Why the best time to talk about real estate investing, is when you are NOT ready to invest.
Updated: May 29, 2019
We don’t know what we don’t know. Common phrase we have all heard. This rings true as well when it comes to the world and possibilities within real estate investing.
And trust me, it’s a vast world.
Let’s look at some of the high level questions you can ask yourself as you begin to think
about entering the arena.
· Do I want to be active or passive?
· Do I want to be in single family or Multifamily?
· What about other assets like mobile homes?
· Where do I find deals?
· How much capital do I need?
· Should I look to partner for go alone?
· Self-manage or property manage?
· What type of returns can I make?
· What is the risk comparative to other investments like equities?
· What are the tax implications?
Each one of these could have many different answers, with a variety of additional questions beneath them.
As you can see it’s a pretty big rabbit hole once you start to dive down.
This is why I encourage people to start researching and having conversations with professionals in the business when they are NOT looking to invest or make a particular decision. The best time to network with other investors, syndicators, operators, brokers, agents, etc. is when you are not looking to invest at that time nor is there a particular deal for someone to present to you.
Real Estate is largely about timing and relationships. You have to be able to act when the time is right, and have the relationships to be around the opportunities. Furthermore it has to be the right fit. When I speak with potential investors, there is always an emphasis on investing when it’s the right time, and the right fit.
By taking the time to get educated on various opportunities, getting comfortable with different ways to invest, you can prepare yourself to strike when the time is right. Many investment opportunities disappear quickly because educated investors like what they see and pull the trigger quick. This doesn’t mean that you cannot compete or that there isn’t room for you in the space. Real Estate is not a 0 sum game and more times than not a rising tide lifts all boats.
One of the ways I do this with new potential investors is spend time getting to know one another when we have no current projects to offer. This provides a slow paced no pressure window to go over in detail a sample closed past investment, where we can cover: deal structure, team, market, how value is created, business plans, financials, underwriting, and risk mitigation, among many other important parts of the investment. By going through this exercise with someone when there is no current opportunity and they are not ready to invest anyhow, they can become more comfortable and familiar with the type of deal, and further their own research on similar assets. This way, once a new project becomes available that I can show to the investor, they are much more educated and prepared, and more times than not just need to take a look at the specs and are ready to go.
In summary there is plenty of opportunity if you take the time to forge relationships, get educated, prepare your capital, and be ready to pull the trigger-IF and only if you feel it’s the right time and the right fit.
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