Last week I talked about knowing what and where your market really is…and why you may have to move to become a successful real estate investor…
Boy did I strike a nerve with that one! I understand why, too.
You’ll remember that I distinguished between where you live presently and where you may be able to invest. Often times, as I’ve heard from your emails and comments to me, these are not the same place! Lots of you are faced with this challenge…
Of course, I knew this was an issue before going into writing the article. I get asked some variation of that question at every Boot Camp or Seminar I put on.
I also know someone will ask me at my next event this week and it’s a perfectly legitimate concern. However, it’s not just the area where you can afford that’s very important. Read on…
Still, your large number of responses tells me that that’s a big issue with many of you. And as I said, I understand why that is. Everybody wants to live in a nice place that’s close to work and family if we possibly can today. Make no mistake about it; we all want that…
At least until we figure out where we really want to live on our own terms. But until that day arrives, there can be quite a disconnect between where you live and where you invest. What with your job, your kids, quite likely your spouse’s job as well and all the rest, splitting your time is not always easy.
If you can’t just pick up your belongings and move to where you can afford to invest, then you either find a cashless JV deal where you are, or you sit down and decide where it is that you can afford to invest and is within a reasonable distance to drive to on weekends.
Is it hard to do? Sometimes, yes. But without a doubt, it can be done. I’ve seen many of my students do it.
Now here’s the kicker–to be successful at it, you need to do a bit of planning and research. You can’t just go off like a blind squirrel hoping you’ll find a nut. You have to do your due diligence. This applies to the area you invest in and to the actual property you end up buying.
But due diligence also applies to the logistics of how you go about picking the right affordable place to invest. This planning part of things is just as important, if not more so, than the actual process of due diligence in the property and area. Trust me on this.
The reason why is simple. If you can’t work out how you’re going to actually get to a place on a regular basis, you’re not going to go there, are you? If you and your spouse can’t agree on who’s going to watch the kids or who’s going to do this and that, it won’t happen, will it?
Similarly, if you can’t determine on how far you can reasonably drive to get there and back on a weekend and not be dead on your feet at work the following few days, again, it won’t happen. You get the idea here. You’ve got to sort out your own personal logistical situation before you set out buying a property 100 or 200 miles away.
That’s everybody’s own personal reality, isn’t it? Every problem is solvable; but sometimes it takes time and thought to figure out your way through it.
In fact, it might just be that you can’t sort it out right away. You may have to wait until your child is a year older, or you get a better situation at your job or whatever else may be happening in the near future that must take place before you invest. If that’s the case, you can make that reality work to your advantage.
For instance, if you’ve got a twelve or eighteen-month period of time where you can’t get to where you need to go to begin your real estate investing career; don’t worry about it. You can put that time to very good use.
That time period is actually a great opportunity to EDUCATE YOURSELF.
You will find yourself among like-minded people who are doing what you’re doing. You may even find someone in a similar situation where you both help each other. It’s not uncommon!
You can also use this time period to really do your grid variance analysis on the area where you’re thinking of investing. Remember, just because you can afford to invest in an area doesn’t mean that you should invest there. It may be affordable for all the wrong reasons instead of a few of the right ones.
I’ve talked about grid variance analysis many times.
But for now, I’ll say that you want to invest in areas that are diverse in their developments. That means you’ll want to see variances in types of real estate in your target market city or town. You should see, for example, commercial developments downtown, with blocks of flats and office buildings nearby.
As you move further out from the center of town, you should see new developments going up. You should also see strip centers with an anchor tenant and businesses occupying the spaces around it. You should also see medical office building around the areas of hospitals, other kinds of support businesses around the local industry.
Then come the schools and housing estates in the suburbs. You should also see relatively well off areas and more affordable areas of housing, too. This process itself takes time and will prepare you for success when you are ready to pull the trigger on your first deal.
This is using the time you have wisely and profitably. Don’t get discouraged if your first deal is a bit further on down the track. In the meantime, get yourself educated, get to know your target market and get going!