Contrarian Approach

by Ed

Further to my last post on Herd Mentality, I had a recent conversation with a friend about his approach to building wealth. I won’t be able to mention everything here. It involved several financial tools put together to form the strategy. But most of all, I can say that it is quite different from what average people would do.

For instance, most people go out and buy a property, be it for investment or for own use. Most people just go out, search around and bargain a little and put down the money. There are others who buy at auctions or from the property developer directly. What my friend was find several of his friends, found a larger piece of land that wasn’t developed yet. He then form a company jointly to buy the land.

Long story short, they sub divided the land, got the architects, engineers and contractors together to build their dream homes. At probably half the price they would have paid if they bought the property ready built. Off course it did involved more work, but then, it was worth it.

Imagine getting bank loans. With the competition at all time high, several loan officers would have tripped over each other to get a shot of giving them a loan. So too would the other people involved in the whole project, I’m pretty sure.

The whole point is, collectively, my friends have better bargaining power to get better deals compared to being individuals. Would there be obstacles, probably yes. But it is thinking out of the box rather than doing what everyone is doing. This is just one financial strategy he used. You can do it too.

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