Why You Must Move Quickly When Investing in Real Estate
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Finance > Personal Finance
May 9, 2007
tomkaradza
Why You Must Move Quickly When Investing in Real Estate
Here's a principle for you. Money responds to SPEED. Now from the best I can tell this applies to everything, even to a beginner at real estate investing. When you move quickly with your decisions and your investments money seems to find a way to move quickly into your pockets. Sounds basic, but many people don't get it. We work with our members who invest in all areas of the country. Some are beginners, others experienced. This concept of money responding to speed applies to both groups. Here's what I mean... Let's take two investors. Sally and Joe. Sally is a beginner investor. She has never bought an investment before. She takes the time to get some education and then decides to act. She buys a residential investment property even though she feels that she really doesn't have all the answers to real estate investing just yet. But she has surrounded herself by a good team of mentors (experienced investors, attorneys, accountants etc.) so she makes her move. Joe has some experience. He purchased an investment property a few years earlier with a partner. And because of this Joe feels that he knows much more than Sally. He decides he would never move as fast as she did. On his next purchase he does some analysis on the comparables, drives around the neighborhood, asks for family opinions and thinks of everything that could wrong. Joe is also surrounded by a good experienced team but fails to leverage them. Sally closes on her property and finds a few things that the home inspector missed and it kind of upsets her. Rightly so, you don't want your home inspector missing anything at all. But, she is now in the game. No turning back. She makes a few calls to her experienced team and they tell her to move forward. And she really has no choice. If she wants to succeed she needs to get her place rented. She puts up a sign, runs an ad and gets out the property to rent it out. Within a few weeks she has rented it out for higher than market rent and collected a down payment from the tenant (also, the subject of an article). Her new confidence propels her to purchase a second investment property weeks after closing on the first one. During this time Joe has still not purchased anything. He continues to analyze the potential problems and stays stuck. So here we have two people with similar education, similar financial backgrounds, the same mentors and they end up with two different results. I've seen this happen time and time again. The people who are making money put themselves into money making situations. In this example Sally was a novice but because she made a decision and then took some action she was forced to make things work. She hit a hiccup on closing but couldn't stay focused on it; there was not time for it. She was facing the possibility of having to make a mortgage payment from her own pocket. She had to take action, she had to handle the pressure and get moving. The looming mortgage forced her to have her property rented out by a certain time. This organized her into taking a series of small actions (placing an ad, ordering a sign for the front lawn, calling people back, meeting them at the property) that ended up with a positive result. It's only these types of real world deadlines and situations that get someone moving. Read that again, it's important. Now I'm sure there is more than one of you saying to yourselves that in this example Joe was doing his research. He was being a sophisticated investor who does his homework before making a purchase. And I agree. He was doing the right things by analyzing his purchase. But I can tell something with 100% certainty...you do not make money by doing research. Nadda, zip. You make money by taking action. Money responds to SPEED. You need to do research and you need to surround yourself by a good team of mentors. But once have done that you don't need to write a thesis on your decision before you act. You'll never get anywhere. I've been stuck in that place myself. When you put yourself in a place where you must act, the real world becomes your teacher, and that is the best education you can get. If you can handle it, the possibilities are endless. The faster you take action, the faster money will find a way into your pocket. So, do your homework, find some mentors and then take some action. Money follows SPEED. Start moving.
Tom Karadza is a expert at investing in residential real estate in Canada. Find his step-by-step investing guides at http://www.TheRealEstateRenegades.com .
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