Working with hundreds of investors over the years, I have found a very small percentage who have actually taken the time to identify and to clearly define their investment goals.
What I witness every day is investors bouncing from one real estate investment strategy to the next. Ultimately they will go years without making an investment. This investor behavior has often confused me and frankly bothered me, as while they are bouncing around with all these different real estate investment strategies, they are missing the best investment opportunities.
While doing some research on real estate investment markets, I found myself lured into reading articles on topics I was not even looking to read. These articles are captioned with your best interest in mind:
- Top mistakes investors make…
- Top reasons why you should ….
- Top reasons why you should NOT….
- The problem with this kind of investing is…
- The problem with that kind of investing is—
Eight questions to ask yourself about your investing strategy.
I just finished reading an article about why you should not use a certain type of investment strategy. It illustrated multiple reasons why an investor would not be properly served by investing in certain types of investments. Clearly this article was written by and for the active investor.
While the article was making accurate statements for the active investor, it was totally a one-sided perspective. The comments were coming from his viewpoint as an active investor. In his opinion anyone who is not an active investor is making a big mistake by investing in things like turnkey properties, notes, REITs, etc.
These investments are not wrong. They simply accommodate the goals of the passive investor and should not be labeled as investment mistakes.
Other articles written for the passive investor provide a variety of reasons why you should not invest in flipping properties or in hands-on property management.
The active investor and passive investor have different goals and objectives
The goals of one type of an investor may appear confusing to another type of investor who has a different objective. Look for information that presents the pros and cons of each topic.
Sometimes important points are labeled as negatives and things you should avoid. These tend to be articles slanted with a self-serving agenda as opposed to presenting accurate, detailed information. Often there are personal objectives dictating the article’s content. This is the place to investigate the background of the author of the article and what type of investment business agenda he may be pushing. You can then judge for yourself whether there is a conflict of interest in the information being presented.
The next time you read an article, look for the opposing viewpoint to be listed as well. When you do not see an opposing viewpoint, the article is most likely opinion based and you may want to seek the opposing view. This will help to avoid the analysis paralysis so many people are encountering.
Is your investment strategy consistent with your plans to be active or passive in your investments?
When you are reading articles you want content that will benefit you and not paralyze you. To do this you must have your clearly defined objectives.
8 questions to ask yourself about your investing strategy:
- Are you an active investor or a passive investor?
- What types of investments interest you most? Single-family, multifamily, notes, etc.
- What types of investments will best accomplish your objectives?
- Do you wish to buy and hold, buy and flip, etc.
- Do you wish to pay cash or leverage with finance?
- What type of asset and liability protections will you put in place- LLC, trust?
- Where will you invest and why?
- What is your exit strategy?
When you have clarity you will not be derailed by information that does not serve your best investing interests. The laws of attraction will connect you to the best investment opportunities available for your wants and needs.
If you are not familiar with these terms let’s provide the clarity:
- Active investor: A person who has time and the desire to be involved in all the day-to-day activities and decision-making processes of an investment. These investors tend to have a bigger desire to squeeze as much profit as possible from an investment and often elect to do as many tasks as possible to accomplish this.
- Passive investor: A person who does not have the time or desire to be bothered with the day-to-day activities and decision-making process of an investment. These investors tend to prefer professionals who are experienced in the real estate arena to assist with day- to- day activity and would prefer secure, safe and consistent returns over the need to micro-manage the assets for maximum return.
Please visit Larry’s website here.
0 Comments