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It is an interesting exercise to look back in time and analyze choices made and then ponder what might have happened had the ball bounced the other way.
Most of the time we pine over what might have been, as using the retroscope always gives us 20/20 hindsight.
I decided it was time I share one instance where the ball bounced not only once in my favor, but it did so two times (and possibly a third).
This led to what I consider a financial grand slam, one that truly accelerated my path to financial independence.
What makes this particular set of circumstances even more special to me was that these lucky bounces occurred during the most difficult period of my life, smack dab in the middle of my divorce proceedings.
Both times I was upset that the outcome I had wanted at the time did not come to fruition.
Only years later, after the entire process had completely unfolded, did I realize how truly lucky I was that I did not indeed get what I then wanted.
These events truly give credence to the old adage that it is indeed better to be lucky than good.
So I now present to you my home run/grand slam investment of all time:
The first pitch:
The year was 2007.
I had only just moved a year earlier, thanks to Ebay, and was on month 13 out of 24 to make partner at work.
The powers that be astutely realized that the city was expanding by leaps and bounds and that the currently leased medical building was already nearing capacity, with little opportunity to capture this growth.
Eventually it was decided to build in another undeveloped part of town, with the anticipation of creating a large medical center complex there.
This development was to be carried out in two phases.
All the current physicians working were offered the opportunity to buy shares in the project as ground floor investors.
I would love to say that I did careful analysis and due diligence regarding this project and then made an informed choice to invest.
But alas I still had not a single minute of financial education under my belt, so I just went with my gut.
To make matters worse, I did not have any funds available to purchase these shares outright so I had to get a personal loan from my local bank (I believe the interest rate was in the 9% range).
Not all the physicians invested.
The majority of physicians that did invest typically did so at one of two levels of commitment, either 5 shares or 10 shares.
I decided on financing 5 shares as even this level stretched my finances quite a bit at the time.
Top of the 9th inning:
Fast forward to 2010 and I was in the midst of a very contentious divorce.
Every asset I owned was put under the microscope.
Eventually it came down to the distribution of two assets, my work 401k and those 5 shares of the medical building.
With phase I of the building already complete and operational, those shares had been recently appraised and already had a greater than two-fold growth.
Fortunately, although I did not know it at the time, the 401k was still worth $20k or so more.
The judge, not one to break tradition, therefore automatically gave my ex-wife the more valuable, at that time, asset.
I was crestfallen as I saw a fairly substantial retirement asset vanish in an instant.
However this decision ended up being the first lucky ball bouncing in my favor.
The bottom of the 9th inning (bases loaded):
As I have previously mentioned in a prior post, when the judge signed the divorce decree he hit me with a sizable sum to pay to my ex and her lawyer.
To add insult to injury, the judge made the situation even more dire by directing me to have this accomplished within a 60 day timeline.
After a drawn out 13 month court battle, it suffices to say that I did not have that kind of cash on hand.
The only asset I had of value that could be monetized was, you guessed it, those 5 shares in the medical building (even that was not enough to cover the amount owed but would have put me in a far better position).
One of the bylaws in the investment agreement was a stipulation that these shares could only be owned by medical staff/administration and thus my only recourse was trying to sell them back to colleagues.
Several fellow doctors inquired about purchasing the shares but nothing materialized from it.
I later found out one colleague was set on buying them but his bank advisor advised against it at the last minute.
Again I was crestfallen.
How was I to come up with that sort of cash in such a short time?
Because of the real estate bubble in 2009, my house was underwater and I could not tap into any equity (again the timing of the real estate bubble was serendipitous as the marital home would have surely been lost had there been any equity in it).
I therefore turned to my least desirable option which was to use all my available credit via credit card access checks, knowing full well I would be hit with transaction fees and have interest start accruing.
Little did I know at the time but this too was a truly fortuitous set of circumstances that allowed me to hold on to these soon to become incredibly valuable shares.
Swinging for the fences:
As part of the operating agreement, shares would become available to new partners at the then appraised price.
This price quickly got out of hand as the building/land continued to dramatically appreciate, requiring not one but subsequently 2 rounds of 3:1 splits over the course of the years to make even one share affordable to a new partner.
The end result of these splits was that my initial 5 shares had increased in number to 45.
Ever so often shares would also be made available to all physicians (when someone retired and sold shares back for example).
Because of my relatively low cost of living and fairly frugal (for a physician) lifestyle, coupled with a high income, I was able to quickly build my financial reserves.
I used these reserves to quickly snatch up every share I got a chance to buy (2013 and 2016), adding 6 more shares to the pot.
Going, Going, Gone:
Throughout the years we would receive cold calls from interested investment groups trying to buy the property.
These offers, while substantial, never gained much headway as there was no desire to sell the building while it continued to appreciate.
We often joked that it would take an eye-popping number for the invested physicians to contemplate selling the property and that number was casually thrown out.
Well lo and behold, not much later, we were informed that such an eye-popping offer had indeed been placed on the table.
The offer came from a very respected investment group who manages a medical real estate portfolio for a large group of investors including a substantial state pension fund.
The physician shareholders held multiple meetings and there was much discussion about what was the best course of action for both the investors and the medical group as a whole.
In the end, as Marlon Brando eloquently put it, it was an offer we could not refuse.
After several long months filled with anticipation after the contract was signed, the deal officially closed May 2019, almost 12 years from the day I financed those original shares.
The value of those initial shares ballooned to just over 23x the initial value.
Because I bought additional shares at higher appraised values, the blended overall investment gain was 15.5x, still not too shabby for a 12 year hold.
It was by far the largest check I have ever received in my life, and likely ever will.
Because of those above lucky bounces I have essentially leapfrogged 3 or 4 years of my previous timeline of where I wanted to be financially.
Oh, and about that possible 3rd lucky bounce I hinted at in the beginning of my post?
Obviously when you have an investment turn out the way this did there might be some regret that you did not invest more in the beginning.
Even before the sale I had wished that I had gone in on the 10 share commitment level because of the appreciation experienced and the distributions received.
But I remind myself of this one fact:
Remember that judge who essentially went down the page of assets and always gave my ex-wife the asset with the most value?
If I had happened to own 10 shares instead of 5 at the time of divorce, I would be the one who would have likely received the 401k account, not her.
Again, it is sometimes better to be lucky than good.
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From what I’ve read of your blog, you totally deserved your luck!
I appreciate that very much. Thank you
Xrayvsn, you have always impressed me with your positive attitude, despite what you have personally endured. Congratulations and it was great reading this success story of selling your building! I loved your last sentence and it just emphasized that you got the great deal even though you didn’t know it at the time. Home run!!!
Thank you so much for the kind words.
Yeah in the end it really turned out to be an incredible turn of events and glad it worked the way it did. Thanks for stopping by
Wow, that’s very impressive. It was a lucky break, but you also had a lot of perseverance. Nice job. Of course, it’s best to be lucky and good. ?
For this particular instance it really was a stroke of luck. But I will take it. Hope the lucky streak continues. Thanks Joe and have a great one
Awesome story. Were the shares throwing off quarterly cash flow/dividends all the while as well?
Thanks! After I believe 2 years from the initial investment, we were getting quarterly dividends (can’t recall how much it started out with but I know for at least 3 years it worked out to $17.5k/year for me.
[…] on a great investment that nearly wasntNice article about how close success and failure can sometimes be in investing, and how patience […]