If you could go back in time..
New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes
If you could go back in time..
Most Popular Reply
Contrarian Investor · Greensboro, NC · Member since 2016 · 219 posts · 174 votes
5yEugene,
I think your question has a deeper meaning than you even realize right now. As you progress in your investments, you’ll find that time is much more valuable than money and your question is focused on compressing time.
I began real estate investing in 2005, which was the perfect time not to begin real estate investing. The atmosphere was very similar to today; risk on approach, frothy real estate market everywhere, lots of money chasing few deals in real estate, low number of days on market, record prices, etc. At that time I was focused on flipping single family homes in Winston Salem in order to build up cash to invest in cash flow properties to exit the rat race. At that time I knew nothing about macro economics, the FED balance sheet, the DOW to gold ratio, NHI, Mueller's market cycle, etc. I was strictly focused on Winston Salem real estate and not one moment of any of my weeks did I spend any time considering macro economic forces. When the financial crisis hit, it was a surprise to me. I watched about thirty to forty thousand dollars of paper equity erode in a few months. I had a few houses I didn’t want, but I couldn’t sell them at break even and I didn’t have the liquidity to cover the losses selling them. So I rented them out to keep my head above water. I remember about 2008 watching an interview with J Kyle Bass and him explaining how he saw the crash coming, tried to warn people and at that time his investors were up 1,800% while I was barely keeping my head above water. In that moment I knew I was on the wrong side of that trade and I didn’t want to repeat that mistake. Since then I’ve learned about market cycles and the importance of being early. I recommend two books; 1) Mastering the Market Cycle by Howard Marks and 2) Economics in one lesson by Henry Hazlitt.
In 2018 I sold the real estate I had left feeling like we were very near the top. Clearly today we can all agree I was early, I’m confident I’m not wrong, just early. My liquidity in 2018 went into the precious metals market. It’s very much a contrarian investment to US equities and real estate.
So in summary, if I could go back to the start of my investment journey, I would take two steps back and learn macro economics and market cycles. I would also find a mentor who was where I wanted to be in thirty years and find a way to add value to their life in exchange for them helping compress time. I hope that helps.
I think your question is very relevant and I think it should get more attention than my one little reply. I’m going to tag a few people here in hopes to create better dialogue. Hope you have a great week ahead and best of luck in your investing endeavors Eugene! God Bless!
@Paul Moore @Robert Ellis @Kevin Stringari @Dan Handford @Ellie Perlman @Vinney Chopra @Vinay Kolluru @Curtis Waters @Ben Leybovich
23 Replies
- Contrarian Investor · Greensboro, NC · Member since 2016 · 219 posts · 174 votes5y
Eugene,
I think your question has a deeper meaning than you even realize right now. As you progress in your investments, you’ll find that time is much more valuable than money and your question is focused on compressing time.
I began real estate investing in 2005, which was the perfect time not to begin real estate investing. The atmosphere was very similar to today; risk on approach, frothy real estate market everywhere, lots of money chasing few deals in real estate, low number of days on market, record prices, etc. At that time I was focused on flipping single family homes in Winston Salem in order to build up cash to invest in cash flow properties to exit the rat race. At that time I knew nothing about macro economics, the FED balance sheet, the DOW to gold ratio, NHI, Mueller's market cycle, etc. I was strictly focused on Winston Salem real estate and not one moment of any of my weeks did I spend any time considering macro economic forces. When the financial crisis hit, it was a surprise to me. I watched about thirty to forty thousand dollars of paper equity erode in a few months. I had a few houses I didn’t want, but I couldn’t sell them at break even and I didn’t have the liquidity to cover the losses selling them. So I rented them out to keep my head above water. I remember about 2008 watching an interview with J Kyle Bass and him explaining how he saw the crash coming, tried to warn people and at that time his investors were up 1,800% while I was barely keeping my head above water. In that moment I knew I was on the wrong side of that trade and I didn’t want to repeat that mistake. Since then I’ve learned about market cycles and the importance of being early. I recommend two books; 1) Mastering the Market Cycle by Howard Marks and 2) Economics in one lesson by Henry Hazlitt.
In 2018 I sold the real estate I had left feeling like we were very near the top. Clearly today we can all agree I was early, I’m confident I’m not wrong, just early. My liquidity in 2018 went into the precious metals market. It’s very much a contrarian investment to US equities and real estate.
So in summary, if I could go back to the start of my investment journey, I would take two steps back and learn macro economics and market cycles. I would also find a mentor who was where I wanted to be in thirty years and find a way to add value to their life in exchange for them helping compress time. I hope that helps.
I think your question is very relevant and I think it should get more attention than my one little reply. I’m going to tag a few people here in hopes to create better dialogue. Hope you have a great week ahead and best of luck in your investing endeavors Eugene! God Bless!
@Paul Moore @Robert Ellis @Kevin Stringari @Dan Handford @Ellie Perlman @Vinney Chopra @Vinay Kolluru @Curtis Waters @Ben Leybovich
- 5yLee RipmaPro MemberRental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
Well I don't have something nearly as poetic as the excellent post by @Jason E. Smith
but a few thoughts:
Property location above all else
Cash flow is a hedge, equity is what I'm after
Equity is what allows you to build wealth and endlessly 1031 exchange
Understand how to get commercial loans and influence the appraisal process
I sometimes say that I would have bought more, but I am glad I took small steps so that could learn lessons and find my niche. Now I know my ideal property, when I see it, I jump on it.
Time is way more valuable than money
Don't be cheap about saving money, you'll waste a lot of time
Treat others well, all businesses are relationships businesses and people make or break, even in a digital age
....and lots of other things that are hard to really explain until you've been through them!
- 5yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Eugene Rabinovich, Start sooner - Buy more!
The 1031 Investor5137 Reviews - 5yJim KalishPro MemberReal Estate Investor · Matthews, NC · Member since 2017 · 219 posts · 173 votes
When I started in 2008 ( stop laughing) I simply jumped in with both feet. I had no idea what I was doing. I did absolutely no self education. so step 1 as the Jason said I would tell myself to learn as much as possible about what I was about to do.
After I got started and was looking for the next rental property I was overly cautious. But I based on gut feeling. I missed a lot of really good deals. I look at neighborhoods I passed on 10 years ago that turned out to be gold mines. And the signs were there. I just didn't do the research. So step 2 I would tell myself to actually analyze each opportunity and not go by but feeling. And there is no perfect deal.
Had I done these 2 things I have no doubt I would have significantly more equity and higher cash flow now.
Great question. I hope newer investors learn from all of this.
Good luck in your journey!
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
@Jason E. Smith wow. that was a great response, i appreciate it! Yes, i agree. Time is more valuable than money. Time is something that i value the most in almost all aspects of my life. Most of my time has been spent understanding how to analyze deals, my market and real estate as a whole. As i go through my journey, i will begin to understand economics (more than I did in college). I added the two books to my list and will read them as soon as i can!
thanks again for your response, i hope we can meet someday!
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
@Lee Ripma Thanks for your response! yes, i agree that equity is what will make us wealthy. In my early stages (which i am still in) cash flow is what i was focusing on when analyzing deals but i have realized that equity is what will allow me to get to the next level and buy more properties.
I have a question for you.. how do you gain equity in a market where homes are at an all time high? its hard to justify buying a property where you have to spend atleast $20k over asking price and then hoping that it'll appraise.
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
@Jim Kalish thanks for your reply! Charlotte seems to be a wild market. We have put in multiple offers at $15 - 20k over asking price which in hindsight, i am so happy that we didn't get the homes. it's so tough to justify buying a home thats worth $120k that is listed for $200k and selling for $220k+. I think once the foreclosure forbearance programs ends, there will be a lot more inventory to choose from especially ones where we can do a flip or a BRRR rather than buying something that is move in ready and marked up extremely high.
but yes, education and deal analyzing is something that we have been consistent with since we started last year.
i see you are in Mathews so if you ever want to meet up and chat let me know! - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes5y
@Eugene Rabinovich wish I had held 30 or so of the 500 I flipped in Cleveland ,
- 5yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes2 things: #1, start now. Find a way to do it because there is no better time. If you're waiting for the "perfect time" there will always be something that causes you to hold back. Do your homework of course, but get started. #2 Don't expect a home run every time. People get discouraged when their first, second, third deal only net a small return or if they end up leaving a little bit of cash in a BRRRR deal. But those base hits add up. I think most new investors are looking for that excellent return and can get discouraged if they don't get it. But is it really a bad thing if you only got 90% of your investment back out with your cash out refi? Look at it like a down payment and suddenly that 10% you thought you "lost" looks like a cheap down payment. It's all a matter of perspective.
- 5yJim KalishPro MemberReal Estate Investor · Matthews, NC · Member since 2017 · 219 posts · 173 votes
@Bonnie Low hit the nail on the head. Start now. Do your research. Analyze each deal. Make business decisions, not emotional ones. Take any personal bias out of it. Just because it's not the house or apartment you would live in, everyone deserves affordable, clean and well maintained housing. So look outside your comfort zone. Remember, building equity is long term. Check out this site: https://www.visualcapitalist.c... On average real estate has increased in value significantly over the last 20 years.
"At the turn of the century, the average U.S. home value was $126,000. Today, that figure is at a record high $259,000 – a 106% increase in just two decades."And while I'm on the subject, every property you buy should always be top notch. It might not be in the most prestigious neighborhood in your city but never say its good enough for this neighborhood. If a tenant is paying 400/month or 3,000/month they deserve the same respect and attention. Take care of your tenants and they will take care of your property. I don't mean to preach but we all hear about the landlord who let's their properties sink into disrepair because they put short term gains ahead of doing what's right. Be that landlord that get's Christmas cards from your tenants, not complaints to the housing board.
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
@Bonnie Low thanks you so much for your input! I agree 100%. My wife and I are READY to buy and get started. We know our first deal will not be our best and it will not make us wealthy but it will be a stepping stone. We are limited funds so its been tough in our market to even land a deal. we have put in multiple offers and have been going $15 - 20k over asking which we have lost. I dont mind losing a deal because we learn after every one and in hindsight i am happy that we lost some of the offers that we placed but we are not discouraged and we will continue to keep working towards our goals!
thanks again for your input. - New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
Originally posted by @Jim Kalish:
@Bonnie Low hit the nail on the head. Start now. Do your research. Analyze each deal. Make business decisions, not emotional ones. Take any personal bias out of it. Just because it's not the house or apartment you would live in, everyone deserves affordable, clean and well maintained housing. So look outside your comfort zone. Remember, building equity is long term. Check out this site: https://www.visualcapitalist.c... On average real estate has increased in value significantly over the last 20 years.
"At the turn of the century, the average U.S. home value was $126,000. Today, that figure is at a record high $259,000 – a 106% increase in just two decades."And while I'm on the subject, every property you buy should always be top notch. It might not be in the most prestigious neighborhood in your city but never say its good enough for this neighborhood. If a tenant is paying 400/month or 3,000/month they deserve the same respect and attention. Take care of your tenants and they will take care of your property. I don't mean to preach but we all hear about the landlord who let's their properties sink into disrepair because they put short term gains ahead of doing what's right. Be that landlord that get's Christmas cards from your tenants, not complaints to the housing board.
100% customer service in ANY industry is key. You can have the best product but if your customer service is poor then that can ruin your reputation. When we become landlords and property owners, we will have a strong focus on taking care of our tenants.
- 5yWill GastonPro MemberRental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
80% of what would have been most helpful is understanding what lenders require to loan money. Especially commercial underwriting.
Once I figured that out I was able to buy a whole lot more property.
Remember that unless you’re paying cash the lender is the real decision maker.
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
Originally posted by @Will Gaston:
80% of what would have been most helpful is understanding what lenders require to loan money. Especially commercial underwriting.
Once I figured that out I was able to buy a whole lot more property.
Remember that unless you’re paying cash the lender is the real decision maker.
yeah, i am definitely realizing that now. Unfortunately, most of my deals will probably be financed until i am able to pay cash and/or work with partners.
Thanks for the response. I am originally from Columbia, if you ever have time i'd love to meet up and chat! - 5yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
@Jim Kalish I couldn't agree more with your perspective on how you treat your properties and your tenants. We are seeing a groundswell of landlord criticisms especially right now in this pandemic era. So much of the public has no idea the challenges of being a landlord but many have been the recipients of careless or shoddy landlords in the past. That negativity rubs off on the rest of us. We are very proud of the quality work we do, the standards to which we maintain our homes, the way we treat our subs and partners and we are grateful that we have appreciative tenants. But none of that happens by accident.
- Investor · Palmdale · Member since 2016 · 112 posts · 80 votes5y
Trust your numbers and buy more!
- Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes5y
@Eugene Rabinovich Hmmm. I bought a lot, but I should have bought more. One way I might have done it wound to have listened to my mentor. We all second guessing ourselves and locations and prices, etc. an experienced mentor says do it and listen to me. And we don’t always listen. Find a good mentor and listen!
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes5y
I'd have focused more on networking and building the relationships which help us find funding, mentoring, deals, etc.
- 5yEnzo Di PalmaBusiness MemberRealtor · Miami Beach, FL · Member since 2019 · 32 posts · 9 votes
@Eugene Rabinovich
You've garnered a wealth of valuable feedback thus far. A question that merits the attention of all investors.
Personally, I wish I had invested into pre-construction and STR properties sooner. I've found these to be very profitable and advantageous in hedging risk.
- Investor · Cary, NC · Member since 2017 · 78 posts · 89 votes5y
@Jason E. Smith incredible answer!
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes5y
The biggest mistake I've seen folks make is trying to time the market. Understand the following:
When there are lots of easy deals, there's usually very little money. And when there's lots of money chasing deals, there are usually very few deals. This seems to always hold true, and as such, what conclusions can you make?
One - don't try to time the market.
Two - understand your role as a financial engineer. Your job is to understand the environment and to synergize all elements to make things work.
If you understand both of those and get good at both, you will be able to conduct business in all markets, negating the need to time markets. Good luck!
- 5yPaul MoorePro MemberCommercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
Thanks Jason! Hi @Eugene Rabinovich. Great question. On a practical level, I would have jumped into commercial real estate as soon as possible. The value proposition in all forms of commercial real estate is so powerful, and using safe leverage as a wealth building tool can be a game changer.
I would have jumped into commercial real estate as soon as possible. The value proposition in all forms of commercial real estate is so powerful, and using safe leverage as a wealth building tool can be a game-changer.
On a philosophical level… I would have focused on investing rather than speculating. Investing is when your principal is generally safe and you have a chance to make a return. Speculating is when your principal is not at all safe and you have a chance to make a return.
True investing is often boring. Paul Samuelson, the first American to win a Nobel peace prize in economics said: “investing should be like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
- New to Real Estate · Charlotte, NC · Member since 2020 · 55 posts · 30 votes5y
thank you everyone for your answers, this forum has truly been eye opening.
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