Rednecks are found in all parts of the world

“If your bicycle has a gun rack, you might be a redneck.”

Comedian Jeff Foxworthy made a career stating such observations. Rednecks have it rough. Whether serving as easy targets for comics or the perennial whipping boys of coffee house snobs, few groups receive more flak than rednecks. With the recent barrage of negative financial news many investors have begun to radically re-think their strategies. I might suggest they look to rednecks for some unorthodox, yet effective investment tips.

I say this after several years of taking in the surprising investment savvy of several “sons of the soil” in remote parts Panama. I have to give these folks credit. While many yuppies in the “non-flyover” states are under water with their overvalued, excessive dwellings, plenty of redneck expats are sittin’ pretty in Panama.

Here are some investment principles rednecks employ in Panama that can lead to wealth creation:

Rule 1: Buy What You Can Afford

Why on earth would anybody buy something they cannot afford to own!? Unfortunately for many Americans with access to easy credit, that’s a situation they’ve grown accustomed to, and the root cause of many individuals’ financial crisis. For most rednecks, access to credit ain’t as easy as for fancy, tie-wearing lads. Thus, they’ve learned how to live frugally, scrape together savings over time and buy things with cash. This position changes an investor’s mindset considerably and often leads to more sound decisions. Pretty simple: when it’s your money and not the bank’s, one tends to examine the downside more closely.

Rule 2: Be Handy

Generally speaking, if you want to buy and resell property for profit in Panama, you’re going to need to make some improvements to it. Unfortunately, finding a reliable topographer, plumber, electrician, carpenter, etc. is difficult in Panama City and nearly impossible in remote areas. So if you’re going to hire somebody to help you on a project, you’d better know a little about construction yourself so you can supervise the work. If you’re used to opening the Yellow Pages to fix a minor leak, you’re in for major headaches in Panama. While you were studying Algebra, the redneck was under the hood of his Chevy Camaro, so he’s got a leg up on you in the handyman department. Time to learn some new skills or a redneck might call you “handy as a cow with a crutch.”

Rule 3: Don’t Live To Impress The Neighbors

To be ahead of the curve, you sometimes have to make personal sacrifices. Whether doing land deals, building or remodeling, the most important tool you have is CASH. That means that in order to ensure you have sufficient funds for your investment, you may have to forgo that ski trip or that shiny new beamer. Keeping up with the Jonses is a hard habit to break. Rednecks aren’t afraid to live humbly, eschewing the social hierarchy that often saddles social climbers in debt, in order to amass real estate assets.

Rule 4: Don’t Confuse Investments with Indulgences

I have a friend in Panama City who would qualify as the Latino equivalent of a yuppie. He recently asked my advice as a tourism professional when considering the purchase of a 4 bedroom, $650k beach condo near Santa Clara. I told him simply, “If the purpose is to make money, then don’t do it.” He bought it anyway, with the justification that it could serve as a vacation rental income producer, despite my belief to the contrary. His desire for the object clouded his business judgment. The lesson? If you want to buy something because you think it’s shiny and pretty and you can afford it, by all means enjoy! But be wary of the power of your brain to rationalize an indulgence by re-labeling it an investment. Ask a redneck! He’ll tell ya, they ain’t the same thing. To pretend they are is to be “dumber than a coal bucket.”

Rule 5: Be Skeptical About Hype

Rednecks are naturally skeptical, contrary thinkers who don’t automatically assume that if a fancy talkin’ lawyer has an even fancier office, that makes him good at his job. Likewise, they aren’t going to be automatically impressed by slick brochures and marketing fluff for pre-construction projects. They look for real, tangible value, not hype. Be wary of falling for the slick marketing machine that many pre-construction developers employ and look for real value. It could save your butt during tough times.

Rule 6: Be Willing to Deal with Discomforts

This one is huge. Just imagine how uncomfortable it was for REAL pioneers back in the 1800’s land rush in the U.S. They had to clear land, plant crops in shallow soil and survive long winters. These days, by comparison, we’ve got it easy. Yet too many of my fancy lad amigos are unwilling to go a single day without Starbucks, CNN or air conditioning. If you cannot to go without creature comforts and modern shopping for an extended period, then you should avoid overseas real estate investing. The big money is made by those with the vision to see things not as they are, but as they CAN be. Sometimes that means driving down lousy roads, dealing with inconsistent (or non-existent) infrastructure and for Lord’s sake, you may even need to be without cable TV for a while. Those who are given to a little suffering earn big rewards for their perseverance.

CONCLUSION

Surfers, hippies and even the much maligned redneck can be unlikely teachers in “new investing” techniques. And even if you don’t make a killing in pure monetary terms, you may yield returns through living more with less. Veer too far from the redneck path of investment wisdom and you may end up, as the rednecks say, “broke as the Ten Commandments.”

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Filed under: Living & Retirement, News on December 25th, 2008