When we are kids we’re taught to colour inside the lines.
When we hit school we’re taught to follow the rules – and the older we get the more rules they impose.
When we learn to drive we are taught to drive inside the lines and follow the rules.
At high school and University there is a strong push to study hard and get a good job so you can live life according to society’s rules… work hard… pay taxes… get married.. have kids… buy a house… work for 40 years or more and eventually retire quietly.
So it’s no surprise that when it comes to investing the first thing most people do is exactly the same thing that most people do.
They follow the rules and invest ‘between the lines’
But, going back to the beginning of this example to the kids…
Kids don’t naturally colour between the lines… in fact, given free reign they will colour all over the lines… all over the walls if you let them.
There’s a natural creativity and exploration of the possibilities.
“What if I remove the head of that Barbie and put it on the body of that dinosaur… what will I get?”
A Barbiesaur of course!
What will happen if I mix sardines with chocolate sauce? Will it makes the sardines taste better?
Something about the education system systematically squashes the outside of the box thinking out of us all.
When it comes to sardines and chocolate sauce – they might be right…but then again , there’s chilli and chocolate..
But when it comes to investing we desperately need creative thinking.
We need to be able to come up with solutions that get the outcomes we are looking for.
I had a mate that was looking for a commercial property but he couldn’t get a loan because he was negatively geared … banks said no to any more.
But he owned this block of land that once a carpark and had a big shed on it. He had plans of tearing down the shed, tearing up the tarmac and developing some apartments.
He was totally set on this idea and had been keeping that land for years to make this happen… one day when he could afford it.
Trouble was that it was costing him money… owning this block was part of the problem. Owning the block was literally one of the obstacles that was stopping him developing that block… Ironic twist right?
Anyway, he was moaning to me one day about his situation and in passing I said to him “why don’t you just rent out the shed as storage or a workshop and the parking lot as hard-stand?
He kinda stopped in his tracks… “no one’s going to want that – it’s totally run down.”
I said…“have you ever looked into it? – do you know that for sure?”
Suddenly he was able to shift from stuck in very limited rules, to experimenting with an idea he had never considered.
It’s not like I’m some creative mastermind… it just struck me as obvious…
Sometimes you just need another point of view on things… when you’re too close to something that you can’t see the wood for the trees.
Funny thing was that by renting that out he suddenly went from negatively geared to positively geared… not by much… because he didn’t want to sign long-term leases…
But it meant that the property was paying for itself.
As an aside, if he did fix up the shed and sign up tenants on longer leases he would have also dramatically increased the value of his property…
He didn’t want to do that… whatever!
Clearly, It takes time to re-learn to colour outside the lines, but if you can…
If you can get creative – and think about investing with fresh eyes… I reckon there’s a big future for you in commercial property.