"By gambling we lose both our time and treasure - two things most precious to the life of man."
Speculative investors are gamblers in the truest sense. They have the best of intentions, and they really want to win big when they jump in to real estate investing - hoping it will fulfill their wealth dreams.
Unfortunately there are a lot of investors in 2005 to 2009 who threw money at deals while we were in that glorious bubble of real estate –it seemed like nothing could go wrong. They had big dreams of getting rich but didn’t do their homework on locations and properties. They just went with what someone told them was a good investment or they just took what seemed like a good deal on the surface. When the bubble was starting to burst, they didn’t pay attention to the market trends to know when to exit that property or market and lost a LOT of MONEY – and in a lot of cases – they lost the properties too. All because they didn’t’ do their homework and weren’t paying attention.
So I am sure you realize you can’t eliminate all risks in
real estate investing, but there are steps you can take and things you can do to reduce those risks and become a smart strategic and successful investor.
Strategic investors make investing decisions by doing their homework, (ever hear the phrase - dotting their “i’s” and crossing their “T’s”?) in advance and then keep an eye on their investments.
In evaluating where to invest they look at a city down to the zip code or neighborhood level – since not all areas in a city are good to invest in. Is this area a good fit for their investing strategy? Will they get the return they want on the property?
A smart investor will also do a solid due diligence on a property they want to invest in – rental history, repairs needed, financials etc.
Every 6 months or at least once a year they check in on a market where they invest or want to invest to make sure it is still a good place to invest. They evaluate the market (location) to see if it still has a healthy economy. They even look at a zip code an neighborhood level where they want to invest – to see if things have changed.
- Has the crime rate gone up in that area? – Sounds like bad news and maybe you should sell.
+ Has there been a new employer moved into the area? - Maybe this mean you should find more properties to invest in that area.
Strategic investors also know when to get help from others, when they don’t have time to do all those steps on their own time.
On a personal note – I don’t have spare time to follow all the best practices it takes to be a strategic investor, so I figured out how to outsource this work to virtual assistants.
Now I simply create requests and templates and have them do a lot of the leg work for me. For market analysis I created an excel template and listed website I want them to source the information from and they fill out the whole thing – while I am working at my full time job or out at the beach. The result is they hand me a spreadsheet that list all the cities in a state – and lists all
the critical information for each of those cities (unemployment, crime rate, vacancy rate, average house prices, average rental rates for that area).
So that just means all I have to do is scan that data and narrow it down to 5 to 15 cities in that state that I want to invest in – that match my investing strategy of buy and hold.
Next, I have my virtual assistants do research on all the zip codes in each of those 5 to 15 cities – so now I know within those cities – what parts of the city I should avoid investing in. I have to tell you it feels really good to feel confident that I had someone do my
homework for me- so I can make smart/strategic investing decisions.
I encourage you all to become strategic/smart investors too.
Let’s all get rich the smart strategic way – don’t gamble and hope you are making good investing decisions !
I grew up with my Grandfather and my Aunt both doing Real Estate Investing, so it's in my blood.