by Theresa Bradley-Banta
So simple:
Don’t hear what you want to believe.
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I’ve done it. You’ve probably done it. We all want to believe the very best about our real estate investments. We want to believe that:
- Our property is in a great market.
- We made a good deal—the price was right.
- The property is bound to appreciate in value. Soon.
- Our renovations won’t cost much.
- The property is in great shape.
- We’ll have no problem refinancing.
Why do we do it?
Because we want to believe the very best. And sometimes we get in a hurry.
Unfortunately this thinking may cost you. In time, money and even possibly your sanity.
So why did you do it? Possibly you fell in love with the investment property. Or you believe you just bought in the hottest (not there yet) market. Your broker or the seller of the property might have filled your head with fantastic possibilities. It’s so tempting to believe them.
Do you ever get the feeling that you took a really big gamble with your residential real estate investment? The one where your stomach lurches every time you really honestly think about it?
One Thing Every Multifamily Real Estate Investor Should Know
Discuss your prospective real estate deal with your multifamily mentor, local property owners and/or other experienced multifamily investors—and “hear” the truth. If they tell you something you don’t want to hear or believe stop, breathe deeply and take it in. In all likelihood the negative things you hear from your mentors about a deal are probably the truth.
Talk to people who will not gain from your decision to buy a property.
Be proactive in your real estate investing activities:
- Hire an experienced multifamily inspector to look at the property.
- Talk to local commercial property managers about the location.
- Network with multifamily real estate investors in your area.
- Visit with other apartment building owners in the area. Ask them if in hindsight they would do things differently before they purchased their property.
- Work with experienced multifamily and apartment building lenders.
- Study your market and become well informed of the current and historical market statistics such as vacancy; rental rates and demand; new construction and absorption; sold and rent comparables; and job and employment growth.
- Say “No” if a deal or property doesn’t meet your investment requirements no matter how excited you are.
Pause—before you do the deal—and be completely honest with yourself. Ask your self these questions:
- Does this deal meet my investment/money rules?
- Does it fit with my overall investment strategy?
- Have I taken the time to conduct proper due diligence?
Asking yourself these questions should lead you to the right decision on any deal.
Related Articles
Money Rules For Real Estate Investing
9 Real Estate Investment Decisions That Will Help You Sleep At Night
5 Things You Probably Don’t Know About Multifamily Real Estate Investing
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