Real Return Real Estate

Most people invest in the area they live in. Others do extensive research and target areas they feel they can thrive. Many factors go into selecting where to invest. There are some important items to consider when choosing a market.

1. Comfort – most people invest where they live because they are comfortable in their own backyard. You are sometimes limited in the amount and size of deals. Many savvy investors have more of an entrepreneurial approach and are open to deals anywhere and look for only slam dunk deals. They build systems, teams and knowledge in other areas.
2. Availability of great deals – This comes down to supply vs demand. There are many factors that affect supply and demand in real estate such as interest rates, foreclosures, the local economy, job market, affordability, etc. You can find deals in any market, the numbers just have to make sense. Some markets have a lot of competition for very few good deals, other markets have an oversupply of opportunity and you can cherry pick only the best deals.
3. Home value stability – During the real estate boom, the writing was on the wall. Affordability became so low in some of the hottest markets that there was just no way home values could stay so high. Be conscious of the trends and direction of the market, there could be a tremendous impact on the success of your deal. Some areas dropped over 40% in value in the last couple years crippling many investors who did not exit.
4. Ability to successfully duplicate deals – When you find a market, type of deal, system and team that works, duplicate. It is called cookie cutter deals. Improve your team and system each time and do the same thing over and over. Savvy investors take an entrepreneurial role and delegate the daily processes and management to their team. Then they can concentrate on growing the business and high level decisions, while on vacation.

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Most investors go to networking events, real estate clubs and seminars. I’m sure you have stumbled across some very successful investors at these events. You may even be able to point out a handful of extremely successful ones. Just think about how hard and how long these investors have worked. Wouldn’t it be great to know what they know? What is it that makes these investors so successful?

There are two things most extremely successful investors have in common. They work no where near as hard as most investors and a fraction of the time. Why? Because these investors are running a business, not working in a business. They have delegated the daily processes, even delegated the management. They have completely separated themselves from the grind from daily processes and they can spend months at a time on extravagant international vacation while their business runs on its own. They are entrepreneurs.

Most people are technicians and handle all of the daily processes themselves. They are do-it-yourselfers and can’t fathom the idea of delegating tasks. There is only so much time and they can only do so many deals which constrains profits. Conversely, entrepreneurs unleash their team and focus on high level decisions, growing the business and ideas to improve the business. Meanwhile the managers run the business and the technicians handle the daily processes. Sure they may only make 80% of the profit as a do-it-yourselfer. But they can do 5 time, 10 times, even 20+ times more deals. They are not restricted, they delegate, build effective systems and teams. If you want to become extremely successful, become an entrepreneur. The most influential book I have read is EMyth Revisited by Michael Gerber. I strongly suggest you read this book, it may completely change your approach to your real estate business.

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