Real Estate Investment: Knowledge Sharing

As discussed before, information gathering, processing and analyzing is the investing foundation. Knowing as much as possible about land use changes, zoning, transportation and such will put the investor in a position of making an informed decision. Becoming an expert in the area you’ve chosen will allow you to take advantage, quickly, of all new opportunities, whereas others less prepared will be slow to pull the trigger.

Use of the property may be the most important determinant of value. Understanding zoning and studying the area of concern can reveal possibilities no one considered before. But you must know how to interpret all the information. It’s a boring task but if you take the time to read ALL the information you might find surprises that can lead to creative use.

You might be in a city where there are lots of old homes that are in disrepair on the periphery of a vibrant downtown area that’s projected to continue growing. There might be a growing demand for condominiums. The zoning might allow for these older homes to be used as condos. If an investor can buy the older homes before others realize the potential, it could turn out to be a good investment.

However, the zoning might not be clear, so a special stipulation would need to be written in the contract that if after research it turns out the fine print was interpreted wrongly, the deal is off. The point, though, is to get involved with city planning, learn the zoning ordinances, meet the players, know who is coming in and going out, be involved – get the zoning maps, find out the web addresses, if they have a website, stay informed.

In order to do this effectively you’ll need a system. Just about any information system is good if you use it. Keep up with all the important information and organize it so that it’s easily retrieved. There are plenty of software programs now that make it easy to manage information – I won’t recommend any one specifically, although lately I’ve been looking at AskSam.com. It seems like a good way to organize all the bits and pieces of information collected during the information gathering process. If you aren’t computer literate, become so, or rely on someone who is. The more organized and professional your approach the better the results – scattered notes written on cocktail napkins is not what I’d recommend.

It takes time and effort to become proficient at gathering, processing and analyzing information but those that do it well are ahead of the game.

What information management will do is improve your vision. To be able to look at information like zoning and transportation and land use changes, then look at a map, allows you to envision what could be. Studying all the information creates Aha! moments when all the information gels into a vision of an investment that is creative and profitable. I found it helpful to buy a huge wall map and create a “war room” environment where I can visualize the area of concentration with color codes and such. But the Aha! only comes after the structure has been built and the learning process has been established.

Take the time to set up the system that works for you, then diligently USE it. It will create efficiency and it will make you an expert, and it will put you in a position to recognize an opportunity that others can’t see.

I used to think wealthy investors had a special knack, some sort of magical gift, for finding the right properties at the right time, until I got to know successful investors. What they all had in common was discipline, organization and persistence. One in particular is a man I’ve known for years, and I’m always impressed with how methodical he is, how he pays attention to details and how he never takes short cuts – he is comprehensive and exacting, so that when he makes a decision he has looked at all the angles, has given thoughtful consideration, and has crunched all the numbers in his ever-present calculator. And he has taught me.

One of the great things about BiggerPockets and the internet in general, and also personal connections offline, is that information is now prevalent and is transformed into something greater – knowledge sharing – I’ll close with this:

Sharing knowledge is not about giving people something, or getting something from them. That is only valid for information sharing. Sharing knowledge occurs when people are genuinely interested in helping one another develop new capacities for action; it is about creating learning processes. Peter M. Senge MIT-based author, researcher & educator