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  • Writer's pictureCJ DiMaggio

The easiest rule in investing is the easiest to overlook

Things were going great for my friend Andrew.

He had a beautiful home, a wife he loved, two precocious little boys, and a career that was headed for the stars.

After several years learning the ropes and climbing the ladder in his industry, he launched a new business with some trusted partners as talented and ambitious as he was. They had a solid business plan focused on an overlooked market niche, and investors clamored to get on board.

With some of his early profits, he bought a nice new car, remodeled the house and took his wife on a dream vacation. But his real splurge was a dream for the future: a 100-acre spread in the mountains where he hoped to build a log cabin, once he really hit it big.

The price tag: $500,000.

He took me up to see the property shortly after he bought it, and I had never seen him so excited. He scampered around like a little boy, pointing out the hilltop where the cabin would go, with a wraparound deck to take advantage of the 360-degree views. He was going to hang a rope swing from the biggest branch of an enormous old oak tree, and he was going to expand a little stock pond into a proper lake where his boys could go swimming and fishing.

But then the Great Recession hit.

Their leads dried up, their investors bailed, and the money ran out.

His net worth -- once in the millions on paper -- went negative.

He lost his home in foreclosure, his wife divorced him, and he had to move across the country to find a job that paid him enough to cover alimony, child support and health insurance.

A couple years later, I met up with Andrew over the holidays when he was in town visiting family.

We reminisced about better days, and I asked him what dreams he still had for the future.

“Not many,” he told me.

Now it was just about getting by. There was no time or money for dreams. Mostly, he just hoped to find another job where he could be close to his sons again, hopefully before the oldest started high school.

I didn’t mean to touch a nerve, but I had to ask about that beautiful land in the mountains. Did he still own it?

He shrugged and took a big gulp. “I honestly don’t know,” he said.

I was mystified. He knew real estate and investments inside and out. How could he not know whether he still owned it?

He explained that he had basically stopped opening mail from creditors and tax collectors. He could barely afford groceries and utilities now, let alone a mortgage and taxes on his mountain boondoggle. For all he knew, the property had been sold in foreclosure or to cover back taxes.

I felt sorry for him. I had given up on my own share of dreams over the years, and I knew how hard it had to be.

We wished each other well, but after the holidays, I couldn’t get him out of my mind. So I couldn’t resist doing a little research.

I pulled up the county’s records and, sure enough, Andrew did still own the land. Apart from some back taxes and liens, he owned it free and clear, in fact. It wasn’t worth $500,000 anymore, or anywhere close to that. Not many people were looking for vacation property anymore, so it was probably worth only about $100,000 now, if a buyer could even be found. But $100,000 was still a lot better than nothing.

So I gave Andrew a call. And I gave him my pitch: let’s be partners.

Put me on the title, I told him. You don’t have to spend another dime. Just sit back and relax. In exchange, I’ll iron out the liens. I’ll pay the taxes and insurance, and I’ll maintain the property. When the market finally turns in our favor and it makes sense to do so, we’ll sell it and split the proceeds.

That wasn’t like me. I usually don’t do business with family or friends. And I never deploy capital without first calculating IRR and ROI.

But here it made perfect sense. It just felt like the right thing to do. It was the ultimate win-win. If we played our cards right, and if we were patient, we could turn a bad situation into gold.

About a year later, we got our price, and we set his old dream free.

Andrew ended up just fine. He got his boys back and he got his career back on track. He remarried, too -- a supportive woman who adores him and shares his dreams.

I take no credit for any of that, since he had the makings of success inside him from the very beginning. But the success we shared gave us both a puff of wind in our sails just when we needed it.

I’ve seen the same thing many times since then: clients and friends making good investments in ideas or places that others overlooked -- restoring historic buildings, cleaning up polluted sites, building affordable housing, revitalizing neighborhoods.

What’s worth doing is worth doing profitably. No argument there.

But first and foremost, you have to do the right thing. You don’t wade into the details and pro formas until you have checked that box.

If you’re doing it for the right reason, you’ll know it.

You’ll feel it.

And the payoff will take care of itself.

Are you looking for opportunity in the right place?

Book a consultation with us at to make sure you’re making the most of your market opportunities.

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