Globel Real Estate Interdependence Part I

People often want to know the “secret” to making money through international real estate investing. I tell them that it really is not secret at all, but rather a well known principle that a variety of disciplines could already tell you.It’s the principle of interdependence. What is interdependence? Let’s look at some examples of interdependence outside of the investing community:1. How do you get to work in the morning? Your car is a complex system of interdependence. How does a car actually function? Well, we could get a mechanic to tell us the exact details, but generally speaking, here’s what happens: you turn the key and transfers power from the battery to the ignition and the ignition sends a signal to tell the gasoline to pump, the cylinders to turn and the spark plugs to spark. Those spark plugs spark and that spark ignites the gasoline that is injected into the engine’s cylinders. That forces the cylinders up and down which creates power and that power is transferred to the wheels. The wheels tend to go in a forward motion but since your work is not straight ahead from where you live, you also have a steering wheel to turn the vehicle… and since you need to vary the speed at which you travel, you have an accelerator (which puts more gas into the engine to ultimately create more power) and a brake (which applies pressure to the wheels to slow the car. To keep the car going you need to do a number of things: you can’t just turn the car on, but you also have to maintain the car and keep it full of fuel. If you don’t maintain the car it’s wear down. If you don’t put fuel in the car, you’ll just drive until the tank is empty. If you don’t turn the key, the car won’t go at all. A break down can occur anywhere within this complex system: a spark plug might not spark, which will mean reduced power. Brakes may fail. Air may leak from a tire. In that sense, your car is interdependent with the other systems in the car: the gasoline-powered engine needs to make sure that there are air in the tires and that the key is being turned in order to keep the wheels inflated and the car running. But your car is also interdependent with the world outside of itself: the driver needs to monitor the amount of power being applied to the accelerator and maybe give it a little more power up a hill or a little less power on a descent. In snow, a combination of steering, brakes, and acceleration make winter driving an art form. Wind will have an effect on the car, too: a headwind will increase fuel consumption; noticeably, in fact, on a long trip. Driving through puddles in a car that’s low to the ground can mean that water splashes up into the car and can potentially douse the engine, rendering it temporarily inoperable.So a car is interdependent with systems both externally and internally and it needs a consistent environment with all of those elements aligned in a specific way to operate at an optimal level. That’s not to say that the car won’t run if those elements are not aligned, but it is harder on the vehicle, often uses more fuel, requires greater driver focus, and is not always as safe.But your car is not the only place that the principle of interdependence operates. Consider, also the area of the environment: Can you point to the starting point of the economy? No! It’s an interdependent and cyclical system where one thing feeds into another and many “circles of life” overlap. For example: A small animal is eaten by a bigger animal which is eaten by a bigger animal which is eaten by a bigger animal. When that large animal dies, it is eaten by the smallest animals as it decomposes. During decomposition, gases are released into the atmosphere and the ground is fertilized with decomposed material. The decomposed material helps fertilize roots of trees and the gases released into the atmosphere are “inhaled” by plants, which “exhale” oxygen. That oxygen is inhaled by animals who exhale carbon dioxide (also used by plants). The water system as well as the sun both have an impact on the environment: water is necessary, as is sunlight. All rely on each other to live. That’s interdependence, and, like your car, it depends on internal and external factors. Now imagine the catastrophe if one element were taken away: if the sun were to disappear for a while, or shine too brightly, or the water were to flood, or dry up. Life exists because each element within the interdependent ecosystem exists within an acceptable range: just enough light, just enough water, just enough of the type of air needed: animals grow and die and feed other animals.See, again, how interdependence works? A complex system has internal and external elements that function within a range, keeping the system operating and impacting the operation of that system. We use this everyday day at www.resintoproperty.com© 2007 Resinto Propertywww.ResintoProeprty.com

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