50 Years Investing in Real Estate

[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?

[Joe Villeneuve]

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