Feedback I get often is that I do a lot of crazy things that are really fun, but that they aren’t practical for normal people. I understand where this comes from. I marvel almost every day at how very good my life is, and how if I didn’t already have it, it would seem unattainable. Besides the things that actually matter, like having a great family, wife, and friend group, I get to live in several places across the world, drive a cool car, and generally do whatever I want.
If you’re rich, these things would all be very easy to do. But if, like me, you’re not rich, you have to rely on finding sweet spots. This has essentially always been the case for me because I’ve always been frugal and have always had tastes that exceeded my means by normal standards.
A sweet spot is a situation or combination of situations that gives you something that seems like a luxury at a value that most people wouldn’t believe.
I bought a two bedroom condo less than fifteen minutes from the strip for under $50,000. I bought an island with a close group of friends for under $10,000 each. I bought my dream car, a Bentley, for $22k.
These aren’t tiny amounts of money, but I feel like with each one I got a lot more in value than I spent.
One thing that these three purchases (and others I can think of) all have in common is that they are things that other people usually finance. When people have access to financing, they usually buy something that is irresponsibly expensive. When they don’t, they often buy the cheapest thing possible, because it’s their only option.
This creates a middle, where things are too expensive for cash buyers to afford them, but inexpensive enough that a financed buyer would just buy something more expensive. Why get a used Bentley when you can get dealer financing on a new Mercedes?
When I bought my condo there was some law that made it impossible to get a mortgage on it. As a result it was about 1/3 cheaper than any place you could get a mortgage on.
This dovetails nicely with my financial philosophy of never financing everything and always paying cash. Besides the financial and peace-of-mind benefits, it also puts you in that middle zone where you can buy things that offer the best value.
Another thing that all of these purchases is that each one comes with a very strong preconception which clouds people’s judgment. Most people do very little research and feel uncomfortable going against popular opinion, so they never even see what they’re missing.
I’d guess that 95% of people in America think of Las Vegas as a very expensive place to live that’s dominated by gambling and partying. The truth is that it’s a very inexpensive place to live, has excellent access to nature (skiing, boating, hiking, rock climbing, off roading, etc), and that most people here rarely or never go to the strip.
This mismatch between popular opinion and reality creates a demand gap. Las Vegas would be a great place for tons of people to live, but they have no idea and won’t even consider it, so the demand is artificially low. Everyone (except for me) thinks that New York and San Francisco are great places to live, so the demand is much higher than it should be.
People think that Bentleys will cost them a fortune in maintenance. They think that only billionaires can own private islands.
I love finding sweet spots. It’s like wandering around and stumbling across a treasure chest that no one else noticed was even there. It does take a little bit of confidence to go through with them, as everyone tells you that you’re making a mistake, but then a few years later they start wondering how you inexplicably have such an awesome lifestyle.
Photo is from my last little trip on Lake Mead before they shut it down for Coronavirus. I was excited when the lockdown started because I thought that I’d go boating and skiing all the time, and then both were immediately shut down.