A Proven Real Estate Investing Strategy For Newcomers Who Want To Buy And Sell Apartment Buildings
Why Your First Apartment Deal Is Likely The Most Important Deal You Will Ever Make
Every business needs a strategy. If you don't have a proven real estate investing strategy when you are starting out, you are already stacking the odds against yourself.
first apartment building real estate deal
could literally propel you into this business successfully or leave you broke and scratching your head. So on that note, here is my number one recommendation if you are just starting out...Take your time. Find the right deal that fits your strategy, or don't do the deal.
Don't be fooled by the simplicity of that statement. It may seem simple right now before you have done your first deal, but trust me, it's not. Sometimes the hardest thing to do is to walk from a deal that you have invested time and money into (in the form of due diligence).
When you are starting out, keep reminding yourself that the first deal you do is likely your most important on several levels.
1. It must not destroy you financially.
2. It must serve as a stepping stone to your next real estate investment.
At times you will be under tremendous pressure to do deals that don't fit your strategy. The greatest power that you have at this stage of the game is the ability to walk away.
Now, here is the simplified version of my real estate investing strategy.I must be able to add value to the property, and then be able to leverage that added value to get me into my next deal.
What exactly does that mean you ask? Let me explain with a story.
A friend of mine is a lawyer. We play in a weekly pick-up hockey game together. Before one of our games a while back, we began chatting about real estate, specifically investing in apartment buildings. He was telling me about a client of his who was quite wealthy. The client had about $3 million dollars to invest, and had instructed his son to find some apartment buildings to invest in. And that's exactly what he did. Within the period of 2 months the son went out a bought a couple of apartment buildings, all cash. They were fully occupied, probably 5% cap rates, and will throw off about $150,000 per year in cash flow. Spent the $3 million. Done. Now what?...
Although what he did would certainly be considered "real estate investing", it is NOT the type of real estate investing strategy that I am talking about, or that I teach. I certainly didn't have $3 million in cash in the bank when I started out, and I am guessing that you don't either. But the truth is, even if you have $3 million you still must add value to the process, and then leverage that value.
For example, the very first commercial real estate investment that I bought, I was able to add over $600,000 in value to the property in less than 12 months. I then leveraged that added value, took the cash, and went on to the next deal where I used a similar process. Had my real estate investing strategy been different, I would have had a much more difficult time moving into my next deal.
The bottom line is, I suggest that you take the approach of being a real estate investment entrepreneur as opposed to just an investor.
An entrepreneur is defined as: "An innovator. One who recognizes opportunities and organizes resources to take advantage of the opportunity." (Source: U.S. Small Business Administration)
Or, as the professor of my second year MBA entrepreneurial studies course put it; Entrepreneurship is the ability to pursue opportunity regardless of the resources that you currently control or own. Although it has been over 15 years since I took that course, I vividly remember that definition.
Entrepreneurship and your real estate investing strategy:
In the case of income producing real estate, the "opportunity" is the hidden value that you can create or uncover in an investment property. Each new property will present new opportunities and will require different resources in order to create value. Keep this in mind as you peruse this website and educate yourself about apartment building investing.
Are you looking to jump start your real estate investing education. Are you interested in learning more about investing in apartment properties? If you are, here is a course that will teach you how to get started.
This website is a work in progress. I am constantly adding new information and examples that will undoubtedly help you achieve your real estate investing goals and ultimately form your own real estate investing strategy. The best way for you to stay in touch and not miss anything, is to subscribe to my newsletter.
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