Sunday, July 22, 2012

Have Cash, Trouble Pulling the Trigger?

Investing in real estate today is NOT simple.  Investing in real estate today IS simple......oops, did I just write two conflicting statements?  Yep, I sure did...why?  Because depending on what you know, the answer could be one or the other.

Here's what I mean:  If you are clear on what the current value is of a property, you will have no difficulty knowing whether you have a great deal or not.  If you are unclear on the current value, then you will spend too much time crunching numbers, looking at all the what ifs, and won't see the value, or if you finally are clear, it's too late and the deal is gone.  You can't afford to waste time in evaluating whether you have a viable investment or not!

There are many investors wanting to jump into today's "distressed" market but they don't know how, or are too scared to pull the trigger simply because they do not understand how to determine today's valuations or project into the future...this is must know what the asset is worth today to be able to judge whether an investment makes sense.  If I buy an asset that I know is 30 cents on the dollar, do I know this is a good deal?  Of course it's a good deal....I can turn around and re-sell it quickly and easily for 50-60 cents on the dollar to the investor who thinks that 50-60 cents on the dollar is a good deal, who in turn can sell it retail for 80-90 cents on the dollar to a retail client who thinks they're getting a discount.  

There are numerous exit strategies, and countless seminars, books, videos, meetings that you can attend, but knowing and not doing is a pure waste of time and money.  Thinking you know and doing is also a waste of time and could be a tremendous waste of money.  Education is great, but this must be applied in any profession.  Poor application creates poor results.  Learn to understand valuations in today's real estate markets, buying so low that you limit your risk to such a minimal amount that pulling the trigger becomes very easy.  This is a tremendous investment philosophy that I learned from a great mentor.  This is what we do every day.  Why do we do this?  Because we don't like risk. We like to limit it to an absolute minimum.  We can never eliminate it (unless we're happy with a 1-2% return), but we sure can control it.

There is so much opportunity out there folks.  Stop worrying about the economy, the negative, and build your future for you and your family. The stock market requires a bias into a rising or declining market.  Real estate if done right, does not matter whether the market is rising or declining.  What matters is the correct investment strategy(ies).

If a screaming deal is staring at you, you should be able to see it within minutes if you have the correct information.  You don't necessarily even need to see the asset prior to determining a potentially viable deal.  Of course if you are buying it, you should always inspect it, but narrowing down your possibilities requires doing your homework and then moving forward, which can all be done from the comfort of your own home or office.  If you find yourself spending hours on analysis, you are not doing it right.  You really don't have a feeling for it.  You will not see the value and hence you will not pull the trigger on the deal.  End result when you have a great deal in front of you:  Fear due to lack of appropriate, intelligent action makes you no money because you didn't pull the trigger as a result of not knowing what it's worth.  

If you want to make money in any investment, you need to know your risk tolerance among other things but most importantly as it relates to risk, you MUST understand valuations.

Don't ever just rely on a "possible" future valuation, as this is a recipe for potential disaster.  You need to know what it's worth today and buy well below that worth.  Once 
you are comfortable in your valuations, you will see how easy it really is to pull the trigger and make plenty of money.  Remember the lyrics from that old Rush song...."If you choose not to decide, you still have made a choice."  

Until next time....