How to Become an Expert Investor by Copying Your Local Competition

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“To steal ideas from one person is plagiarism; to steal from many is research.” — Wilson Mizner

When new investors get started, the first thing they do is go online and start researching different tips and techniques used by other investors. Even seasoned investors do this. We want to know why others are successful so we can copy their techniques and eventually find a way to do it better.

While the internet is a great place to begin learning, your success will ultimately depend on your understanding of the local market. It doesn’t matter what works somewhere else. It only matters what works where you invest.

The most important thing you can do as an investor is study what works for successful investors in your area. Not guess, check and regret for 30 years. You take pieces of information from each investor and slowly build your own puzzle.

Related: How to (Legally) Copycat Your Way to Success in Real Estate

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Gathering Investment Data

The only way to find out what other investors in your area are doing is to gather data on their investments. You want to get every bit of information you can on their investments, break apart their strategy and figure out why they are successful. Only when you know what works should you start investing or tweaking ideas. Think about this for a minute. Where would you be right now if you copied Warren Buffett stock picks over the last 10-20 years?

If the investors you’re studying are experienced, chances are they’ve made a lot of mistakes — the same mistakes you’re likely to make starting out. If you can look into their past, see how they did it and avoid many of the rookie mistakes, you’ll get to your goals much more quickly. Too many investors would rather the pride of being able to say they did it all themselves than the success of copying someone else’s strategy. I get that. But what’s more important in the end?

“I believe in the discipline of mastering the best that other people have figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger (Warren Buffett’s right hand man)

You have to look at investing as a science experiment. Gather data from what works, create a hypothesis as to why it works and finally, test the hypothesis by investing. The greatest innovations in science and technology were created using the scientific method. 

Using the MLS

The only way to reliably gather information on other investors is to get it from the Multiple Listing Service. Keep in mind that you have to be a licensed Realtor and paying member of the local MLS to get access. If you don’t plan on getting a real estate license, you can always ask your real estate agent to get the data for you. 

Here are some important questions that can be answered by the MLS.

  • Where did the investor buy properties in the past and where are they buying now? Investors will change areas only if one area is more profitable than the other.
  • Where are they selling properties? This could be an indication that a particular area is going downhill. 
  • What was the difference in sales price vs. purchase price? Are they able to get the price down, and if so how might they have done it?
  • Most MLS’s keep photos of properties every time they were listed for sale. What was the condition of the property before the flip, after the flip and how much did they make based on those repairs?
  • What type of financing did they use to purchase the property (cash, conventional, FHA, other) and how much was their down payment? Cash almost always wins so looking at how they paid will give you insight into your competition when making offers.
  • What types of properties are they buying? I.e. 4 bedroom properties, 3 bedrooms properties, properties with convertible basements, in good school districts or areas of high appreciation.
  • Are many of the top investors using the same real estate agent?

Related: Newbies: These 3 Simple Steps Will Prepare You For Your First Deal

“We have always been shameless about stealing great ideas.” — Steve Jobs

It’s too easy to gather information on your competition and their strategies. If you want to be a good investor and make fewer mistakes, study what the best investors are doing and why. If you find a strategy that works really well, steal it.  Steal everything you can and start pulling data on the next investor. If you did this for a month or even a year, you would have hundreds of years of local experience under your belt and know how to beat your competition. This is the best way to succeed. 

Have you researched investors in your area? What are the best tricks & tips you’ve gathered?

Let us know with a comment!

About Author

Brett Lee

Brett Lee is a licensed Real Estate Broker in Portland Oregon where he helps people achieve a better future so they can do the things that truly make them happy. Brett is also a buy-and-hold investor, property manager and investment advisor.

2 Comments

  1. Patrick Desjardins

    This is a double edged sword as we know the 80/20 principle is at play and few investors are really “killing it”. In my market I see investors buying properties that have negative cash flow all the time. They might make money long term through appreciation / pay down, but most often they end up wanting to get rid of it after they get bad tenants.

    My point is simply this: do model after other people, but make sure you copy the elite few, not the average.

  2. Troy w.

    In the DMV market ( DC, MD, and VA) there are a lot of wholesalers/investors but not a lot of competition. Yes you read it right. Alot of folks just don’t know how to follow a blueprint, yet wonder why they are failing. It’s like if you are asked ” who is your favorite person you admire or that taught you something”. What they taught you is for life!

    And when you form your answer you know why this person has touched you. It’s the same with real estate. Know what teachings to accept, and know which to steer clear of. There is a lot of BS that is out there that may have worked in 2012 but in 2015 going into 2016… that same stuff is child’s play!

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