The other day, I was preparing to check my email when a headline on Yahoo!’s homepage caught my eye: Tough Times for Blockbuster. As a fan of Blockbuster’s, I felt compelled to learn why so many of its beloved stores (between 810 and 960!) were closing. As it turns out, several of its stores were becoming unprofitable money pits, no doubt due partly to the success of online rental goliath Netflix and newcomer Red Box—the rental box company taking the nation by storm.
Needless to say, Blockbuster has had to implement several changes necessary to stay competitive in this ever-changing market. Like Netflix, Blockbuster has launched an online, mail-service component. Blockbuster has even started distributing rental box dispensers much like Red Box. The question remains: is this too little too late for the former movie rental giant?
What does this have to do with real estate?
The Blockbuster Saga illustrates how important it is for real estate professionals and investors alike to stay on top of current trends and innovations in the real estate realm. Real estate professionals run a business, and they must treat it as such or risk getting left behind in the dust. The internet and social media marketing provide access to an almost unlimited number of potential clients and investors—but everybody and his mom knows that. The trick is to find out who your target demographic is… and target your marketing efforts there. Of course, that is easier said than done. There certainly is a trial and error aspect to this process. That is why it is imperative that you document where and how you’re getting your leads. How else will you know where to utilize your time, money, and energy to most effectively target your clients? Too often, real estate professionals rely on gut feel rather than statistical evidence—don’t make the same mistake.
Investors, like real estate professionals, have a wide variety of tools at their disposal to make informed decisions. They can check out a real estate company’s track record at the Better Business Bureaus’ website, or right here at BiggerPockets.com. They may look up a wide variety of statistical evidence at Reis.com, or scour investment properties on LoopNet. Keep in mind, however, that everyone else has access to the same resources, so be diligent!
Don’t rely exclusively on the internet
Checking out a property, or its neighborhood, online, is no substitute for physically checking out a property. A ten-minute drive through a property’s neighborhood will tell you more than several hours worth of research on the internet. Investing in a property without truly understanding its market—neighborhood, trends, economic situation, future developments—is like investing in a stock when all you know is its 5-year high/low prices and its most recent closing price. You might be making a good investment, but you don’t really have any substantial evidence to back it up. Without knowing the company’s business plan, looking at its financial statements, or understanding its recent acquisitions, how can you truly be confident in the stock you’re purchasing? The same principles apply to real estate investing. A properties operating numbers only tell a part of the story. You must dig deeper to truly understand what you’re getting yourself into.