NUTS & BOLTS COACHES CORNER
STRATEGIES: REITs Think Realty Coaches
know? I was there! And as things keep heating up, my backyard expands. There’s a lot of op- timism in the air, optimism that could become “too much” and if you’re not here, you might miss it. Fortunately, I am here, and I can tell you that I’m looking south, and I’m looking east, and I’m seeing opportunity that investors elsewhere in the country are not going to see unless they have someone work- ing here for them as well. Now, I will make one exception to my rule about backyard investing for virtual wholesalers. That business is entirely unique and you can move a property from anywhere. It’s amazing. But that’s a completely different animal because you’re not keeping the properties. For me, if you’re buying and really investing in assets, do so in your own backyard. Of course, there are markets where you simply cannot argue that there are not better opportunities elsewhere, and if you are a turnkey investor, for exam- ple, then sure, you’re going to want to take your money and put it with an asset where it’s really going to perform. Even then, though, you are putting that asset in the charge of someone who has their feet firmly planted in that local market. Why do you think every major turnkey provider out there now has some sort of market report that they issue on their markets? It’s because their investors want to feel like they know the area where their properties are located. They are trying to sort of “superimpose” themselves into being local. Being local is the key, and if you cannot actually be local, find someone who is that you can trust and let them monitor and maintain your investments for you in that market. •
HOW TO HANDLE A HOT MARKET NO MATTER WHERE YOU LIVE W hen markets heat up, emotions rise and people make mistakes. The biggest mistake you can make in nearly all cases is overpaying for a property because you think that it will appreciate while you’re renovating or rehabbing and it will be worth it in the end. Well, I have bad news. If you do this, sooner or later, you are going to lose. Eventually the
will enable you to sell no matter what is going on the market if you really, really have to. 2. IF ALL YOUR FRIENDS ARE BUYING IN THE SAME NEIGHBORHOOD, GET NEW FRIENDS. Okay, you don’t really have to get new friends, but you do have to expand your horizons a bit. You don’t want to be an investor lemming, and your buddies are probably creating bidding wars anyway. Go find the next diamond in the rough and let them follow you. 3. PLAN FOR THE WORST. When a market is hot, things can change fast. Planning for the worst-case scenario will help you accurately evaluate potential deals and insure that you are well-equipped to react fast if your hot market starts moving in the wrong direction. We forget just how good investing local can be. That memory loss: That is what’s actually bad. For me, my favorite real estate market is actually my own backyard. I live in Atlanta; I love Atlanta real estate, and I can tell you with confidence that my market is super, super hot right now because I live here and I have a finger on the pulse of this market’s activity. This past Super Tuesday, there must have been a couple hundred people at the Fulton County Courthouse bidding for properties, for example. How do I
all live in the same basic area) and we know she’s having a rough time and she ends up living in our property for free for 18 months. We just have to buy that decrepit, blighted old house because we’ve “al- ways loved it,” and then we find we also just have to spend a fortune we didn’t plan on to fix it up. You get the idea. Well, all of that is well and good, but here’s the thing that happens when we all start agreeing with each other that investing in our own backyard is bad: Fed will raise interest rates and affordability will decrease. Fewer people will be buying, and unless you are just lucky, you will get caught in the downturn. So here’s how to handle a hot market no matter where you live: 1. LOOK YOURSELF IN THE MIRROR AND REPEAT AFTER ME: “In a hot market, the total cost of my project will not be more than 60-65 percent of ARV.” Now say it 10 more times. Believe it. Absorb it. Buying at a price point like that
Don’t Rule Out Your Own Backyard THINK REALTY COACH ABHI GOLHAR MAKES THE CASE FOR LOCAL INVESTING.
by Abhi Golhar
e’ve all heard the saying “Live where you want, invest where it makes sense.” There is a lot of wisdom in that saying, most of which is based around the fact that as humans, we make a lot of mistakes. We mean well, and we do a lot of good stuff, but we also make a W
lot of mistakes along the way. One of those mistakes is letting real estate get tangled up in our emotions. Where is that most likely to happen? At home, of course! In the communities that you love, the neighborhoods you’ve been watching grow, with the folks in
all those local investing groups that you want to impress the most. We get all emotionally tied up in whether we have the prettiest rehab and we forget the bottom line. We get all teary over that tenant that we ran into at the store (because we
Abhi Golhar is a Think Realty coach, real estate developer, media host, and national speaker. You can view his Think Realty coaching courses at https://thinkrealty.com/coaches/abhi-golhar.
16 | think realty magazine :: december 2017
thinkrealty . com | 17
Made with FlippingBook - Online Brochure Maker