Risk.

We’re all familiar with it, we all fear it, but only some of us know how to deal with it. One of the largest differences between experienced and inexperienced investors is in how they think about risk. To the beginner, it’s a monster that could pop up at any moment and take your money, and there’s nothing they can do about it. To the expert, it’s just a part of doing business — something is to be expected, planned for, and dealt with. They’re still in control.

You might be thinking, “Huh? Is it really possible to control risk?” The answer is yes… to a degree. You can control it to the extent that you anticipate and plan for it. Let me explain.

I started college in the middle of the .com boom. Like lots of other nerds (err… kids), I wanted to be a part of it, designing computer programs that would usher mankind into a new technological age. So, I majored in Computer Science, which was at the time part of the College of Engineering at our university. In those introduction to engineering classes, one of the first principles we learned was Murphy’s Law: What can go wrong will go wrong… if given a chance.

What’s it mean?

Continue reading ‘Ignore This Law and You’ll Go Bankrupt’

Imagine for a moment that you have a crystal ball.

Looking into it, you can see everything that’s going to happen in the real estate market — which neighborhoods are going to climb in value and which ones are going to depreciate; which houses are going to sell fast and which houses are going to sit on the market; which improvements will help sell a property and which improvements won’t. You’d be able to make the right decision every time and make lots and lots of money.

Well, what if I told you something like this crystal ball actually exists?

It’s called the Law of Supply and Demand. If you’ve taken a civics or economics class, you’ve probably heard your professor droning on about it and its importance, but you never thought it would be useful. In the everyday life of a teenager or college student, I suppose it’s not, but in the real estate world, it governs several of the most important variables we track:

• Appreciation
• Depreciation
• Price
• Days on market

In other words, Supply and Demand influences how much money you make and when. If you know what price real estate is going sell for and when it’s going to sell, you can time your purchases, improvement, and sales for the maximum benefit. You can also get out of the way when the market takes a nosedive.

Sound important? You betcha.

Continue reading ‘The Economics of Real Estate Investing’

Create value.

Imagine an old, worn-out house in the country. The paint is peeling, the grass has practically grown up to the windows, and the roof is a patchwork of holes. It’s been sitting there for years, and no one wants it. Yet, seeing some potential, you pick it up for a small price.

Then you go to work.

You repaint the walls (inside and out), landscape the entire yard, put on a new roof, and otherwise transform the beat up little country house into a home anyone would be proud to own. As a result, the price goes up and you collect a nice profit.

Why? You’ve taken something without value and turned it into something with value. This is what it means to create value.

Continue reading ‘The #1 Secret to Real Estate Investing Is…’

Investing is a lot like taking a road trip.

Let’s say you live in New York and you’ve decided to drive to Los Angeles. Between the two cities, there are thousands of roads to choose from. Some will take you to Los Angeles and some won’t. Some roads are faster. Some roads are prettier.

As the driver, it’s up to you to decide which roads to take. You can take your time, making frequent stops and enjoying the scenery. Or you can concentrate on speed, choosing the roads that take you to Los Angeles as quickly as possible.

You can also get lost, take a break, or change your destination entirely. It’s all up to you.

How does this apply to investing?

Continue reading ‘Investing Is like Taking a Road Trip’

Millions of people fail each year in real estate because of a myth. What is it?

If you want success bad enough, you’ll get it.

I’m sorry, but that’s BS. Just about everyone that fails in real estate or any other endeavor wants success.

But sometimes it’s not enough. You can want to succeed with all of your heart and something will come along and stomp out your desire.

When the phone rings at 10:00 p.m. for the 100th time, you lose your desire for a “flexible” job. What’s going to make you pick up the phone?

When a tenant skips town without paying you their rent, you lose your desire for passive income. What’s going to make you find another tenant?

When you underestimate repair costs and end up losing $20,000, you lose your desire to make $1 million a year. What’s going to make you submit an offer on the next deal?

Desire isn’t enough. Something has to force you to keep going. You have to need success.
Continue reading ‘Why Do You “Need” to Be Rich?’

Walk into a room of successful investors talking about wealth, and you are unlikely to hear any of them ask, “How can I get rich with real estate?”

Of course, why should they? They’re already wealthy.

Walk into a room of beginning investors talking about wealth, on the other hand, and someone will inevitably pop the question, in one form or another: How can I get rich with real estate?

What’s interesting is the question doesn’t help them. Less than 1% of the people that decide to invest in real estate end up making a fortune. Similarly, after succeeding once, most experienced investors find it easy to expand their empire.

Why is it easy for one group and tough for the other?

Continue reading ‘Why “How Can I Get Rich with Real Estate?” Is a Poor Question’

Blogs are nothing new. The Internet is overflowing with millions of them. Hell, your grandmother may have one by now.

They also take time. You can only read so many blogs each morning before you actually have to do something productive.

So here are the questions. If blogs are nothing new, why am I starting one? And if you’re already out of time with your current blogs, why should you read mine?

I’m glad you asked.

Continue reading ‘5 Reasons to Read This Blog’