How To Recognize Financial Opportunity: It Doesn’t Come Around Often

Financial opportunity can sometimes be hard to recognize. There was tremendous financial opportunity during the March 2020 stock market sell-off. However, unless you read the post: How To Predict A Stock Market Bottom Like Nostradamus, perhaps you missed the buying opportunity.

Here is a story of how one couple missed out on $24,000 of financial opportunity a year because they didn't understand the rental market.

Recently, I made a strong attempt to help ameliorate the #1 recurring problem in San Francisco: housing affordability. My idea was to provide $2,000/month in subsidized housing to local preschool teachers.

As a high school tennis coach, I feel a kinship with my fellow coaches and teachers. Our jobs are rewarding, yet often difficult. We sometimes get yelled at and disrespected. During a global pandemic, it is clear teachers aren't getting paid enough.

There was one time one of my players called a ball out that was clearly in to win the point. I overruled him due to the importance of honor and sportsmanship. He started swearing at me and told me to stay out of it.

That was an unpleasant experience. I had a stern talk with him after he won the match. At least he apologized later. But would he have apologized if he had lost? I'm not so sure.

As coaches, we don't make much. I was paid between $1,000 – $1,300 a month during the 3-4-month season. But we also gain a tremendous amount of satisfaction by helping young adults mature.

If coaching was my only source of income, I would not be able to raise a family in the city.

Lost Financial Opportunity

Given my wife and I felt fortunate that our son got into our local preschool, we thought we'd try to help provide affordable housing for a couple of our son's teachers. We had learned that there was one teacher who drove an hour each way to save money.

As soon as we let it be known we had a place to rent that was five minutes away from the school, two teachers told us they were interested.

Instead of offering them the market rate of $4,400, we offered them the place for $2,400, a 45% discount. Each teacher would have paid $1,200. The place was a two-bedroom, one-bathroom, 1,380 square foot upstairs portion of my house in immaculate condition with a panoramic ocean view.

If you're living in Des Moines, $2,400 might not sound like a bargain. But I assure you it's a bargain in San Francisco. Besides, focus on the percentages. If you got a 45% discount to market rent, wherever you live, I think you'd acknowledge it to be a steal.

The Discounted Rent Calculation

I came up with $2,400 a month because I wanted to at least cover my property taxes, insurance, and maintenance expenses. I would keep the downstairs portion of my house as an office and place for my relatives and in-laws when they come to visit. There is a door that locks off the upstairs and downstairs with separate entrances.

Take Advantage Of Financial Opportunity, They Don't Come Around Often

Further, I knew the preschool teachers made roughly $70,000 a year. But there is a range, depending on seniority.

With a combined income of $140,000 a year or $11,667 a month, $2,400 a month comes out to a reasonable 20% of gross income spent on rent. This percentage was not bad given the average percentage expenditure on rent in SF is between 31% – 34%. Further, the teachers were getting a much nicer place as well. Financial opportunity!

Not only would we be helping two preschool teachers find a great place at a bargain price, but they would have a short commute to work. In return, we'd feel great helping people we know.

We considered the $24,000 a year in lost income as a way to support our teachers and our city during a difficult time period.

The Rejection

The teachers came up to our place and loved it. Unfortunately, they did not love the price. They could not recognize the financial opportunity while staring mesmerizingly at the ocean.

One was renting a room in an apartment she hated for only $700/month. She said her roommate was a difficult person and she wanted out. She didn't want to spend more than $800/month. The other teacher was paying $800/month for a temporary room and was willing to go up to $1,200/person.

Combined, they wanted to only pay around $2,000/month, or a 55% discount to market rent.

I considered going down to $2,000/month, however, I also sensed they still felt stretched at $2,000/month. Therefore, if they felt stretched at $2,000/month, I wasn't really helping them feel good about their housing budget since they would be paying more than they were comfortable paying.

Further, I didn't feel they appreciated the value of the property at the market rate of $4,400/month. I think they felt like the place was worth less given they had never rented a place as nice before.

Instead of feeling like they were getting a $2,000/month off deal, perhaps they felt like they were only getting closer to $600/month off based on their understanding of the market.

My wife and I sunk a lot of money into the property: changing the windows, remodeling the bathroom and kitchen, refinishing the floors, etc. The place was nice enough for a family of three with a healthy retirement income stream. Surely, the place was good enough for two young teachers.

Given this was a sensitive situation where I was technically a client of the school, they didn't push me to lower the rent further. Instead, they were gracious and passed.

Let's Try One Last Time

Two weeks later, I heard the teachers were still looking for housing. Thus, I came up with a proposal that I hoped would get them to reconsider.

I offered to lower the rent to $2,000 a month in return for watching our son 16 hours a month at $25/hour to get to $2,400/month. The 16 hours would be split between the two of them. Therefore, I figured 8 hours a month of side hustle work wasn't a big deal.

I used to work 65 hours a week on average in my 20s. Therefore, I thought adding only two hours a week to each teacher's 40-hour-a-week schedule would be easily digestible.

They graciously declined again.

Their second rejection made me believe that perhaps one of them was planning on leaving the preschool and didn't want to take advantage of the situation. By accepting way below market rent, one or both of the teachers would feel trapped to remain teachers given I specifically said I wanted to help provide subsidized housing to teachers in the city.

Only time will tell their intentions.

Whatever the case may be, as a couple of readers pointed out in my previous post, mixing personal with business may not be the best idea. People might suspect improprieties. Therefore, I told them no problem.

Going Market Rate Instead

After getting rejected twice over the course of 45 days, I decided to move on. Each month that went by was one month of lost rent. As someone who still wants to build more passive income to maintain our lifestyle, the only thing left to do was test the market.

In general, I like to rent between 5% – 10% below market rate so I can get a larger tenant pool to choose from. Further, at such a discount, the tenants will know they are getting a good deal and hopefully take better care of the place. Therefore, I put out an advertisement on Craigslist for $4,200.

I found one prospective tenant that looked very promising: a couple with a newborn baby. Such a tenant would likely stay for a couple of years or more.

Then I found another promising couple with a small dog. The demand was strong to move out to the western portion of the city where there was more space and better value. I strongly believe best near-term real estate buying opportunity is right within your city.

A Change Of Heart

During my 8-day negotiation process with the couple with a baby (they wanted to stop by several times), the preschool teachers came back to me and now said they wanted the place. They finally recognized the financial opportunity!

This is the e-mail I got from one of the teachers:

Hi Sam!

XXX and I have been looking for places and it hasn’t been so good.
Wanted to ask if your place is still available? We are interested! Let me know

As nothing seemed to have changed from a month ago, I asked him what kind of places they had been looking at and what had been the biggest obstacles they faced thus far.

Here is his response:

Good morning Sam!

We just haven’t been able to find another place that’s as great as yours for the same rate. Mostly we’ve been finding in-law units that are underground and we would be much happier in your space. 

I have until August 15 to move and XXX isn’t in any rush, so if it’s still available, XXX and I would be more than happy to make this work! 

Doh! Just as I was about to go through and sign with this baby couple for $4,200/month, the teachers wanted to take me up on my original offer of $2,400/month.

The Timing Was Off

It had taken them 45 days to realize they couldn't find a place similar to mine at the same rate, despite already looking for a month prior.

I guess there isn't anybody out there who is willing to purposefully rent at a 45% discount to market. Further, an underground in-law unit is obviously not as nice as a remodeled ocean view apartment that's 50%+ bigger!

At this point, it was too late for me to turn back. I was already in deep discussions with a couple parties. I told the preschool teachers I could not accommodate their mind change.

Although I felt bad for the preschool teachers, I had sincerely tried my best to convince them that what I was offering was a bargain. For me to then reject two couples who wanted to pay $4,200/month felt like too much of a sacrifice.

The upside is that everything is still good between us. The preschool teachers are still saving money by paying $700 and $800, respectively, for their existing rooms.

Please Take Advantage Of A Good Deal

I had a goal of providing subsidized housing to teachers for the long term. Now, I will put my plan on hold.

It's sometimes hard to recognize financial opportunity when you first encounter it. We can all say now that Apple stock was a great buy just three years ago. But just three years ago, most investors thought Apple was an overly conservative company that lacked innovation.

Backing up the truck on stocks in March 2020 turned out to be one of the best financial opportunity in years. But even if you read my detailed post, How To Predict A Stock Market Bottom Like Nostradamus a week before the bottom, I might not have been able to allay your fears of doom.

However, getting subsidized rent is a completely different animal. You can easily go online and see what similar types of units are renting for at market rate. That is how I got to my rent estimate of $4,200 – $4,400. To find the value of your subsidy, simply subtract the market rent from the subsidized rate.

Over a 5-year period, the two preschool teachers would have saved over $100,000!

Don't turn down financial opportunities when they are clear as day. Further, try not to come back to the person providing the financial subsidy after you've rejected them twice. It will show that you were not aware of the subsidy in the first place.

Just move on and be ready to pounce on the next great deal.

Ways To Recognize Financial Opportunity

Financial opportunities don't come around very often. Therefore, to help you capitalize on rare opportunities I suggest the following:

1) Always have a decent cash stash.

It often takes money to make money. Therefore, always have a good amount of capital that's available to be deployed.

If I'm focused on stocks, I generally like to have enough cash equal to the average position of each stock I own in my portfolio. If I'm focused on real estate, then I like to have a cash amount equivalent to at least 30% of the value of my target home.

Sure, cash hardly pays anything nowadays. However, in times of extreme uncertainty and volatility, owning an asset that holds its value isn't so bad.

2) Understand the market.

The preschool teachers' biggest error was not doing enough due diligence about the rental market for two-bedroom apartments and homes in the area. They should have lined up at least 10 visits to properties at my discounted rate to get a good understanding of the market.

The more you understand the stock market, the real estate market, a particular industry, or a product, the easier it is to recognize value. The recognition of value starts coming to you instinctually. Please put in the time.

3) Do your best to remove your biases.

If you are adamant in thought, you will simply look for reasons to bolster your views. Instead, you must practice listening to different viewpoints before making any financial move.

The market is efficient. It's rare that both sides are getting a great deal. Therefore, in order to truly get the best deal possible you must approach every transaction without preexisting biases.

If you find yourself constantly arguing with others and getting upset at other people's opinions, chances are high you are consistently missing out on financial opportunities.

4) Always think in probabilities.

Finally, there is no guarantee with any investment or any financial opportunity. Things go bad all the time. Therefore, you must always calculate the probability of your decision turning out great or poorly.

Here are some examples:

  • I thought there was an 85% probability that attending The College of William & Mary for just $2,800/year in tuition was a good idea. The cost to attend was so inexpensive for a top public university. Worst case, if I couldn't find a decent job after college, I could pay back my parents within 10 months by working at McDonald's.
  • I think there's only a 35% probability that buying more stocks with the S&P 500 at 3,375 is a good idea. Sure, the index could continue marching higher thanks to the support of the Federal Reserve and a surprise vaccine. However, I believe there is a 65% probability there will be a better buying opportunity over the next 6-12 months. Therefore, I have no issues building my cash reserve.
  • Conversely, I think there is a 70% probability that buying commercial real estate at depressed prices will turn out to be a profitable move in five years. The market tends to view things in extremes, such as “the death of the workplace” and so on. Things generally never turn out as bad or as good as pundits say they will.

It Gets Easier Over Time

When you can recognize financial opportunity and have cash to deploy, you greatly increase your chances of winning.

As soon as you start thinking in probabilities, you'll begin to more clearly think through different scenarios. When the inevitable poor outcome arises, you'll also feel more at ease. After all, even pocket aces in Texas No Limit loses 19% of the time.

Finally, you cannot just expect good things to happen to you without putting in any effort or taking any risk. The world is simply too competitive for you to predominantly rely on luck to build a great fortune.

Financial Opportunity In Real Estate

I believe real estate is going to be a great asset class to own due to positive demographics. The millennial generation is in its prime home buying years. As a result, expect to see strong structural demand for real estate over the next 10 years.

Further, mortgage rates will likely stay low and the intrinsic value of real estate is going way up. We're all spending a lot more time at home due to the pandemic. The work from home trend is also here to stay forever.

I believe the financial opportunity lies in buying real estate in the heartland of America. This can be done through real estate crowdfunding, where I've personally invested $810,000 in 18 commercial real estate projects around the country.

My favorite two real estate crowdfunding platforms are:

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.

Both platforms are free to sign up and explore. 

Related posts:

To Get Rich You Must Practice Predicting The Future

Your Wealth Is Mostly Due To Luck, No Matter How Great You Think You Are

Readers, have you ever passed on a great deal only to realize it was a great deal in retrospect? How do we get better at recognizing great financial opportunities?

About The Author

46 thoughts on “How To Recognize Financial Opportunity: It Doesn’t Come Around Often”

  1. In their eyes all they saw was going from $700/$800 mo rent to $1,200 each. No surprise they walked. And offering them an even lower price was worse because it came with “more work” in their view.

      1. Actually, I was surprised to be honest. Typically, renters who live on a fixed income (base salary only/no commission or bonus) that have to jump up $500 in rent or more will look for something $100 – $200 higher max*. But it doesn’t surprise me at all that they didn’t even consider the $2k rent in exchange for additional work when they came back 45 days later.

        *I owned a tenant finder service for landlords for 7 years here in San Diego

        1. I was kinda surprised, but not really. They each made ~$70,000 a year + side hustle income.

          They new they were living way below their means and no longer wanted to continue living like they did. One was in her early 30s.

          1. I don’t know why anyone making $70k would want to live in SF. That just sounds like pure misery to me.

  2. Did you ever tell the teachers that you were giving them a discounted rate? It seems they were looking at places in the same price range as your discount and then when they could not find something cheaper they came back and wanted to accept your offer.
    You must remember that your view as someone with money is very different than that of someone who is essentially poor (as would be a teacher making 70k in San Fransciso). Your discounted rate might seem like a good deal to you but to someone who is looking in a totally different price range it makes no difference whatsoever, much like a half off deal on a new Rolls Royce would make no difference to someone who could only afford basic transportation. Even with your discounted rate you quickly learned that to them it was still not a reasonable rate given their incomes. So please refrain from saying that they would have saved $100,000 over five years. That would only be true if you had offered them the apartment at market rate, they had accepted, and then you gave them a discount. You only save money if you were willing to pay full price to begin and clearly they were not in a position to do that.

    1. Yes, I told them the market rate was closer to $4,200 – $4,400 and they should check out the market.

      They looked for a couple weeks and thought they could find something great for $2,400. After about 45 days they finally gave up.

      I’m coming to agree with you that they aren’t saving as much, even though $100,000 is exactly how much less income I would receive in my bank account if I had rented it to them for 5 years. It’s better to just give money away perhaps than to help directly solve a problem.

  3. Rental is incredibly easy to compare with other rentals. I wish it was better to compare financial opportunities easily that are not related though. For instance, I know many who are thinking of whether to buy a home, invest more in stocks for the rally, or buying a car. News about housing and stocks are almost literally all over the place. Cars seem to be going in only one direction though.

    Would you know about any tool in which you can compare financial gains for making a large purchase or investing if they are unrelated?

  4. The Expostriate

    Sam you clearly (and understandably) don’t know the two teachers’ financial positions. You say you’re not sure about their exact salaries. Since you describe them as young, perhaps they have massive student loans due to out-of-state or private university tuition (which may have been their biggest area). Perhaps you correctly assessed that 2k would have been a stretch for them. maybe they had to come to terms with reducing other budget categories (food, entertainment, self-care, gym) in order to get to the point where they could afford the rent.

    Certainly beeing offered a $2m for the price of $1m is a great financial opportunity. But if you can’t come up with the down payment or the I come to support the payments, you can’t take advantage of it.

      1. The Expostriate

        Yeah I saw that in the article. That’s about $4,000-4,600 per month in take home pay, based on my estimates. If they have to pay $2k in student loans every month, that’s half of their income gone. Then they would pay about half of their remaining income for housing with your property. Why it might be a great deal, such a situation could justifiably cause a person to pause.

        1. $2K a month in student loans? Yikes, that’s a lot. The only people I know with that high of a monthly student loan payment are doctors.. maybe.

          Spending 18 – 20% of gross $70K salary on housing is not bad. That is affordable IMO.

          And again, everything is rational. I’m glad they are saving more money now and staying put. It was just interesting they came back want the deal.

          1. I know several people who went to private or out-of-state universities in the period of 2000-2010 who had to (and most still do) pay around 1.5k/month, since their parents didn’t provide any funding and they didn’t get full-ride scholarships. Prices for education have only gone up since, so 2k/month seems like a realistic number for a recent grad. If a person gets a master, it’s very easy to have to pay 2k/month in loans.

            The cost of post-secondary education is, in my opinion, unjustifiably high and leaves too many people financially crippled, sadly.

  5. I think you should consider subsidized rent for software developers living in the city. About half off sound Ok?

    1. That’s a great idea. Software developers do more in one day than teachers over their entire career.

  6. Fascinating article Sam!

    We have owned a modest 3bdrm 2ba rental home in a modest neighborhood since 2006. We’ve enjoyed 100% tenancy since 2007 with a simple strategy: we rent to military families looking to live off base in our area. We utilize a military housing website, so we get interest from families BEFORE they even move into the area. We rent slightly (may TOO slightly) below market rate on the premise that it’s a military discount for those that put their life on the line to serve and protect our freedoms, and I believe pushing close to market rates with invite undo competition. If we lost even one month of rent due to competition, it would take a long time to recoup the loss. So, in our area, we rent this home to military families for $1395 per month. Going rate for the home is probably closer to $1595, maybe a little more (we’re 60 miles south of Seattle)

  7. Simple Money Man

    We’re selling our MBR furniture at a great discount. We’ve had it for almost 15 years and wanted a change and it’s so big and bulky. We’re ok with selling it at a discount and helping someone out.

  8. The teachers should have spent a little time with comparison shopping. It shouldn’t be that difficult to look up online. Sorry they missed out, but hopefully they’ll learn from this experience. Also, hope they don’t have any hard feeling.
    I have a hard time recognizing financial opportunities as well. I’m pretty conservative so I tend to avoid change unless the benefit is obvious.

  9. Saying no the first time is sort of understandable because we’ve all been there. Sometimes we miss out on great deals because we didn’t do any homework so the only analysis is comparing current cost vs future cost. For them, I guess they were looking at $1,200 / person as a 50% increase without considering any other factors like reduced commuting or location.

    Saying no the second time made me go WTF? They not only had the time to do their homework , but they made themselves look bad and lazy. Most of the great preschool teachers that I’ve met were intuitive, patient, and empathetic. Them saying no the second time makes me question their ability as a preschool teacher…lol

    1. I totally get them saying no the first time b/c of a jump in price, despite the price being 45% below market.

      I would have thought nothing of the situation if they had not then decided to come back and ask if I would reconsider, despite rejecting me twice.

  10. Erik Sengel


    Curious to see how you feel about investing in real estate for income in distant places. For example, buying a beach house in a place which is 8 hours away where you won’t be able to manage it closely?


  11. While I find it hysterical that they thought the place would be available still after 45 days, I guess it never hurts to try. Good on them for thinking/knowing you were going to be soft and would hold out so long for them.

    As a result, i’m curious about a couple things:

    The first was when they came back the third time, were they looking to take the first offer of $2,400, or were they looking at the second option with babysitting included to offset the price?

    Next, if you were willing to take the 45% hit and rent at $2,400 instead of 10% off market at $4,200, would you had been willing to rent to the teachers at a slightly higher value after the 45 day idle period? Assuming they could have stretched their budget slightly further to maybe $2,800 or $3,000 would you have reconsidered? Possibly worked another package to increase babysitting if needed to offset? You could have even tried to work a credit for the missed month as well. Though that may be a stretch because it wasn’t really their fault you didn’t rent it out in the 45 day gap period.

    It doesn’t seem like the money was the issue to begin with. You set out with good intentions, and tried to give someone (some people) a huge opportunity, but eventually you seem to have fallen back into the capitalistic mindset. Was the new offer of with an increase of $2k really enough to sway you from your initial goal?

    Seems like there is some case study developing in here. How much money does it really take to push someone to give up on their goal… (reminds me of a scene from the movie “Up in the Air” with George Clooney and JK Simmons, “How much did they first pay you to give up on your dreams?” [scene where Simmons gave up a chef career for $27k])

    I suppose in the end you can feel slightly good as you are technically still subsidizing someone’s life. You are in fact renting out at 10% less than market. Maybe you are helping the budget of the new family. Which is a more noble act, helping a young family at 10% or helping two teachers at 45%? A little Sophie’s choice…

    1. They were happy to rent for $2,400/month. But I didn’t give them much of a chance to discuss further b/c I was already think into discussions with two other couples at close to the market rate.

      I allocated 30 days for the teachers to make a decision. I wasn’t a rush to rent out the place b/c of my previous experience being a landlord.

      The 15 days was when I restarted my search process after the second rejection. I could have done things more efficiently, but I was holding out for the teachers b/c I knew they wouldn’t find anything nearly as nice.

      As a teacher myself, I’ve realized just telling a student something doesn’t often stick. The student has to experience the situation for him or herself to learn and appreciate a situation and the teacher.

      However, when you are young and you just don’t know, it’s just harder to appreciate things.

  12. Candian Reader

    Thanks for the update.

    Although I was initially quite critical of this idea for different reasons, I was surprised to learn the teachers didn’t realize you were offering them a sweet deal.

    Sharing your personal stories does open you to unwanted criticism, but I still found the content thought-provoking.

  13. Wow Sam,

    This post kinda triggered me. A couple thoughts. Doing charity, “and that’s what this is” should feel good for the teachers and more importantly You! I give money to help and blah blah blah but I mainly do it because it makes me feel good. I think if most people were honest they’d admit they do good things because it makes them feel good. Who wants to do good deeds if it pisses you off? Your post comes off as if your upset they didn’t recognize what a great deal you were offering until to late. If that’s the case I totally agree.

    Second, generally speaking, you can’t expect most teachers to recognize a good deal if the overall cost goes up. If money was truly important to them they would’ve never become a teacher in the first place. Also to think that they should’ve looked at least 10 different comparisons is not realistic. If a science teacher offered you a dodo bird egg at a 45 percent discount would you find ten other eggs to compare? Probably not, dodo eggs aren’t your thing.

    It was very altruistic for you to offer the teachers that deal. I commend you for trying. You can only do so much before it’s not fun. Having enough money you can give it away should be fun!

    1. I’m not pissed off. I’m just sharing a story about financial opportunity and lost financial opportunity to help other people. It’s more that I feel bad I had to reject them after they came back 45 days later wanting the place.

      Everything is rational in the end. If you don’t think it’s worthwhile for a renter to study the market before making a rent decision, that’s cool. I really didn’t realize it was that difficult to check out as many comparable properties before making a life decision.

      Maybe this is my blindside that normal people don’t do comparison shopping as much as me. So thanks for pointing that out.

      But I’m definitely gonna encourage my children to comparison-shop and study the market and all the options before making a decision.

      As one commentor said, “no good deed goes unpunished.”

      1. You do seem somewhat miffed by the audacity of these teachers to not take such a *clearly* good deal. Why would you say ‘no good deed goes unpunished’ if you didn’t feel like you were somehow punished? Obviously you weren’t which makes the statement a little weird, at the least. You frame the entire equation in terms of ‘financial opportunity’, and it appears since you were the one providing that ‘opportunity’, only to have it rebuffed twice, that you walked away not only insulted by them turning down your ‘charity’ but also by not recognizing this obviously superior ‘financial opportunity’, in your words, that has been presented to them. I get it, it doesn’t feel good to come up with an awesome plan intended to help only to have that help turned away. But you’ve painted an image where you are the hand that feeds and they are the dogs that bit you, when neither is true.

        It is no doubt true that you do more comparison shopping than the average person, and that is a good idea. That being said checking on 10 other properties does in fact take time, which I’m going to guess a semi-retired tennis coach has a lot more of than a full-time commuting pre-school teacher. And as pointed out by OP, pre-school teachers tend to have different priorities and values than financial gurus. Which is unfortunate for their real estate portfolio, but is probably good for the kids. And to frame that as “oh, well, if you think it’s smart to be dumb, that’s cool . . . my kids though. . ” C’mon man, you can do without the straw man arguments, they don’t look good on you.

        Your fundamental error in this equation seems to be a lack of perspective. You frame a situation where people making a vastly inferior combined income, in terms that make sense to you. I love your blog but you are frequently out of touch with what others deal with in terms of operating income and expenses. True you discounted the rent by 45%, and by your terms they would have saved $100’000’s! Except you willfully ignore that your ‘charity’, by the very numbers you have, would in fact NOT SAVE them anything . . it would COST THEM 50-70% more than what they are outlaying now. You don’t understand their decision process because you fundamentally misunderstand their position. You’re blindside is greater than just comparison shopping comparisons.

        As usual you have a bunch of great points, and I don’t disagree with them. I think you should review rule 3 though, and have another look at your own bias’ in terms of how you define an ‘opportunity’. And never forget . . It is expensive to be poor.

        P.S.: You probably also understand how having one of your students parents as a landlord who is giving you a ‘good deal’, dependent upon watching their kids after hours, is a major red flag for anyone with a good sense of boundaries.

        1. No good deed goes unpunished is a term another commentor left. And if you look at some of the responses, including yours, they sort of justify what he says.

          Trying to help people is difficult, which is why most people I know just give money away. I try to get to the source of problems.

          Sharing personal stories also opens you up for criticism. I do like the criticism usually because it allows me to write another interesting post. At the same time, when I’m tired, I’ll just write something more plain vanilla for the search engines.

          Have you ever provided subsidized housing before? If not, I’d love to know some stories from you. Thx

  14. jeff hawkins

    The notion of subsidizing teacher rent is a noble cause. I”ll speculate a very small percentage of homeowners would contemplate a 45% discount, let alone put it into action. Commenters seem a bit dismayed at the teachers unwillingness to bite on a great offer. Sam D is in a bit of a kerfluffle or else there is no article. Speaking on behalf of a lot of teachers in my family and within my circle of trust, I am not surprised.

    The educators do not have a grasp of real estate in general or San Francisco in particular. Especially the rental market. So they are unable to identify what is and is not a good deal unless they did a lot of research ahead or during these negotiations. No one is going to out research Sam D.

    The $800 a month teacher is looking at a 50% increase in housing. I’d poop myself. The $700 a month teacher is staring at an increase of 71.5% in monthly housing. I’d poop myself twice.

    Each teacher after taxes, car payment, student loans, insurance, etc., has a take home approximating $2600-$3000 a month at best. Those types of housing increasing are ginormous. Even if they are incredible deals.

    While it is a bummer they didn’t recognize the deal, it is probably a wise move to pass. They realistically cannot afford it.

    1. Each of their gross income was about $7000 a month. And yes, the percentage increase in the rent they would pay wouldlarge. But was in her place for 7 years and had a tiny room with a apartment made she could not get along with. The other is being asked to leave because he was subletting. They recognized they were getting great existing deals, but they also wanted better space.

      It is good that they continue to save money on rent.

  15. Great article. One comment, sometimes it’s also the right decision to do nothing. Of course you have to first do the Three Ways To Recognize Financial Opportunity analysis.

  16. Stevan Koncar

    Hey Sam, nice story as usual! Although your offer was noble and you had good intetntions, I see some room for improvement from your side as well.

    I learned a lot while I was doing Sales in my younger days and it’s heavilly related to communication in general.

    First, if I were you and realy wanted to have them rent your place, when the teachers rejected the offer, I’d dig deeper to try to find out why. Peeling the onion as they call it. You’re still not sure why, you can only guess. And still, you gave another offer without knowing why they refused the first one.

    Second, they were not your customers at that point in time. There was no win – win, they wanter something extra cheap disregarding the quality. You didn’t want to go extra cheap.

    I can relate to the teachers – when I was a poor student I optimized everything to fit in within my budget, not for the biggest bang for the buck. I had some money and couldn’t go over that. I waited at the airports longer as I took cheaper flights. Later I changed my perspective and started appreciating my time much more, but I guess I wouldn’t change what I did then because that’s what I had.

    1. Yes, my place wasn’t cheap enough for 45 days until they realized it was until it was too late.

      Skin in the game is important. I feel that if I just provided housing for free, I definitely would not appreciate it. I don’t plan to just give my kids everything either. It feels great to earn things on your own.

  17. For Three Ways To Recognize Financial Opportunity, I understood number 2 with regards to a second home for us to eventually become our only home but curses, number 1 wasn’t completely there and even it had been, the house had an accepted offer in 48 hours.

    There’s always fall and winter. Seems like people do not like moving in the cold. :)

    Your article also makes me feel less insane about looking weekly, if not daily, at new listings in the places we’d consider moving to. I’m decent at spotting deals (barring serious issues with the home that don’t show in photos) but apparently I’m just not quite ready with the cash in this hot market.

    Thanks for the post!

  18. Understanding the market is key to getting a great financial opportunity. I’ve built my rental portfolio around a few select neighborhoods in New York City.

    I can tell in a short period of time if a new real estate listing is a great deal in one of those neighborhoods. It comes with market knowledge and experience.

    But I don’t fault the teachers for not taking you up on your offer. It is simply the difference between your offer and their budget. They weren’t looking for such an expensive place to begin. Therefore, it almost doesn’t matter what the discount amount is if it is still outside of their budget.

    It’s no different than say a billionaire wanting to rent me a mega-yacht for 10% of market rent. Doesn’t matter if the savings is $900,000 a week, I would still say no as the $100,000 will still be significantly above what I want to spend to rent a boat assuming I can’t have guests.

      1. I think the better example would be looking for a car because your current one stinks. You get an offer for a 6 month old Chevy Tahoe at 45% off list price of $40k, but you were just looking for a car 1/10 of your income at $7k, or a 5 year old Ford Fusion.

  19. There must be a quote about not being really able to help anyone. In the past I’ve tried more often than I do now. From experience I’ve only been able to help people who really live in poverty. One was for a Burmese boy selling t-shirts, the other was a UC Davis student. The boy I paid for his education. It was only a few thousand dollars and I’m a rock star whenever I seldom visit his village. Yea I’m bragging but I am anonymous, mostly. What I say now is, “I have some advice that would really help you just ask me if you are ever interested”. Crickets, but I don’t waste my time anymore.

  20. Wow Sam. You went out of your way to help these two teachers who did not see the value in your good intentions. I learned a long time ago that often people do not appreciate the help you give them. Not one bit. Naggers and complainers who often are utterly bad at personal financial management and discipline will often not see these great opportunities. You could have offered the house rent-free and I am sure two or five months down the road they would have left you high and dry. We will always have people like that. That is why some of us who are more prudent with finance and value people’s help get ahead in life. It sounds bad but it is the truth and reality.

    Thanks again for a great post. Sincerely, Economy Chief (another FinancialSamurai inspired financial blogger).

  21. Wow what a story. I bet they felt so foolish for saying no twice and then losing out later. I’ve seen some of those basement no window type apartments and they suuuuck.

    I can’t think of a specific missed financial opportunity in my past of that significance. But I probably missed out on a couple of raises in the first half of my career for sure. It took me a while to realize my worth and that if you don’t ask you probably won’t get.

  22. Sounds like they assumed that since your offer just kind of fell into their lap that it would be easy to find other similar (or better) offers. They didn’t seem to believe or understand that you were genuinely trying to help them and offer them a spectacular deal

  23. Hi Sam,

    Great blog! Wish I’d found it 10 years back. I graduated with an MBA back in the great recession of 2009 with no job. Deja vu this year, though following your advice will greatly help me over the longer term for sure.

    Quick question: how have you assigned the probabilities for S&P and commercial real estate?


  24. Financial Freedom Countdown

    Rent control has totally distorted the concept of market rent in San Francisco. For now, districts further from downtown are more desirable.

    Tent cities keep moving from one district to the next. Looks like Hayes Valley might follow Tenderloin in suing the city.

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