What's the difference between an OK investor and a savvy one?

I often hear people say "I wish I could move to Hawaii (or follow my passion or change careers) and do whatever I want whenever I want" or something similar. It always involves doing something different than what they're currently doing while enjoying a level of freedom they've never had. Well, I can tell you from personal experience that real estate investing can get you the level of freedom you're looking for but most people will never attempt to do it. "You need money to make money" is a common complaint.

But let's say for the sake of argument that someone does seriously want to get into real estate investing. They will learn as much as they can from books, the internet, even mentors in the industry. They will run the calculations they were told how to run and they will attempt to buy their first property. Maybe it's a success, maybe it's not. An OK investor will take the risk and hope for the best. Their eye will be on the market and their pocketbook.

I don't know about you but that sounds rather stressful! I'm glad there's another approach: one that allows for wealth accumulation and a more passive involvement. Let me explain:

Here are the TOP 3 things savvy investors know:

1. No matter what the market does, you're in good shape

2. Short-term planning will get you nowhere fast

3. Diversification leads to a lack of expertise

So now you know what makes a savvy investor, you're ready to go out and make your dreams come true, right? I get it - you need a bit more info and you're not quite sold. As an entrepreneur, your #1 goal is to close the deal (e.g. make things happen and influence people) so here you go:

No matter what the market does, you're in good shape

With our next President taking office, there's been quite a bit of speculation on what the markets will do. Will they go up, flatten out, or plunge into a dismal firey display of doom and gloom? The savvy investor frankly doesn't care. They know that with every downturn, there's an upturn. What goes down must come up. From personal experience, I bought my first place at the height of the market in 2007. 9 out of 10 people a) said I couldn't do it b) thought I was crazy for taking "such a big risk". Well, since my purchase, my property has increased 2X and I've been able to rent it out for profit. Having the foresight to know that I would eventually make a good return didn't deter me from taking the "risk" because I didn't see it as risk. That brings me to my next point:

Short-term planning will get you nowhere fast

You've probably seen shows on HGTV where the hosts flip houses for a living. Now I'm not against flipping and I happen to like these types of shows. But have you ever wondered why even though they're making upwards of $100K on a flip they keep flipping house after house? Is it for network ratings or do they have a long-term plan they aren't letting us in on? I'll let you in on a secret: flipping isn't sustainable without a long-term plan. I'll go so far as saying any real estate investing isn't sustainable without a long-term plan. Remember what we learned in my first point? The market fluctuates so you have to be ready for it. If you lose money on one deal, the next deal could make you a profit. Learn from your mistakes through careful attention to detail. Finally,

Diversification leads to a lack of expertise

By now you can see that real estate is not only a numbers game but a timing game. Knowing how to put together a deal is just as important as knowing when to hold and when to fold. I'd also like to propose that real estate deserves attention to detail and diversification of investment leads to lack of expertise. What if you had done all your homework on a multi-family property and an investor came along who had "an amazing opportunity to invest in an early stage startup". What would you do? Would you trust this investor? Do they have a track record of success? Do you know enough about this startup or the industry to feel confident in your decision? Zoning in on and mastering an investment strategy (with the proper tax strategist, accountant, lawyer, supporting staff) will allow you to become the expert at it. Most importantly, having the data to back up what is working well for you and what isn't makes all the difference. Advances in technology and data tracking seek to empower you and offer a competitive advantage over the compeittion.

So there you go. Have I sold you on the idea of becoming a savvy investor? If you've never invested in real estate before and would like to actually get in the game instead of waiting on the sidelines for a deal to come along, let's make it happen. I'm in it for the long-term and have the experience to guide you through the often daunting process of real estate investment.

#investor #realestate #bayarea #market