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At the time I contemplated developing this blog, James, a long-time friend, was the first person that came to mind. Over the years, he has become somewhat of an ‘aficionado’ on real estate investing. Who better to give me his Key Takeaways For Real Estate Investing and provide insight on the subject than someone who can speak authoritatively out of their experience?

By developing his own real estate investing plan and building the skills of a consummate real estate investor, he has masterfully navigated his way into successful real estate deals, in the process racking up a spectacular portfolio of investments built up over two decades.

I invited him to lunch with a small group of friends where I’d asked him to give us practical insights into his journey in the world of real estate investing. He happily obliged and I was thrilled. These were the 5 key takeaways from that conversation:

1. All successful investors develop a clear investment plan and habitually review their progress to adjust their plans based on their successes and failures.
2. All successful investors diversify their investments to spread and minimize risk. Consider investing in different market segments and for different utility (capital gains and income).
3. The savviest investors build up market intelligence by observing and following market trends and can eventually predict the market behavior as well as determine their effect on different market segments.
4. All successful investors develop an investor mindset. They learn how to remove their emotions from the transaction, place their objectives above aesthetic and superficial considerations, and have clear exit plans for each investment both at the point of acquisition and at the time of review if necessary.
5. All successful investors continually develop the skills and capabilities that they require to improve the outcomes of their investing activities.

Takeaways For Real Estate Investing


How Can You Achieve These Key Takeaways For Real Estate Investing?

To be very clear, they seek out the best deals that are compatible with their investment plans for both capital gains and income yields. Although these bargains often exhibit poor aesthetic qualities and carry a higher level of risk than other properties in the market, the savvy investor is able to “see” the potential beyond their flaws and to capitalize on those flaws to make a killing

So what strategic steps should new investors take to position themselves in the real estate market?

#1. Keep it Simple, Take Action Today

Purpose to step out of your comfort zone and to actively pursue a real estate investing journey. Starting out at the tender age of twenty-three when he made his first acquisition, James has gone to work on building an impressive fortune through a regimented approach to investing in real estate. Starting out is the most daunting part.

  1. Start early if you can.
  2. Start late if you must.
  3. Start with the resources available to you and gradually work your way towards leveraging resources from your networks and thereafter with traditional financiers (they will be convinced to support your endeavours if you can prove that you have successful investment models that give demonstrable returns).
  4. Start. Period.

#2. Develop a Real Estate Investing Plan

Determine a focused and clear plan for your real estate investing which will allow you to define the opportunities you shall consider. A strong investment plan incorporates and defines, amongst others, the specific investor’s:

  1. Objectives
  2. Strategy
  3. Tastes and preferences (which determine the specific niches the investor will operate in)
  4. Risk appetite/tolerance
  5. Resources
  6. Domain, i.e. target market

Compatibility with your investment plan determines the suitability of the deals you find in the market and good deals are only those that are a fit with your investment plans.  If your plan is not well-defined, you are likely to get caught up in bad investments. Consider developing selection or analysis criteria for each category of real estate investments within your plan to help determine which investments are suitable.

#3. Research and Learning Will Impact on Your Success:

Be committed to learning all you can on the real estate market and your success will be both demonstrable and evident. Market intelligence is key to any successful real estate investment plan.

#4. Learn From Your Mistakes to Make Progress:

Not all his investments panned out successfully or as he’d hoped. But James is fairly comfortable in the knowledge that he has secured a nest egg to see him through the retirement years and to sufficiently meet with the educational aspirations of his children. He credits much of his success to learning from his mistakes and making progress towards honing his investor skills and instinct.

#5. Nose in the Air, Ear to the Ground:

It’s often the market-savvy investor who finds the best deals first. But to do so, you’re going to have to build your intelligence on the market over time and with diligence.

1. Put in the legwork: Go to the field as often as possible and develop a culture of constantly studying the environment and making note of changes that are happening. This will allow you to become familiar with the market and to collect information on prevailing market conditions. You cannot determine whether what you are getting a bargain if you don’t know the market.
2. Be organized, disciplined and prepared. Be accurate and methodical in your data gathering. Develop your own criteria for appraising opportunities. Follow a discipline in your decision-making process devoid of emotional criteria. Plan ahead and position yourself to be able to close on bargains before other investors’ crowd you out and leverage the opportunities.
3. Separate the wheat from the chaff – apply an analytical process to review opportunities, eliminating those that don’t meet the basic selection criteria, then to those that fall outside the criteria until you are left with those that give the best returns (whether that is capital gains, cashflow or yields).
4. Own what you know, and get to know what you don’t: Local knowledge in the market where you are pursuing deals is absolutely necessary. Get to know local agents in the specific location you are looking at. People in the vicinity such as vendors, transport service providers, and even the gatemen can be a treasure trove of information – strike up conversations with them and treat them well!
5. Your network is your net worth: Build a network of associates in the public sector offices and in as many professions whose offices interact closely with the real estate industry. This includes lawyers, surveyors, property agents and managers, architects, property developers, building contractors, engineers, managers in financial services institutions (banks, cooperative societies). They will provide credible investment leads and steer you to exceptional opportunities. Another source of property bargains is movers and firms that provide relocation services.
6. Attend that public auction. Better yet, get familiar with a licensed auctioneer who can give you leads on public auctions. Preying on the misfortunes/missteps of others may initially seem sleazy. However, there is no obligation to buy and, if nothing else, the experience will be instructive. There are some true gems to be found here.

To continually maintain and nurture the networks that feed your investment pipeline, you will also need to improve your interpersonal skills – listening, negotiating, communicating and interacting with your networks. The investment in continuous learning and improvement of your skills and capabilities will build up your market intuition, help you engage with your networks more meaningfully and help you sell faster.

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