TKSTV-367 Stop Investing for the Upside (Do This Instead)
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The decision we made in March 2020 is the reason we run our business the way we do today.
March 2020.
The entire global economy shut down in less than seventy-two hours.
Flights were grounded. Offices closed. Headlines moved faster than anyone could process.
And we were sitting on a deal with $300,000 in non-refundable earnest money on the line.
If we walked away, that money was gone.
If we stayed, we risked something even bigger.
At the time, walking away felt like the only sane option.
But what we decided in that moment — and how we made that decision — became the foundation for everything we teach today.
Because that experience taught us something we will never forget:
Confidence in investing doesn’t come from optimism.
It comes from preparation.
The Deal Looked Solid — Until the World Changed Overnight
The property was called Regency Oaks.
One hundred units.
Fort Worth, Texas.
A working-class neighborhood near the medical district and downtown.
It wasn’t glamorous.
It wasn’t trendy.
And the first time we toured the property, we didn’t feel entirely comfortable walking the grounds.
But we didn’t buy it because we liked it.
We bought it because the numbers worked.
The plan was straightforward:
- Purchase price: $6.225 million
- Renovate the remaining units
- Improve operations
- Hold the property for five years
We had already raised over $2 million in investor commitments.
Momentum was strong.
Everything was moving forward.
And then the world stopped.
When the Headlines Turned Against Us
Within weeks, the economy entered territory none of us had seen before.
Millions of jobs disappeared.
Businesses closed.
Markets fell.
Uncertainty spread everywhere.
And if you owned rental housing — especially workforce housing — the message was loud and clear:
“No one is going to pay rent.”
We heard it from lenders.
We heard it from investors.
We heard it from industry professionals.
Then our lender called.
The terms had changed.
What used to require six months of reserves now required something very different.
Eighteen months of debt service.
Twelve months of taxes and insurance.
All upfront.
That meant $680,000 locked away in escrow — money we couldn’t use to operate or improve the property.
Everything had changed.
We Had Two Options — And Neither One Felt Easy
We could walk away.
Lose the $300,000.
Protect ourselves.
Move on.
Or we could move forward — into a situation no one fully understood.
But before we made that decision, we realized something important:
We weren’t asking the right question.
At first, our question sounded like this:
“How much can this deal make?”
But in that moment, we changed it to something far more important:
“Can this deal survive if everything goes wrong?”
That single shift changed everything.
The Discipline That Gave Us Clarity
Instead of guessing, we rebuilt the model from the ground up.
Not once.
Not twice.
Thirteen times.
Each version reflected new information, new risks, and new realities.
And eventually, we stopped chasing perfection and started testing resilience.
We ran three stress tests — each designed to answer one simple question:
Will this property survive under pressure?
Stress Test #1 — What If Nothing Improved?
This was our baseline test.
No rent increases.
No renovations.
Expenses rising naturally.
Just the property operating exactly as it was.
What we wanted to know was simple:
Could the property still cover its debt without growth?
The answer was yes.
Not comfortably.
Not optimistically.
But reliably.
And that reliability became our foundation.
Stress Test #2 — What If Rents Fell?
Next, we modeled something more severe.
Two consecutive years of declining rents — worse than anything the local market had historically experienced.
We wanted to know:
Would the property still function in a downturn?
Again, the answer was yes.
The numbers didn’t sparkle.
But they held.
And holding is what matters when markets turn.
Stress Test #3 — What If Tenants Stopped Paying?
This was the scenario that kept everyone awake at night.
We modeled a situation where:
One in five tenants paid nothing.
Not temporarily.
Not occasionally.
Every year.
Even under that extreme scenario, the property still generated enough income to cover its obligations.
That moment changed how we saw the deal.
Because suddenly, we weren’t guessing anymore.
We knew the floor.
The Real Lesson Most Investors Never See
Most people evaluate investments by looking at the upside.
Projected returns.
Future growth.
Best-case scenarios.
But the investors who consistently protect their capital focus somewhere else entirely.
They focus on the downside.
They ask:
- What happens if growth stops?
- What happens if income drops?
- What happens if the unexpected happens?
That mindset isn’t pessimistic.
It’s disciplined.
The Decision We Made
After all the modeling, all the conversations, and all the uncertainty — we made our choice.
We stayed.
We closed the deal in April 2020.
In a garage.
At a folding table.
With a masked notary holding her own pen.
Not because we were fearless.
Not because we were optimistic.
Not because we believed everything would work out.
We stayed because the data told us the property could survive.
What Happened Next
Twenty months later, we sold the property.
Our investors received:
- A 1.5x equity multiple
- A 90% average annualized return
During one of the most uncertain economic periods in modern history.
That outcome wasn’t luck.
It wasn’t timing.
It was preparation.
Why This Story Still Matters Today
That deal changed the way we think about investing forever.
It taught us that success doesn’t come from predicting the future.
It comes from preparing for uncertainty.
Because markets will change.
Economies will shift.
Unexpected events will happen.
The only question is whether your investments are built to withstand them.
The Principle We Carry Into Every Deal
Today, before we invest in anything, we ask one question first:
Can this investment survive the worst-case scenario?
Not thrive.
Not grow.
Survive.
Because once survival is secure, growth becomes possible.
And that is how sustainable wealth is built.
If You Want to See Where Your Portfolio Stands
We created a simple tool to help.
It’s called:
It’s completely free.
It takes less than three minutes.
And it shows you exactly where your financial structure may be vulnerable.
Because the goal isn’t to avoid risk.
The goal is to understand it — before it understands you.
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