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WHY MOST REAL ESTATE INVESTORS FAIL TO: |
-A.
Reach Their Goals.
-B. Produce Adequate Returns For The Amount Of Time And Money Invested
Most investors new to real estate get mesmerized by a technique for
acquiring control of real property and or a technique for turning a quick
profit. These "techniques", often taught by "gurus" at RM5,000 - RM8,000
for training, workshops and seminar, emphasize no need for extended time
and financial commitment (lease option, subject to) or emphasize quick
turn profitability (Auction, Buy during financial crisis, etc). These are
analogous to the technical or chart reading aspect of stock market
investing, (similar on real estate investing) it doesn't matter what
property you find, just apply the technique.
The
truth is that any of these techniques can be successfully utilized given
the right set of circumstances. However, they are applicable in only a
very small percentage of cases, and usually after an extended negotiation
or as an afterthought to the property acquisition process. Successful real
estate investors concentrate on the property itself rather than on a
specific technique. This not only allows the investor to concentrate
directly on where most profitability resides, but also opens a much wider
array of potential "deals" for the investor to consider.
Plan on doing many deals each with a small amount of profit rather than
a few deals each with substantial profit
Many investors both experienced as well as new are thrilled with a small
(under RM10,000) profit on each deal. Since unexpected expenses always
seem to creep up when least expected in real estate investing, the actual
profitability of these transactions range from half the expected profit to
no profit. In order for the investor to earn enough income to warrant the
time commitment, monetary commitment and risk involved, he would have to
participate in a large number of deals annually. And since it always takes
many negotiations to produce a single deal, and many property inspections
to find a single property worth negotiating on, real estate investment
will become a full time real estate business. To be sure, there are people
who successfully play the low profit high numbers game; most real estate
consultant come to mind. But if working 70 plus hour a weeks and buying,
rehabbing and selling 50 plus properties per year sounds like a worse life
than the corporate world you're trying to leave, you probably want to find
a different approach.
In my many years investing in real estate, financing real estate ventures,
and observing successful real estate investors, I have come to the
conclusion that participating in a small number of highly profitable
transactions not only produces more monetary success but also leads to a
much more leisurely, less stressful and more satisfying experience. I
personally don't believe any serious investor need look at any transaction
with less than a RM50,000 profit, with the goal of eventually only
considering deals with a RM100,000 plus profitability. If you don't think
these kind of deals are available, then read on next page.
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