{"id":100099,"date":"2019-10-06T11:00:02","date_gmt":"2019-10-06T17:00:02","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=100099"},"modified":"2021-03-16T13:57:29","modified_gmt":"2021-03-16T19:57:29","slug":"investing-wrong-real-estate-market","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/investing-wrong-real-estate-market","title":{"rendered":"How to Know If You’re Investing in the Wrong Real Estate Market"},"content":{"rendered":"

How do you know if you\u2019re investing in the wrong market?\u00a0<\/span><\/p>\n

I\u2019m probably going to sound like a broken record here, but it is very, very important that you build trust and relationships with the key people who are going to be involved in your real estate ventures. For example, you need to have a good real estate agent, property management company, accountant, and possibly attorney. You need to have contractors, a rehab crew, a title company, advisors, and mentors. You need to be part of a real estate club, and you need to be part of an online community. <\/span><\/p>\n

Don\u2019t forget your network equals your net worth.\u00a0<\/span><\/p>\n

Success won’t happen overnight. It is going to take five, 10, or 15 years to build a lasting portfolio that will be able to offer you financial freedom<\/a>. You also want to work with people who understand what delayed gratification is and what planting a seed now and reaping the harvest later is.<\/span><\/p>\n

So, how do you know if you\u2019re investing in the wrong market? My experience has led me to believe that I should forget about all the online stats and demographics. As I mentioned to you, the team is by far the most important thing. So, let\u2019s just hypothetically say that you have found the right team in a particular market that you have researched. <\/span><\/p>\n

Then, you need to get down to the fundamentals. That means cash is king and cash flow is queen, and you can forget about appreciation because that is a crystal ball analysis. We do not know what tomorrow brings, so you cannot include any appreciation estimates into your calculations.<\/span><\/p>\n

Related:<\/strong> Here\u2019s Why the Market is Exactly Where It Should Be<\/a><\/em><\/p>\n

You may think what I\u2019m going to share with you won’t work in your market. Look, I understand because I attend a lot of conferences nationwide, and a lot of these institutional companies and buyers are talking about a lack of inventory in markets that have seen big appreciation. I get it. <\/span><\/p>\n

Well, then don\u2019t invest in that market. It\u2019s as simple as that. Invest in a market where the numbers make sense and just focus on the cash flow. That is my belief, take it or leave it, but I do not believe in appreciation. I do not believe in speculation. I believe in the core fundamentals of a deal as it lies today.<\/span><\/p>\n