Looking for Diamonds
A real estate investor who specializes in fixing and flipping real estate is looking for a diamond in the rough, that is REAL diamond, not a fake. Robert Allen, the author of "Nothing Down", talks about how difficult it is to the untrained eye to find one diamond in a group of cubic zirconium. However, he can teach how to spot the diamond with one simple trick: Turn the stones upside down onto its face. Then the difference between the stones becomes obvious and the real diamond reveals itself.
In real estate there are a lot of properties that report themselves to be diamonds, but only you can make that determination. Does the property meet YOUR requirements to make a profit? You may need to go through dozens of offers before finding the diamond and deciding to execute the transaction.
Once you do purchase the property it typically takes 3-6 months to fix, resell, and get paid. How many people working for a paycheck a willing to wait 3 months to get paid?
The 30 Year Bamboo
Another way to invest is to buy and hold real estate. In that case, even more patience is needed. This is a lot like a species of bamboo that lives along the shore of the Bay of Bengal. It blossoms once every 30-35 years! Think about owning real estate by paying down a 30 year mortgage. You may have cash flow along the way, along with depreciation benefits to reduce your taxes. This is truly a get rich slowly scheme that requires time.
Why Proceed with Patience?
There are millions of people in the United States that are running away from investment real estate right now. They got involved at the top of the market and have lost a lot. Many were looking to get rich quick, did not examine the risks, look at downstream consequences, or did not educate themselves.
The most successful investors I work with have 1-3 transactions at a time and always finish what they start. There are a lot of details that need to be taken care of, a lot to learn, and a lot to do. The successful investors identify what they want and then patiently proceed to get it.
Once you know that you have found what you are looking for, you need to respond quickly. There are a lot of people looking for the diamonds. Are you ready to:
- Write offers the day a property goes on the market?
- Close quickly- 1-2 weeks, better yet in 1-2 days
- Have professional resources that can help you structure and fund a deal?
- Deal with the property AFTER you acquire it? Fix up, rent it, sell it, etc.?
Work with a Partner
One recommendation that I always have, especially to beginning real estate investors, is to try working with a professional real estate investor who has experience doing what you are trying to do. This lowers your risk tremendously and you can learn how to work on your own by participating and gaining experience over time.
Are you a patient person? Have you always been? Can you think of someone who has rushed into real estate and been burned?