I Bought a Dumb Investment (And Learned 3 Good Lessons)

Geeze...this was a dumb investment...(but 3 good lessons!)

3 years ago, a good buddy brought me a cool investment idea...

(Now, for those who don't know me, I'm a real estate guy. Been doing it since I was 20. Thousands of units. Lots of wins, scars, lessons, victories, etc.)

But this wasn't a real estate investment.

This was...

an RV.

(This post isn't about RVs...stick with me)

Now, I love camping in an RV as much as the next guy. I've got kids, and I remember making great memories as a kid in our family RV.

So my buddy comes to me with this idea: let's buy an RV together, and rent it out. It's like real estate, and we'll make a good return AND have an RV when we want one.

AWESOME.

Now, I didn't buy it without doing some work. We got on a call, talked to the seller (who was also the owner of the large RV-rental company that would manage it) and drilled in on the numbers.

My spreadsheet was awesome. My spreadsheet was thorough.

My numbers were conservative.

They expected me to have the RV rented roughly 60% of the time. So I thought "what if only 50%?" And ran my numbers that way. They suggested I'd get around $150 per night. I ran my numbers at $120 per night. They suggested 10% for repairs/maintenance. I said "let's assume 15%."

And even after allll that, with my small down payment of just $10,000...my numbers showed I'd get around a 25% cash-on-cash return on my money per year, after the loan payment and the insurance and all those other expenses.

YES.

For those not in the investing world, 25% return each year is amazing. Bank accounts offer like 1%. The stock market averages like 8%. A great real estate deal might get you 10%.

25% is astounding.

And it's so low risk...right? Just $10,000!

Well, we did the deal. Bought the RV together.

The Result...

The RV was rented out TWICE in three years.

Twice.

Two times.

Not 60% of the time.

Not 50% of the time.

Not even 5% of the time.

Two times. Two weeks out of 156 weeks.

So, as you can imagine, this deal didn't make me 25% on my money.

Because every single month, I still had to make the loan payment. Over $600. Plus insurance. Plus a few maintenance items (on the positive...when the RV isn't rented, there's not a lot of maintenance!)

The Lesson (This is NOT about RVs...)

In the classic finance book The Richest Man in Babylon, author George Clason tells a story that hits a little too close to home.

A young man named Arkad, eager to grow his savings, hands his money to Azmur, a brickmaker who is sailing to Tyre to buy rare jewels from the Phoenicians. Azmur knows bricks. He does not know jewels. He comes home having been sold worthless bits of glass, and Arkad loses everything he'd saved.

The lesson Clason draws out of it is simple: a brickmaker knows about making bricks. Or as he puts it elsewhere in the same chapter, "Better a little caution than a great regret."

And here's the part that stings.

In my story, I'm both guys.

I'm Arkad, handing money over based on the advice of the one person who had something to sell me. And I'm the brickmaker, wandering confidently out of the only trade I actually know.

I'm not an RV rental guy. I'm a real estate guy. As much as I tried to convince myself I knew the difference, I didn't. It FEELS the same. It's not.

But here are the 3 points I'm trying to drill home:

1.) Wealth and freedom are found in expertise. And expertise is found in focus, repetition, and staying in your lane.

This is why my one piece of advice for both newbies and experienced investors looking to obtain financial freedom is DECIDE and COMMIT. RV rentals DO work...they just don't work for me. Because if I'm not an RV rental guy, it's about the investMENT, it's about the investOR.

If I decided to ALL-IN on RVs, then I bet I could make that business work. I could get to financial freedom with RVs. I know I can.

The same is true of nearly every real estate investment...multifamily? Yes. Midterm rentals? Yep. Residential assisted living? For sure. Mobile home parks? Yep! (I've bought 60+ of them. They rock.)

But what DOESN'T work...is trying to do all of them. Pick one, and go all in. Yes, you'll make mistakes at the beginning (as I did with this RV, and that's why we start small).

So...decide. Commit. Go all in.

And win.

2.) Let's be honest: I bought this RV on emotion...and then justified it with logic.

I see this same mistake play out in real estate alllll the time. Especially in the short-term rental space. "Honey, we love the Gulf Coast...let's buy an Airbnb there!" It almost never works. Not because Airbnb doesn't work, but because it was an emotional purchase first, justified as an investment.

To be honest, I didn't earn the right to buy this RV investment. I talked to ONE guy about it (the seller, lol). I watched NO long-form YouTube videos. I called NO other RV-rental owners for advice. I took ZERO classes, courses, workshops. I filled in the blanks on what I didn't know (most of it) with what I did know (in another industry).

3.) Final point, and something I did right: I tested a new industry, and could afford to lose it all. And I did.

Suppose for a moment that this investment actually went GREAT. Instead of losing money, what if all my assumptions were TOO conservative? What if it worked? And what if I LOVED this niche of investing? What if my return was 40% cash-on-cash?

Well...then I could have scaled up. I could have bought 2, then 5, maybe 20. I could have discovered tens of thousands of dollars in passive income, and then helped others discover it too.

And this, in the investing and business world, is what's called an "asymmetric bet." A fairly low downside (for me) with a much higher upside.

So the point is this: when venturing into a new industry, a new business, a new market, etc...make asymmetric bets, but don't bet anything you aren't prepared to fully lose. AND...know the real risk. My risk wasn't my $10,000 down payment. It was the $65,000 loan too. Plus the time, stress, and opportunity cost of distraction.

Which leads to...

The Silver Lining

This is no longer an investment.

I just paid the thing off (I got tired of paying 10% interest on a loan that wouldn't have paid off for another 17 years) and now I have no loan, so at least the $600 month isn't eating me alive.

So now I have an RV. Not an investment. Not an asset. A pure liability.

But...that's not so bad.

I'm writing this in the back of that RV somewhere in the Canadian Rockies, heading to Banff. I've spent 50% of this trip trying to fix things that keep breaking. So far I've fixed-or-tried-to-fix the AC, the water pump, the shore electrical system (still broke), the sewer system, the radio, the TV, the water heater (still broke), the generator (works sometimes), the oven (still broke) and more. You get the idea.

But you know what?

I LOVE IT

And that's the reality. This isn't an investment. It's a memory machine.

And I don't need to pretend otherwise.

Some things in life are just liabilities to be loved.

To your Better Life,

Brandon Turner

P.S. Need a loan? My lending company, BetterLife Real Estate Funding, is really good at this. Competitive rates and fees, sure, but that's table stakes. What makes us different is that we might be the only lender that actually cares about your life outside of real estate. The deal isn't the point. The life you're building with it is. Check us out: BetterLifeREF.com