As a real estate investor who has managed to attain the Holy Grail of total financial independence I am used to people asking me about the ‘secret’ to real estate investing. I have had people come up to me in after dinner speeches and ask me to tell them what the formula is and I have had colleagues in the industry come up and ask me for a secret tip and in each case I have been tempted to take out a ballpoint pen and write at the back of my business card “trust your instincts”. That would be being disingenuous as it is just the kind of advice that means everything and nothing.
Let me explain this first. Every investor in the world has to function in a way that is comfortable for them to operate in and that, invariably, requires them to use their instinct when they are going after deals and when they decide to pull out. So to say that you need to “use your instinct” is just the kind of non-advice that sounds good and means nothing.
So, to cut to the chase, what is the secret of real estate investing? To discus this here, now, I have to draw on extensive real estate experience that has taken me from my very first property to owning and running over 4,000 apartments in eight different states and growing. You realise that what I am about to say has been on my mind for some time and I have considered it in some detail and it is part of the advice I give out in my courses, seminars and workshops and it’s summed up by two words: “Risk management”.
In a sense any kind of investment is about risk and every kind of investor who wants to be successful tries to manage it successfully in order to come out on top. Real estate is no exception and, if anything, tends to magnify the risks involved which is why risk management becomes so important and the only way to spread the risk in real estate is to have a large number of people contributing to the costs and giving you income as opposed to just a few. This is where multi-family dwellings and apartment blocks come in and this is exactly where an investor’s mettle is proved.
Do your homework carefully, pick up the right multi-family dwelling to buy into, arrange to outsource everything so you do not have to deal with tenants yourself (that would definitely not be a good use of your time), use the bulk-buying power of running multiple properties to negotiate tough but fair deals and then get ready to reap the rewards which, as you might have guessed, are considerable.
So now you know the ‘secret’ top real estate investors do not want you to know. What’s holding you back?