The greed factor can keep you from jumping into real estate investing as you wait for “unrealistic” returns that are never going to happen.
The key to successful real estate investing investing starts with Identifying your objectives (cash flow, growth, lifestyle) etc, selection of the location for your BEST investment, selection of the property, quality of the property, exit plan.
Be on the look out for a sound bites from the media and your sphere that can really trip you up! Some of the most damaging include:
20 plus percent returns. High returns like these are not sustainable and therefore really do not exist. These returns are based on a very low acquisition price and these low acquisition prices are only found in areas that are depressed and of a high rental district. These low priced homes typically are older in age with expensive repairs on the horizon. High rental districts typically sell to other investors and therefore your ability to get appreciation is very limited.
Buy for only 20k, 30k. You get what you pay for. Seasoned investors never believe they can get sustained returns off of such a small investment. They understand these homes are subject to mechanical, plumbing, electrical and roof repairs and their low entry price is suddenly absorbing all their returns.
Great location. Always follow up with your own diligence, does the area have a growing population, (I know of 20K properties being promoted that are in areas of massive population shrinkage), this of course does not bode well for any appreciation and cash flow is in jeopardy if the population decreases and renters are leaving the area.
Do not let your greedy side be responsible for you missing out on the great opportunities that are upon us. We all know that the most important aspect of real estate is location. I totally believe that the second most important aspect (for the real estate investor) is sustainability. To get sustainability you want to make sure your investments are in great areas of growth, in markets at high concentration of owner occupied homes as your exit strategy for optimum returns is to sell retail to the end user.
The Greed factor: Finally as the window of opportunity continues to tighten, sitting on the sidelines and holding out for unrealistic returns continues to be the number one thing that stalls out new investors. The greed factor will literally stop any sort of profitability from ever taking off.
Newer homes tend to be in higher concentrated areas of home owners where the rents will be higher, the repairs will be lower and when time to sell can be sold to the retail buyer bringing you optimum returns.
So be purposeful, know what you truly wan t to accomplish and take serious action and avoid the greed factor in your real estate investing plans.