Real Estate Investing Victory - Learn From An Old Pro (Jack Miller)
"Only when the tide goes out do you discover who's been swimming naked!"
Hey it's Cody Sperber back again and I have a question for you. "Fast money spends fast." You ever notice that?
Think of many of the people you saw “real estate investing” during the run up. Yes, they were making fast money, sometimes huge chunks of money. And because making the money was easy, they also thought it was limitless. They were spending it as fast as it came in – new car, trips with the requisite picture of them posing in front of a private jet, buying properties with financing that made no sense in any market. When the bust hit, these people were wiped out. And not just wiped down to zero. They were wiped down to below zero. Some will never recover financially.
Many real estate investors, in a desperate effort to make a lot of money fast, take risks that eventually (sometimes quickly) knock them out of the game. Real estate is a long term investment. Even if you’re flipping contracts, you want to create a business that you will be able to reap profits from for years, not for one quick season.
One of my early mentors was the late Jack Miller. Jack was an “old-school” real estate investor. He bought and held, making his money on cash flow and paying off his properties over time. He worked to free and clear his properties and created a real estate portfolio that set him and his family up for life.
Jack was also notoriously cheap. After a seminar, he’d host a “cheap wine party” for his attendees and he delivered as advertised. Box wine was the norm. Jack didn’t drive flashy cars or wear flashy clothes. He put his money where it would give him a good return on his investment.
In short, Jack Miller was in it for the long-term.
Today’s investor needs a long-term strategy. Yes, there will be opportunities to make some quick deals and quick money, but that is the gravy, not the meat. At Clever Investor, we know the necessity of creating a strong foundation so that you can bullet-proof your real estate portfolio and be the last man standing when the smoke clears.
In that regard, you need to marshal your resources and make sure you are working with an overall strategy, not just trying to make deals. The people who did well in the run up and managed to survive the bust intact are the people who are now able to invest in the incredible deals that are available.
So what do I mean by marshal your resources? To take advantage in this market, you need to act quickly and many times that means having access to cash to close a deal. If you don’t have the cash yourself, you need to have private money partners who can make a quick decision and get funds into your account in a matter of days, not weeks.
Avoid negative cash flow deals. You don’t want to put yourself in the hole on a property right now. Feeding an alligator not only hurts your wallet; it hurts your psyche. And a hurt psyche makes bad decisions.
Don’t overlook what may be your largest resource: your personal network of real estate investors, realtors, property managers, hard money lenders, etc. In a market where few are playing, it’s a tremendous opportunity for you to position yourself as the 800 pound gorilla in your area. Now is the time to reach out and make connections, when these people are looking for business. (Congratulations – you’re about to make a BUNCH of new best friends!)
When the smoke clears, as it has, you will find that most of your “competition” has disappeared. There are fewer investors. The ones who are left are either very large hedge funds who are snapping up properties fairly indiscriminately or the dusty, tried-and-true investor, who stuck to his plan during the craziness, didn’t over-leverage himself and ended up with a stronger portfolio and the assets to take advantage of the new lower prices in today’s real estate market.
Real Estate Investing Is A Long Term Investment
Let me say that again...real estate is a long term investment. Even if you’re flipping contracts, you want to create a business that you will be able to reap profits from for years, not for one quick season. If we have learned anything from this boom/bust cycle, it is that you want to be the one left standing when everyone else around you has been knocked out of the competition. It’s at that point, when no one else is real estate investing, you are able to control your marketplace. We’re seeing it today: To the real estate victor go the spoils.