profile

Vicente Valencia

You've been told a fallacy

Published 8 days ago • 2 min read

Last week I went to a meeting where a team exposed their plan to build a big stadium.

Here, where I live now, in Auckland, New Zealand.

No offense, but I love these meetings.

Observing.

Learning.

Laughing sometimes.

They presented other successful cases.

Beautiful stadiums…

Detroit, Los Angeles, Hong Kong…

You know, great stadiums, with fantastic real estate developments around.

Successful cases.

The guys presenting have experience.

Years and years…

They said that these projects can take 10, 12 or 22 years to be completed.

But still…

They say that they want it finish by 2029.

You count.

2025

2026

2027

2028 and

2029…

That’s the fallacy of the best case… well… almost the ideal case.

Ignoring experience.

Ignoring what dozens of similar asset class projects have shown you.

That you should aim for 10-12 years… instead of 5.

If you don’t do it, you’ll depart from the wrong premises and assumptions.

You’ll buying all the tickets for lottery of disasters, frustrations, failures, and all series of cost overruns.

And I see this all the time.

Big and small projects.

When I talked to my more trusted contractor for one of my projects in Spain, his message is clear:

“This apartment, in 2 months, is ready”.

Yeah…

Two months…

Yeah…

The reality is that the shortest similar flip took me 4 months and a half…

You say this to him and the answer is…

“Yeah, but in that case… what happened is that the materials didn’t arrive, and then the electrician went on holidays and then we needed to change the layout of the kitchen, and…”

Yeah…

Look.

There is no project with “something happening”.

No project without excuses.

The average I get for any similar full renovation like that apartment is 6 months…

Of course, it could be done in an ideal world in 2 or 3 months, but data tells me a different story.

That ideal worlds are just that… ideal.

Another example.

One of my projects, for a full building, was going to be finished in 9 months.

They started well.

Very well…

But the invoices arriving to me were only 40 to 45k€ a month… I was expecting at least 100k€.

Suddenly, we needed to stop works in a small section of the building for analysis. It took us 3 weeks.

Remember, a small section of the building, they were still working in the rest of the building.

After we finished, with no additional works required, the contractor told us that he needed 3 extra months… additional time…

Of course, they were late before.

How did I know?

First, cash.

Second, data.

These projects take a year in average.

Materials don’t arrive.

A subcontractor goes bankrupt.

We need to adjust design for unexpected conditions.

A client requests a small change somewhere.

The guy of the kitchens gets delayed.

Etc.

Every project has some funny stories…

But, let me more precise.

Any project, any, all projects have some of those stories.

So, imagining yourself being able to deliver in ideal conditions, with no issues, no room for unexpected things… is a fallacy.

And this fallacy can get you into trouble as an investor very, very soon… and those troubles are terrible if you are playing with cash flows and having multiple projects.

In publics projects, the answer is like this: “Vicente, but if I had to tell that this project cost $1bn more and 10 years instead of 5, it won’t go forward…”. This interesting answer is for another email.

So, don’t think of rainbows in the sky but data in your Excel file.

What’s data telling you?

I’d love to hear your thoughts about this. Answer back, I love reading you.

Stories, learnings and much more like this in my mentorship.

The Real Estate Investing Incubator - 99$/month

PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day.

PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit theantagonist.co

PD 3: If you want unsubscribe, click the link below.

Vicente Valencia

Join +3k real estate passionate

Former CEO / Board Member | Real Estate Coach and Investor | I left corporate life through Real Estate "sidepreneurship". Now, I show you how | Mentor & Investor

Read more from Vicente Valencia

There are people, many, who, even if they found a map showing the way out while being kidnapped, would set it on fire. This is because habits are addictive, whether they are good or bad. Winning is addictive, but so is failing. Being happy or being sad. Being friendly or spending the day bitter. Poverty and the belief that you can't escape it. The cozy couch, the 9-5, your stupid boss or boring job. Addicted. There are true junkies of misery. They are the ones who say they don't like doing...

about 9 hours ago • 1 min read

Which guy do you think is happier, more interesting and that it’s worthy to trust? The guy that slept with 1000 women or the guy that… I don’t know… slept and hung around with Laetitia Casta? Think about it… and don’t come with the feminism bullsh*t… you know what I’m trying to say… Which guy do you prefer to be? Or put it in another words. Which guy do you prefer to be? Which guy do you think will bring better business partners and investors? The guy that got 1.000 apartments and offices all...

1 day ago • 1 min read

Money provides happiness, and Money changes people. If you disagree, you don’t understand the power of money. First, money buys time and peace of mind, which is the closest thing a human being can have to immortality. Obviously, if you're told you're going to die in two months, you're screwed, and you'd trade all your money to avoid dying (or maybe not). But if tomorrow a friend asks you to go out for lunch, and you can go without any problem because you don’t answer to anything and it...

2 days ago • 2 min read
Share this post