The other day I was doing some yard work and different chores around the house and I heard the sound of a few airplanes overhead. It was a formation of C-130’s heading back to the Air National Base at the Wilmington Airport. I think one of the airplanes was being flown by one of my good friends and neighbors, Troy. As I was watching the two ship of “4 fans of freedom” go by I was reminded of the concept of formation flying and the value it provides in many aspects of aviation and our lives.

Why do military airplanes fly in formation?

They fly in formation for mutual defense and concentration of firepower. Let’s focus on mutual defense in this short article. Mutual defense can provided in multiple ways. It could be an extra set of eyes to see an enemy coming or shooting down a bad guy so they can’t get to you or your formation…stopping your mission.

How about the knowledge and experience of the other people in the formation to aid in mutual defense? Normally you have a formation or flight lead that has “been there and done that.” They may have thousands of hours and combat experience that a fellow wingman may not. They can guide or coach you through hazardous terrain or bad weather.

I’ve been in formations where KC-10’s unintentionally were not in the proper positions while in the bad weather. We were on our way out to our designated area to stay proficient in refueling with KC-135’s. Normally this procedure/mission is a non-event and routine. However, poor weather made the departure more challenging. Being out of the proper formation position could have been potentially dangerous. In my situation, three KC-10’s were climbing while in a turn heading out over the Atlantic.

Thankfully we had an experienced flight lead who had the big picture of what was going on in their mind. They were able to separate three 400,000 lb. aircraft from hitting each other. At the end of that flight, let’s just say there was a thorough debrief of what went wrong. All members of the formation were held accountable. BTW, doesn’t it sometimes seem the enemy in anything we do, is usually ourselves?

My $30,000 learning opportunity

The same concept of mutual defense can be applied in the world real estate and alternative investing. There are many variables, just like in flying, that you may not know about or have experienced. For example when I first got into real estate I had read lots of books, attended many seminars, and thought I knew what I was doing to start down the path of owning rental properties. I was attempting to learn by osmosis and thought I would be protected from losing money… wrong!

My wife and I had always wanted a beach house. I had the idea of buying a beach property and then renting it out. The plan was to let our renters pay the mortgage off and we’d eventually own the property free and clear. Appreciation that came from owning it was factored into my plan.

We purchased a 3rd floor condo on a beach block in Atlantic City. Completely refurbished…it was beautiful. The unit had it all: hardwood floors, views of the beach, new kitchen, and a great neighborhood.

The problem was getting enough rent to pay the mortgage. I completely underestimated the amount we could rent the unit for. I underestimated how much time/effort it would take to market and maintain the unit. In the end what finally sunk the deal was the gushing negative cash flow. Our expenses way outstriped our capacity to pay from the rental income. We needed to cut our losses… we sold the property at a loss and in the end had a $30,000 learning opportunity 🙂 Who was the enemy here again? Oh yeah, myself…

How would have a good formation lead who’s “been there and done that” helped me? Using their big picture view of the situation, they would have helped me take my emotions out of the deal by making me realize the numbers wouldn’t have worked. They would have made me realize owning a rental property is a business and in order for it to remain alive it needs positive cash flow after all expenses. In addition, they would have told me to never count on appreciation in your business calculations. That would have been good to know before hand as we bought the property at the height of the last housing bubble.

How to potentially save yourself $30,000

I wish the Aviator Freedom Alliance (AFA) and our upcoming Aviator Freedom Summit were available when I first started in real estate and alternative investments. At our event in Philadelphia, April 22-23, you can learn and meet investors that have done thousands of deals, bought/sold in up markets and down markets, and survived (and thrived) in the last financial crisis. These are the people I’d want as my wingman, how about you?

Make the commitment to find out more and save your spot.

Find out more and save your spot

Seating is limited.

Till next time,

Ralph Marshall

Ralph Marshall
Wilmington Financial

P.S. Have you had a chance to get your free copy of “Capital Assets – The key to financial freedom.” Download it today!

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