In many places in the country the real estate market is hot. Properties are going under agreement within hours of being listed as multiple offers pour in. Interest rates are extremely low, rates of return high and the tax benefits so far, have not changed. You want to get in on the action! You need to get in on the action! But where do you start?
In some respect you are a starving man at an all-you-can-eat buffet. You grab a plate and start filling it with the tastiest looking nuggets you see. You gorge on anything you can get your hands on, eating faster (and more) than you ever thought possible. Although you are unsure why, you find yourself taking a third trip to the steam tables, and that’s when you see it. Behind the popcorn shrimp, beer battered chicken and tater tots is a carving table with filet mignon.
The same is true in real estate today. There is a lot of “noise” out drawing your attention to this broker or that listing. Pictures, graphs, gifs, podcasts, social media posts and other “shiny objects” are the soggy crab legs at the buffet. To be successful in real estate investing you need to drown out the noise. You need to find someone who can guide you through a correct analysis, someone who understands that math does not lie.
Here is a quick example. A client of mine was on another broker’s mailing list, which I did not mind at all because I knew they trusted my judgement on properties. One day, they forwarded me a listing that had been sent to them. They loved it. They wanted to go see it right away and made overtures about wanting to buy it. They fell for the shiny object. However, the advertised 7% return was actually only about 3% when a proper investment analysis was done. My clients quickly changed their minds and I contacted the listing broker to ask how they’d been so negligent.
This is a great time to be a real estate investor. There are super deals out there that make strong financial sense, depending on your goals, but there is also a lot of noise distracting investors from reaching those goals. Don’t fall for the bacon wrapped French fries. Take a minute and find the filet.
