This expression is common among most sincere folks contemplating starting their own real estate investing business. In this article, I want to discuss this mindset and analyze the pros and cons therein.
As with any new venture, it is always wise to first weigh the costs involved. Furthermore, without a plan our vision of financial freedom through real estate investment could be doomed from the start. For that reason we want to listen intently to what any real estate investment expert might advise. Consider:
If we apply the “buy low, sell high” principle we must buy in a market climate when the majority don’t see the need to buy. The truth is that your decision to buy would have to be the unpopular decision at the time. This is just as true when a real estate investing expert chooses to sell. They may feel that it is time to sell (high) while the masses are still in buying mode.
Whether you buy foreclosures, short sales, or any other type of investment properties, these will likely be distressed in one form or another. Otherwise, your competition will be intense. In my real estate investment mentoring program, I teach that the better a house “shows,” the quicker and higher it will sell. My students know how I feel about properties that look and smell poorly. They will tell you that it is the ‘look and smell of opportunity.’
Of course, it takes vision to identify opportunity amidst clutter and filth. However, learning this technique will make you a lot of money. In my business, we wholesale properties in their “as-is” condition to savvy cash buyers who have a trained eye like we are discussing. If a cash home buyer wishes to acquire any of our properties my students are taught to be coaches for those who have not yet learned to identify opportunities out of distressed real estate.
The “everybody’s doing it” idea is strong reason to do the opposite. When the U.S. economy took a “bearish” turn I remember Warren Buffet saying that it was ‘a good time to get some great deals.’ Rather than whine about falling values, the REI experts get more aggressive about acquisitions, knowing that the right time to sell at a profit will eventually come.
Now is a great time avail oneself of the many distressed situations out there to purchase and hold properties as rentals for at least 12 months to avoid short term capital gains. The market will eventually turn around but then the competition for properties will be fierce. Don’t wait. There’s no time like the present.