I was laughing this past week at some of the responses I received when I wrote a slightly different blog article for my website. I wrote a “Best of the Best” list of my favorite restaurants for real estate investors to visit in Memphis when they are in town viewing the city. I have been taking an expanded approach to writing articles and have started really having a lot of fun with certain topics and hoping to really expand my readers view of the city. What I did not expect, and what made me laugh were the responses, some posted right on the site, from investors who wanted to ‘remind” me of their favorite restaurants as well. I laughed because they were great responses and reminded me that my tastes and favorites are not going to be a perfect match for everyone.
The more I read those responses, it seemed like a perfect segue into a question that has been bothering me for a while now. Where can investors go to get the advice that they really need…the kind of advice that they can trust? I know restaurant advice and real estate advice has very little in common. However, for someone who has been in this business now for a number of years, I have seen plenty of “sources” of information that are tainted and skewed away from what is best for investors and that really bothers me. So as I read the responses from my recommendations for great restaurants, it got me thinking about the question all over again.
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First Hand Real Estate Experience
I think one of the best places for investors to get solid and usually unfiltered information on a good investment opportunity, company or even professional is from investors who have experience. That seems so simple doesn’t it. But believe me, sometimes it is hard to find investors who will give you the kind of advice that you really need. Too often an investor will have been investing for a short period of time or have been investing practically blind by not really paying attention to a passive investment and their advice may be no better than wildly picking an investment property out of the paper ads. So how do you know if you are getting good advice when you ask another investor their opinion of investment opportunities for you?
Ask Before Answering
Fo me, one of the first signs that gives me a feeling of comfort is an investor who asks more questions of me before answering. I love it when I ask for advice and the answer is a question. That means the person is inquisitive and looking for what fits my needs before they answer. If only everyone used that concept before giving advice! So that always makes me feel comfortable with the person I am talking with.
The Law of Averages
Then I look for how others answer the question. I figure I can always throw out the best and the worst comment. There is always a story behind a bad comment and usually an equally good story behind the best comment as well. I prefer instead to pay attention to the aggregate of comments. What do MOST people say about the investment strategy or investment company or even the investment professional. And not just their clients, but what does the investment community think of them. I will get more to that in a minute as to where you go to find out, but I just wanted to point out that I want to get a feel from a bigger group of opinions.
Lastly, I want to test the honesty of whomever is giving me advice or a recommendation. For me, I think the easiest way to know if someone is being honest is to ask them to share with you the reasons NOT to do an investment. There will not always be an easy answer, but there are almost always risks associated with anything and if someone is willing to share those risks and make sure you understand the concerns, that makes me feel much more comfortable. If they cannot give me any negatives, then I look for if they struggle with the answer? Do they have empathy for my question and want to be truthful but cannot come up with a good, logical reason for me not to follow through with an investment.
These things are very important to me when I ask for a recommendation in anything. A real estate investment or real estate company, a good investment outside of real estate, a good school or program for my children and even a recommendation for a restaurant. I want to know that whomever I am talking to wants to keep my best interest and needs in mind and then wants to give me a fair and honest assessment.
Beware of the “Experts” and Their “Lists”
So now I have shared one way that I think is great for investors to get good information on investments and investment opportunities, companies and professionals. Let me share with you a way not to get good information. Beware of anyone who tells you who “The Best” companies are to do business with. Why? Because every “best list” I have ever seen has the flavor of the writer in it and if you don’t know the ingredients that went into list, you can’t trust the final product. Put simpler…if you are allergic to b.s. and don’t know how the list was compiled, you could end up with a nasty rash!
It seems there are some out there who want credibility so badly that they are willing to tear others down to get it. That is usually a first sign that you need to take whatever you hear and allow it to filter in and right back out. If the best someone can say about one investment or company is something bad about another, their opinion is probably not worth listening to. Another major warning sign is the need to tell you how much they know and why you should listen to them. It is funny, but humility, which is a major factor in getting someone to like and trust you, seems to be missing from a lot of so-called experts in the real estate world. They are quick to tell you who to do business with and even quicker to tell you who to avoid and they often tell stories that seem so far-fetched from what others say and even from reality itself, that it is easy to dismiss them right off hand. But what if they are very convincing?
In cases where I find someone trying to tell me how important they are or how their mission is so valuable to me as a real estate investor, I almost always know there is a hidden agenda. The pitch is always very good. You can tell it has been rehearsed and prepared. They want you to believe they know what they are talking about…that they are an expert. They are either being paid to speak well of whomever they are speaking about or were not paid at all by who they are talking bad about. You see it quite often in this space and sometimes it is blatant. It is easy for experienced business men and women to laugh at the spectacle caused by these kind of jokers. They are the easy ones to walk away from, but new investors still have to learn. Just because someone begging for credibility wants to tell you they have all the answers you want, does not always mean they have the answers you need. “The Best” list is usually best left in the trash can.
Turning To Real Estate Communities
Real estate communities, especially super-active, online communities are great source of real estate advice. You just have to exercise a few muscles along the way to getting advice at these communities and you can get a clear picture of just about any opportunity or company. This is not a pitch for BiggerPockets, but I have never been shy about the fact that I think this is THE most important real estate website online today. I even had the owner of another company tell me as much last week and he had dozens of questions for me about the site. He knew I was an advocate of the connections you can make on the site and how important it can be in your development as an investor, an investment company and as a real estate professional. So, I will tell you what I told him.
Get online and get plugged in today. Take advantage of asking questions, answering questions and by all means, tell someone when you respect their answer or their opinion. You will get from a site like BiggerPockets exactly equal to what you put in. If you put the time in the give back, then that site will give back plenty to you as a real estate professional. And that is what this article is all about right…how do I know when I am getting good advice? The great thing about the site is that there is one huge filter on it. It is called space. Not like the outer-kind of space, but the distance between people. It allows people to be able to interact in an honest way that sometimes is not possible when face to face. It lets people explore and think about questions that others are asking and then give thoughtful and honest answers. The advice on a site like this comes from so many different directions and it is unfiltered. That allows us as investors to use the most important muscle we have when it comes to real estate advice. Our brains!
Communities like BiggerPockets give us the opportunity to filter the information we get, compare it to similar questions and answers and then dig in on a personal level with others that really impress us with their answers and contributions. Our brains then tell us which direction to go and which advice was worth listening to as we move forward.
I prefer to use all three methods to make my investment decisions. I love hearing from other investors face to face and get their opinions. I also really like hearing all the noise created by so-called experts who like to create lists. When they give advice I usually go in the opposite direction. And, again, I think BiggerPockets has evolved into such an important real estate site. The power of that site is not the technology or the platform or the layout. The power of that site is the people and that advice from an anonymous investor who I only know from an avatar and brief clip of their story, is usually some of the trusted and most straight-forward advice I can get. Being aware of all three has made me a much better investor. How about you? What has been your experience when it comes to getting advice?