―John Muir
Most of us exist, for most of the time, in a world which is humanly arranged, themed and controlled. Which makes us forget, that there are environments which do not respond to the flick of a switch or the twist of a dial. Environments that have their own rhythms and orders of existence. Mountains correct this amnesia. If you have been to Canmore Alberta, woken up in the morning, and looked out your window at the Three Sister Mountain Range -light pink and gold from the sunrise with a skim of new snow, you know what it is like to live here. You have felt the magic of Canmore. The same magic among the larches in the fall, the deep emerald of the bow river in the summer, the powder at dawn at the Nordic center. Real estate in Canmore is not like owning real estate anywhere else. Owning a piece of Canmore, is more transcending than that.
It is also not for the faint of heart. You need to be, what is considered, a second level thinker to not only invest in Canmore real estate properly but invest well in it. It will always be a good investment to buy here. Aside from the fact that the real estate market in the Bow Valley is somewhat immune to the market fluctuations in the rest of the country, Canmore has intangible charm. It has immaterial value like nowhere else. There is not a single season here that doesn’t have an incentive to come. Schools are next to none, and while the pace is slow enough to live mindfully, the businesses are vibrant. You want your kids to be here. You want your parents to be here. It is like the scene of a romantic book and a Jack London novel all wrapped into one.
If you want a piece of it, it will come with a price tag. If you are looking for another investment condo, air bnb, or time share, yes Canmore could be your town. But if you are looking to invest in real estate that you want to make your own and not let go of, Canmore is unquestionably it. It’s the place to buy property that you pass down to the next generation.
If owning that is of little interest to you, and what you really want is superior investment returns in real estate, particularly in the Bow Valley, you might need to be unconventional. Not unconventional in a risky, unbalanced way. I mean unconventional in the way you approach the investment. Think of it this way, if you were an athlete, and aspired to make the Olympics, but did nothing out of the ordinary from every other athlete, your chances of making it, are very small. Even if you work just as hard as everybody else. To make it, put yourself in medal contention, you must not only aspire, but train unconventionally. You must go up to the line of conformity and jump way over it. That’s where some athletes get caught; it’s not about working harder than everyone else, or even smarter, it’s about working differently. Using your own set of rules, skills, philosophy, structure, and plan. If you want to be as good as someone else, train how they do, and you might get lucky. If you want to be the best, be unconventional.
The challenge lies in the fact that market prices are the result of consensus thinking. It’s hard for any one person to figure out (somewhat consistently), when the asset (in this case investment property) is priced too high or low, and when the consensus is wrong.
Investing is a lot like running a race, where racing conditions and the performance of competitors can change on any given day. On some days, your approach to the race is the appropriate tactic. On other days, you must adjust your race plan. To win you have to do a better job than others when selecting your tactic or in it’s execution.
Here is where First Level and Second Level thinking come in to play, and why in Canmore you have to be a second-level thinker to invest properly.
First level thinking is simplistic, fast, and superficial. It requires no extra thought. I am hungry, I will grab a snack. Just about anyone can do it. It is a snapshot decision, we look at the information provided to us, and we make our choice. This is a normal and natural reaction, but often, we really don’t need to make the decision that fast. We can take time, to consider our options. That’s where second-level thinking comes into play; it is deep, convoluted, and complex. We take the time to deeply consider the consequences, and from that, determine the better decision.
If your goal isn’t to earn average real estate returns, you need to do better than average. Your thinking has to be better than that of the pack. Since many investors in your race have also trained, you need to find a tactic they don’t have. Being right about an investment won’t be enough, just like being as fast as your components in a foot race won’t mean you will win. Find the edge. Be a second-level thinker. Critically weigh your options, and consider the consequences.
Unconventional behavior and thinking are the only road to superior real estate investing, but it’s not for everyone. Successful investing requires looking wrong for a while and surviving some mistakes.
“The biggest risk is always what no one sees coming. If you don’t see something coming, you’renot prepared for it. And when you’re not prepared for it, its damage is amplified when it hits you. How do you live with that? One truth is that if you’re only saving for the risks you can envision, you’ll be unprepared for the risks you can’t imagine every time. So the right amount of savings/security/liquidity is when it feels like it’s a little too much. It should feel excessive; it should make you wince a little.”
–Morgan Housel