The next time you tell someone you are a real estate investor, listen carefully to their response. They will probably ask you which way the market is headed. They may even proceed to ask you how they can make a quick buck investing in real estate. With the influx of real estate investing shows on TV, it is easy to get the perception that the business is a series of quick hits and big returns. The reality is (no pun intended) that investing in real estate is done best by investors who are in it for the long haul and can manage the highs and lows of the business. If you are just looking to make a quick buck, the odds are not in your favor.
The most successful diets are the ones that are done with the long term in mind. Fad diets and other short term changes can be effective, but over time they may actually do more harm than good. The same concept can be applied when thinking about your investing. You may be able to get a deal to fall on your lap that yields a profit, but relying on this over time can be fool’s gold. If you don’t have a business plan and structure in place, any success will be short lived. You can still go after short term rehabs and flips, but you need to always keep an eye on the future and the next deal.
There is a large segment of investors who look the other way when it comes to buy-and-hold properties. Instead of focusing on long term wealth accumulation, they look for quick hits and short term results. This can be effective for some, but for the large majority of investors this is a dangerous path to go down. Five, ten and even twenty years comes much quicker than we may like and realize. Think about what you were doing ten years ago and think about where you want to be ten years from now. By having even just a few long term rental properties in your portfolio, you can set yourself up for the future. You don’t have to totally change gears in your business, but you should keep the big picture in mind.
The ideal portfolio has a combination of long term holdings as well as a few rehabs in the pipeline. Focusing only on properties and deals for short term gain will quickly fade away. If you can show the people in your network that you are serious about the business, you have a better chance of working together and ultimately closing more deals because of it. There is nothing wrong with looking for short term properties, but you need to always think about staying in business for the long haul. One deal should never define your business or impact it in such a way that it limits you from making the best decision possible. This is a great time to invest in real estate but ten years will be here before we know it.