Real Estate Nerds 40: How To Work on Yourself To Become The Best Possible Investor With Damion Lupo

Welcome back to the Real Estate Nerds Podcast. On today’s Bad Beats episode, investor, author, and retirement planning expert Damion Lupo joins our host and attorney Scott Smith. Together they discuss the details of one of Damion’s worst deals, while also sharing some of their expertise about evaluating markets, investing strategy, and investing psychology tips anyone can use. Tune in to Episode 40 of The Real Estate Nerds Podcast to hear their full conversation.

Listen To Episode 40 of The Real Estate Nerds Podcast Now

Damion Lupo on Losing Big, Blind Spots, and Preparing for an Impending Recession

Damion and Scott discuss Damion's early real estate career and the lessons he has learned about his own blind spots. Damion also shares some of his observations about recessions, including a prediction on when we may be looking at our next one and what to do about it.

[1:00] Damion grew up in Alaska, where he later took physically demanding jobs in the oil industry. He left at 17 to escape the ennui and isolation of life in Alaska. He was able to use some of these funds to get started in the real estate industry.

[2:45] Damion describes his early real estate dealings. He believes he was naive, which in some cases worked to his advantage. He purchase 150 houses, but they became a massive problem: “Within 8 years, I took a $20 million portfolio of a cliff,”

[3:00] The two investors discuss the value of learning the lessons from failures. Those who do not take the learning opportunity do not tend to perform well over time. Damion admits that he failed to listen often.

[6:15] Damion also speaks to the danger of not acknowledging your own limits: “Your blind spot is everything you’re not seeing. Maybe you need to move three inches to the left and everything is wide open. It could just be that simple.”

[7:00] Scott points out that a solid economy and market bull run influences the way investors think about real estate. Damion speculates that after a long bull run, a recession within the next year and a half is extremely powerful. He suggest investors evaluate their portfolios and plan ahead for the recession.

[8:30] The two investors discuss how different assets perform in a downturn. According to Damion, “You have to know what’s going on in a recession and plan for it.” Scott agrees, pointing to investors he knows that are doing well know and thoroughly prepared for a recession.

[9:45] “It’s the prepper mentality,” Damion adds. However, some people spend more time and money on preparation than maintaining their businesses. He reflects on the fear of the unknown, which motivates many of these paradoxical opportunities. Scott points out that figuring in probability of any given risk is important for an accurate picture.

[12:00] Damion agrees that investors can evaluate risk ahead of time. He points to his own investment “rules” as an example. For instance, he will not have more than 5% of his own liquidity in a given deal. He heeds to these rules religiously. His approach is conservative compared to what he's seeing from other investors: “I don’t see a lot of practicality. I see a lot of people who are stoned out of their mind by the wealth the bubble has been creating.” [13:20]

[14:00] Scott shares a couple of anecdotes about investors in the current climate.

[15:12] Damion shares advice for new investors. “If you want to make money, there is one thing you should invest in: your education.” He lists a few terms all investors should be familiar with. Scott points out that “It is always more expensive to learn by experience...You don’t have to if you aren’t lazy.” He speaks from his own experience, pointing out he once lost several thousand dollars because of failure to do due diligence.

Scott circles back to the value of having personal rules, pointing out that some investors have criteria for behavior patterns outside of relationships. Damion agrees that having rules prevents delusion.

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How to Fully Engage with Your Life (And Why You Want To)

Damion shares about some of the deep internal work he has done to recover from failure, maintain success, and nurture himself to contribute to and connect with the broader community more. He discusses how he defined his purposes, as well as some of the influential books and practices that have informed his own development.

[18:30] Damion points that passive income can develop passive desires in other areas of life, and how problematic this phenomenon is. He and Scott discuss the distinction between passive investors and those who are actively engaged.

[20:00] Scott recalls his interview with Scott Sutherland about best and highest use of a property, pointing out the parallels with Damion’s story. Damian points out that the same principle of active engagement applies to retirement planning: “If you’re not engaged, you’re toast.” [21:58] Scott points out that applying one’s mind intensely almost guarantees returns.

[23:00] Scott asks about the difference in Damion’s life before and after 2008. He shares some stories about his drive for “more” as a younger man, as well as watching his father pass away living with regret.

[26:00] The two investors discuss the internal building blocks that are essential to genuine fulfillment. Scott, who shuddered initially at the mention of spirituality, has also performed a lot of internal work.

[28:00] Damion highlights the Blank Slate Principle. These strategies helped him refocus his priorities onto things that actually fulfilled him in life.

The Takeaway: Work on Yourself to Become a Better Investor

Damion and Scott conclude with some take-aways of Damion’s story for listeners. While each had their own take, they agreed on the most important principles.

[30:00] Scott feels that Damion’s story speaks to the value of strong investing psychology and profound self-insight. In his opinion, wealth and happiness do not necessarily correlate--if you want both, you have to work for it, but the work will be on yourself. This view is confirmed my numerous studies in human behavior, social sciences, and psychology.

[32:19] Damion offers a take-away for listeners “If you want to feel successful, fail faster and more frequently.” He points to the survival of extreme events, the value of gratitude, and the power of a healthy attitude toward failure.

[33:23[ Damion lends some advice to struggling or anxious investors: “What’s the lesson in your pain right now? If you don’t learn it, you’re stuck.”