Thursday, December 28, 2006

Investor or Idiot?

Real Estate Investors amaze me. First I suppose we need to define what an "investor" is. Most people consider themselves one if they plop down a few thousand and buy a home. Congratulations, you own a home therefore you are an investor. Please. You own money pit that will drain you dry.

At best you are just ignorant or you are an idiot. In the last year or so I have seen more people come up with the oddest strategy to determining if a property is a good value. They will do everything to make a home work, except doing the math. One buyer recently said, "This home is so pretty, everyone would want to live here so this has to be a good buy." She will probably be in the middle of a foreclosure in about 12 months.

An investor is one who has studied the market, the home to be purchased, understand what rate of return is and how to figure it. They are making, that's right, making their money work for them. This is not guess work, it is having an understanding of the environment around you. All aspects, from the job economy, industry statistics, the mechanics of the homes, and the true cash on cash value.

I have seen more people get into the real estate investing game in the last few years than ever before. I have also seen more people loose their shirt because of having insomnia and getting sucked into late night TV. There is nothing easy about real estate investing. The pros at it make it look easy. That's why they are pros. They understand how the market reacts, what the public wants, and they do their homework.

Real Estate can be the best investment one can make. It can also be the worst. I just met with a couple who lost, yes lost, over $50,000 when they had to sell a duplex. They didn't know what they were doing when they bought it, and it wiped them out. "Real Estate always goes up in value," they said. "That was an expensive lesson," I responded.

You can do this real estate investing venture. Just learn. Find someone who is not just a real estate agent, but one who knows investing. Most real estate agents are not investment strategist! I can help. If you decide that investing is for you, call me or email me and I can send you some names of people that can assist in your area.


Lorrie said...

I agree. However as a newbie, where do you turn to learn the RIGHT way to investing in your area for yourself as well as your clients. I think Tom Lundstedt had a great class on this, but my mind wants more. Ideas?

Mark said...

I love reading your blog. I've flipped a few properties and now have 5 rentals and I still consider myself a newbie. Do you know good Real Estate agents that you would recommend in CT?