I learned to invest (and how not to invest) at a relatively early age. These are some of the biggest lessons I’ve learned from real estate investing over the years, and that I believe everyone can benefit from learning sooner, by watching others, rather than by expensive personal trial and error.
The Back Story
Growing up I watch my father invest. He started off well. Made some good real estate-related investments, and loaned his capital to active real estate investors.
Unfortunately, he was burned pretty badly by some unscrupulous investors and bad actors. That was frustrating and painful to watch.
I could see the many benefits of investing in real estate property through various vehicles and strategies. I also believed that there ought to be better ways to do it. To avoid those risks, and invest with more certainty in the outcomes and for more predictable and reliable results.
So, I went to school. I got my degrees. I went to work for property developers. I wanted to learn everything I could to create better solutions for other people like my dad and their families.
With several successful funds, a great team, and many success stories for those who have invested with us, from CPAs to Goldman Sachs analysts to former house flippers, I believe we have come a long way towards those goals already.
3 Tips I’ve Learned In Investing
1. The Importance Of Asking The Right Questions
The majority of the time, investors get in trouble because they simply do not know what questions to ask before making an investment. That leads them to make terrible and highly risky bets, and end up not getting the results they hoped for.
Just learning a handful of the right questions to ask investment advisors, sponsors and others can make ALL the difference in how safe your money is, and the returns you’ll net.
If you ask these questions you’ll often be shocked at the answers, and how some seemingly extremely ‘successful’ people on Instagram or running seminars completely flub the answers.
You may have seen some of these scenarios play out in our YouTube videos.
That’s why I wrote the book and blueprint on Passive Income Real Estate Investing and How To Know Who To Invest With. And, yes, you can get a free copy on our website.
2. There Is No Substitute For Experience
IQ, passion, innovation, and good intentions are all great. Yet, there is NO substitute for experience.
There just isn’t.
Cycle after cycle, we see the same mold of excited, exuberant, and optimistic investors. They swear they can’t lose. They go all out. For 15 minutes they look like they might have the ‘Midas touch’. Then, just as predictably it all collapses around them.
This happens for two reasons. On, is that they simply do not have the perspective that comes with being in this space long enough to see the true big picture. It is what they don’t know, that they don’t know that bankrupts them and all of their followers.
Secondly, there are so many little quirks and nuances of sectors like real estate that you just aren’t aware of until you’ve done a high volume of transactions over a long period of time. They aren’t in the books or podcasts. Yet, little things like zoning, title issues, etc., can make or break you.
The bottom line is, you probably shouldn’t be actively investing on your own, on the frontlines, until you have partnered with others for several years.
3. It’s All About The Management
The management team is more important than anything else. If you are going to just master one thing in your investments, and there is one factor that can predict the outcome, it is picking the right management.
This is far more than the evaluation of any individual property or opportunity itself. The best-looking properties in the best part of town, that look like they can’t lose, are going to be big losers with poor management. While even just okay deals can end up being huge wins in the right hands.
It’s all about the execution, and that comes from the experience and values of that sponsor or management team.