness (SA) involves being aware of what is happening around you to understand how information, events, and your own actions will impact your goals and objectives, both now and in the near future. Lacking SA or having inadequate SA has been identified as one of the primary factors in accidents attributed to human error (e.g., Hartel, Smith, & Prince, 1991; Merket, Bergondy, & Cuevas-Mesa, 1997; Nullmeyer, Stella, Montijo, & Harden, 2005). Thus, SA is especially important in work domains where the information flow can be quite high and **poor decisions may lead to serious consequences**.

Emphasis mine.

While Situational Awareness (SA) education is a large part of emergency room, combat, flying, and police fields., it is completely relevant for real estate investing.

When you are evaluating a particular real estate deal do you ask yourself these questions?

>> What is your strategy?

>> Are you buying for cash flow, appreciation, or tax benefits?

>> Is the investment the best asset class or geography for that strategy?

>> Do you know the risk profile, population and jobs for where the property is located?

>> Is the prospective investment in the right neighborhoods? "Right" can vary depending on your goal and holding period.

>> What about team? Do you have the best field partners - acquisition, renovation, property managers, title, insurance, legal, etc.?

>> What about the street and block? Do you know what else is there? Percentage renters? Subsidized housing?

After all the above criteria are met, does the property fit your investment goals? Cash On Cash Return? Aggregate Return? Tax Efficiency?

If you don't have the right answers to these questions, then you are missing critical information. Your situational awareness will be less than what is required to make good decisions.

Poor decisions may (and often do) lead to serious consequences