50 Years Investing in Real Estate

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50 Years Investing in Real Estate

Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

50 Years Investing in Real Estate

50 years investing in real estate, real estate notes, real estate syndications and REITs. Here’s some things I wish I knew when I started!

1. Over the long run, the quality of your property and the growth of the location matters far more than whether you paid a 10% discount, paid market price, or paid 10% over market.

2. Time corrects a lot of mistakes. Rents rise faster than expenses, cash flow increases, property rises in value.

3. To reap the benefits of #2 above, the investor needs ”staying power”, the ability to hold on to a property thru a down economic cycle and thru negative cash flow. This means having capital in reserve, or at least access to capital.

4. It almost impossible to buy a property in a declining area cheap enough, unless it’s for a short term speculation, and even then your fighting the tide. An investment in the average home in Detroit in 1950 lost 97% of its value (in real dollars, i.e., adjusted for inflation) by 2012.

5. Holding vacant land 10 years and then selling it for double what you paid is NOT profitable. After paying property taxes you’ve made maybe 80%. Compounded, that’s 6.05% annually - with no liquidity, no income and high risk. For the same risk you can invest in a private mortgage loan at 12%, double the return.

And here are some beliefs I held that did turn out to be true

1. Successfully investing in real estate takes knowledge, experience and (access to) capital.

2. Knowledge consists of knowing real estate principals, real estate law, and real estate finance

3. Rarely are great deals “found”; they’re NEGOTIATED

4. Once you have a successful track record, you can LEVERAGE it by charging passive investors to invest with you.

5. Investing in real estate is a lot more fun and satisfying than investing in publicly traded securities, private equity, or crypto currencies.

What do you think?

Private Mortgage Financing Partners, LLC
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
1mo

What do I think?  I think you just verified why I always enjoy reading your comments.

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  • Jared Smith
    Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes
    1mo

    @Don Konipol to your point about great deals being negotiated, I also find it true that they are created by having a stake in the market first; then opportunities are created through the relationships built through that ownership. This could be a neighbor selling, a new tenant moving out of a home where the owner doesn't want to "be a landlord" any longer, or maybe your tenants love the property so much that they want to purchase at a premium that you couldn't have realized otherwise. 

    Most would call this "luck"; I call it creating your own destiny!

    1Reply
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      1mo
      Quote from @Jared Smith:

      @Don Konipol to your point about great deals being negotiated, I also find it true that they are created by having a stake in the market first; then opportunities are created through the relationships built through that ownership. This could be a neighbor selling, a new tenant moving out of a home where the owner doesn't want to "be a landlord" any longer, or maybe your tenants love the property so much that they want to purchase at a premium that you couldn't have realized otherwise. 

      Most would call this "luck"; I call it creating your own destiny!

      great point.   I think some people consider it momentum.  

      Speaking of which, there seems to be a lot of effort spent by people creating a "false narrative" or trying to create "the appearance" of momentum.     In the real estate field we have gurus whose investing careers led to bankruptcy selling "mentoring" for $50,000 a shot; experts in property financing with 3 weeks in the business and 0 loans funded; wanna be investors posting on BP that anyone who pays for college courses in real estate or finance is stupid because you can get all that information on Youtube; and my personal favorite layman with no education in law providing legal advice. 

      Real estate remains a GREAT field to build wealth, have a successful and fulfilling career, and/or create a business that can include your kids, if they have an interest.  But probably a lot of people who COULD have been success got scared away because they spent $40k to join a "tribe" of wholesalers or flippers, and found out quickly "it doesn't work".  
      Private Mortgage Financing Partners, LLC
      WebsiteView Page
      0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    1mo

    What do I think?  I think you just verified why I always enjoy reading your comments.

    2Reply
  • Ryan SpathBusiness Member
    Real Estate Agent · Boise, ID · Member since 2017 · 565 posts · 377 votes
    1mo
    Quote from @Don Konipol:

    50 Years Investing in Real Estate

    50 years investing in real estate, real estate notes, real estate syndications and REITs. Here’s some things I wish I knew when I started!

    1. Over the long run, the quality of your property and the growth of the location matters far more than whether you paid a 10% discount, paid market price, or paid 10% over market.

    2. Time corrects a lot of mistakes. Rents rise faster than expenses, cash flow increases, property rises in value.

    3. To reap the benefits of #2 above, the investor needs ”staying power”, the ability to hold on to a property thru a down economic cycle and thru negative cash flow. This means having capital in reserve, or at least access to capital.

    4. It almost impossible to buy a property in a declining area cheap enough, unless it’s for a short term speculation, and even then your fighting the tide. An investment in the average home in Detroit in 1950 lost 97% of its value (in real dollars, i.e., adjusted for inflation) by 2012.

    5. Holding vacant land 10 years and then selling it for double what you paid is NOT profitable. After paying property taxes you’ve made maybe 80%. Compounded, that’s 6.05% annually - with no liquidity, no income and high risk. For the same risk you can invest in a private mortgage loan at 12%, double the return.

    And here are some beliefs I held that did turn out to be true

    1. Successfully investing in real estate takes knowledge, experience and (access to) capital.

    2. Knowledge consists of knowing real estate principals, real estate law, and real estate finance

    3. Rarely are great deals “found”; they’re NEGOTIATED

    4. Once you have a successful track record, you can LEVERAGE it by charging passive investors to invest with you.

    5. Investing in real estate is a lot more fun and satisfying than investing in publicly traded securities, private equity, or crypto currencies.

    What do you think?


     Great post! I enjoy reading posts from veteran investors! #1. Totally agree in my journey so far. I am a bit over a decade in but this is starting to show its face. #2, well said most of my properties made $100-200 a month when we first bought them, fast forward a decade and those original properties are now doing much better! Best part, the fixed rate debt has decreased and the rate stayed the same! #3 I found this out last year for sure, we purchased a few older properties and multiple properties needed capex in the same time frame couple this with a planned renovation, this is a cash intensive business and it takes cash to keep the properties well kept, desirable and values up.

    [email protected]208-600-2814
    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1mo
    Quote from @Don Konipol:

    50 Years Investing in Real Estate

    50 years investing in real estate, real estate notes, real estate syndications and REITs. Here’s some things I wish I knew when I started!

    1. Over the long run, the quality of your property and the growth of the location matters far more than whether you paid a 10% discount, paid market price, or paid 10% over market.

    2. Time corrects a lot of mistakes. Rents rise faster than expenses, cash flow increases, property rises in value.

    3. To reap the benefits of #2 above, the investor needs ”staying power”, the ability to hold on to a property thru a down economic cycle and thru negative cash flow. This means having capital in reserve, or at least access to capital.

    4. It almost impossible to buy a property in a declining area cheap enough, unless it’s for a short term speculation, and even then your fighting the tide. An investment in the average home in Detroit in 1950 lost 97% of its value (in real dollars, i.e., adjusted for inflation) by 2012.

    5. Holding vacant land 10 years and then selling it for double what you paid is NOT profitable. After paying property taxes you’ve made maybe 80%. Compounded, that’s 6.05% annually - with no liquidity, no income and high risk. For the same risk you can invest in a private mortgage loan at 12%, double the return.

    And here are some beliefs I held that did turn out to be true

    1. Successfully investing in real estate takes knowledge, experience and (access to) capital.

    2. Knowledge consists of knowing real estate principals, real estate law, and real estate finance

    3. Rarely are great deals “found”; they’re NEGOTIATED

    4. Once you have a successful track record, you can LEVERAGE it by charging passive investors to invest with you.

    5. Investing in real estate is a lot more fun and satisfying than investing in publicly traded securities, private equity, or crypto currencies.

    What do you think?

    It is fun - if you have the bug! I used to work with investors (when I was a green agent - sorry guys luxury pays better) and the pattern I saw was that stock or crypto investors who just came just for the ROI never made it. You need to have a passion for brick and dirt. If you have that passion, you'll see a challenge and opportunity in every issue you are working on. If you don't, you'll be incredibly frustrated and annoyed.

    I don't think the message about time, appreciation and quality lands with new investors. They measure their success today. Buying quality and then letting time do the work is a confidence that needs to be earned and experienced - simply telling someone does not do that. Maybe 10 years later they start to understand what you meant ;-)

    1Reply
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