Do not ask about the market, ask what you want to achieve through real estate investment.
Do you want to …?
… make the quick deal, quick profit?
…build a long term portfolio?
…create long-term passive income?
Most people never stop to think. Saying real estate investment is good, right?
It is the same as saying mutual funds are good, right? Well no…some are and
Ask and force yourself for an answer.
What are you?
• A Shark?
• A Flipper?
• A Real Estate Investor?
The shark is a grave dancer. He benefits from the misery of others. The Shark will always be able to find customers whether it be good times or bad times. All the various categories for grave dancing apply. Illnesses, deaths, divorces, job transfers, business reversals, job losses, bankruptcies, people who got too greedy, too sleepy, or too stupid are all grist for Shark’s mill. Bad times simply make the soup a little thicker, but it is always there. Is that you? If you want to deal in foreclosures, auctions, tough deals…go learn something. Do not expect it to be easy. Sit in court, evaluate.
The Flipper has his advantage on the other side of the scale. For him the good times with a rising market and rapidly rising inflation give him the most opportunities. But even in a flat market with no inflation he can find deals, he just has to work a little harder and wait a little longer for them, but they’re there. What the Flipper has to watch out for is that ‘bigger fool theory’. .
There is a tendency in a rising, inflationary market to jump on the conveyor belt at any price because a bigger fool will come along and take you out at a profit. This is fine as long as you are not the last fool in line. Yes, you can be both a shark and a flipper. The common characteristics to have are the ability to recognize the signs, interpret them correctly, and then to act quickly and without hesitation. Those three characteristics are the toughest things to learn about this business.
However, the Shark and the Flipper don’t deal in averages – they deal in the exceptions!
It sounds brutal to say that the Shark is out there looking to do some grave dancing to prosper from someone else’s misery. It also sounds cruel to describe the Flipper as an opportunist who will take advantage of someone else’s ignorance to deprive them of potential profit. You have to ask yourself where you draw the line between morals and business. Everyone has to decide that for him or herself.
The investor is primarily concerned in finding low down payment, cash flowing
property using personal rules. (I.e., the 1% rule…The monthly payments of 1% of the purchase price will service a 100% financed property and cash flow.) He looks for safety and quality tenants to create a passive income stream for him sometime in the future, e.g., buy 5 condominiums anywhere in North America say at $80,000 each, with an $800 per month income. Buy them with nothing down, own them in 18 years and have an income of $4,000 forever ($4,000 will service a million dollars).
The shark and flipper buy anywhere…they are in and out of the deal within 3 – 6 months. The Investor MUST buy where the ratio of rental income is in line with the price you pay. Good working environment. Likely a suburb or a smaller town. The Real Estate Investor generally outperforms sharks and flippers over time.
Is it important to know if its a Good or Bear Market?
People always want to know whether it is a good market or a bad market.
Of thousands of questions I get every year…that is the most often asked.
For 35 years I have listened to ‘bubbles’, hot markets, seller’s markets, buyer’s markets…and you know what?
It did not matter. No matter what the market was, no matter whether there was Asian flu, Mexican crisis, bubbles or sharp increases…The average homeowner outperformed any other investment – BECAUSE OF LEVERAGE.
The best advice I received from my first branch manager in 1968: “For the individual, there is no such thing as a good market or a bad market…only whether or not he or she has a good or a bad deal.”
I have never heard one say: “Oh, I made a lousy deal…but I bought it in a good market! I mean…who cares?
Much more important is…who YOU are. Are you a flipper, a shark or an investor? The answer to that question determines your success.
The bad news? You have to do some work! No guru, no Realtor, no ‘market’ is going to find you that great deal…YOU must do it yourself.
The market is irrelevant. Your commitment to learning and growing is everything.
Ozzie helps members build an action plan toward real estate success with his Real Estate Action Group, arming investors with the best information and insights possible with his Jurock Real Estate Insider.
Find out more about Ozzie Jurock HERE