What’s Your Investor Type?
February 10, 2009, Writen by: Chris Anderson, Ph.D
Follow Us On |
Linkin Profile
 |
Introduction
Have you noticed that everywhere you turn, people are highly excited about distressed properties and their profit potential? By distressed, I mean:
- Pre-foreclosures;
- Short Sales;
- Motivated Sellers (but not in trouble yet);
- Courthouse Step Sales;
- Bank REO’s;
- Cash flow Deals (or steals);
- Subject To’s
- Bird Dogging;
- Wholesaling; and
- the many other buzz words floating around the industry.
In addition, anytime something is a hot topic with profit potential attached to it, then the “guru” crowd runs wild with the latest and greatest offerings since sliced bread. I literally get 2-3 “releases” each day for something that is going to make us all rich.
Over the years, we have developed a database of over 31,000 real estate investors and needless to say, I have had a “few” conversations with most of the “gurus”. One place where we see a tremendous amount of confusion is in the realistic expectations for the amount of time required vs. the expected risk & returns for a given type of investment opportunity.
That probably doesn’t surprise you, given all of the “false” advertising that exists across the Internet….. So for example, consider this headline that I just saw:
XXX Students Have Made Over $230,000 last year while only working only 2 Hours Per Day.
Pardon me but I call “Bull” on this claim… While one guy may have gotten lucky (maybe), the odds of you accomplishing the same are slim to none.
Different Investor Types:
Knowing The Difference Really Is Important
Based upon our years of experience, we find that most investors fall into one of these 3 different categories:
Active Investor:
This is a person that makes real estate investing their “day job”. Typically, they invest only in their backyard, work this as a business, and many people in this category have teams of 2-5 people to make this work successfully. On a daily basis, they are constantly working on identifying motivated sellers utilizing a variety of resources, including foreclosure lists in order to find investment opportunities that make sense. We have found that these investors sometimes need to identify 20+ motivated sellers in order to get one deal that works. In addition, they are actively marketing their opportunities to end-users who will ultimately lease/buy their property (flips, lease-options, wholesaling, etc., etc.). Make no mistake about it, if you have a regular day job, you should realistically analyze if this approach is practical for you.
Assisted Active Investor:
This person typically has a regular job or business but has several hours per week to put into their real estate investments. This person is frequently active both in local markets and/or out of town/state markets. To compensate for the reduced time availability as compared to the active investor, they use other professionals to either locate great deals, or find new buyers/tenants and manage, or both.
The hardest task for the Assisted Active Investor is usually getting the TOP local experts interested enough in really working on bringing them good deals or good buyers. Note that I said “TOP” local expert because the run-of-the-mill Realtor/Broker will just not do in most markets. These top experts usually are working with past proven clients, so you really have to get their attention in order for them to work for a new unproven investor.
Passive Investor:
This person always has a day job and has excessive funds that they want to put to work. They are typically very busy (doctor, lawyer, engineer, business owner), have little time, but are looking for great ways to deploy their capital.
Unfortunately, too many of these people get convinced that they can get “rich” by simply buying the latest course, or buying the latest property “while supplies last”. In actuality, this type of investor can make OUTSTANDING returns. However, having looked at almost every passive real estate deal over the last several years, I can tell you that it is not likely to happen overnight. If you want very good returns, with low risk, with minimal time involvement, then there are definitely good deals out there for you in this category.
So, before you get too excited about “getting rich” on someone’s latest course or property offering, I strongly encourage you to decide your investment type and then manage your time/risk/reward expectations accordingly.
Related Real Estate Investing Posts
- Foreclosure Investing - The Fastest Way To Get Started Foreclosure investing is actually quite another world when people have finally taken that risk and go for it. This...
- New Fannie Mae Investor Reserve Guidelines I have been asked recently for some clarifications on the recent changes from Fannie Mae on Reserve Requirements when...
- Is Now The Good Ole Days Of Real Estate Investing? Are The Good Ole Days Here Again? I was thinking the other day, boy, do I miss the good...
- Home Equity Lines - An Investor Goldmine In today’s very difficult financing environment for investors, a home equity line of credit option may be your best...
Related posts brought to you by Yet Another Related Posts Plugin.
Thank you for visiting www.NoBullRe.com. As always, your comments are welcomed below:
Comments
One Response to “What’s Your Investor Type?”
Got something to say?
-
Who Is "REALLY" Making $ In Today's Real Estate Market?
Our 29,689 Members Tend To Agree...
It's Usually Not The GURUs
Have you ever noticed that every "Guru" real estate pitch sounds the same........
They once were poor, but now are rich working only 5 hours per week, and you can be rich too if you just buy their "can't fail system".
Or have you noticed that every property promote has a can't miss proposition, if you just buy TONIGHT.
At the NoBullRE club, we are huge believers in real estate investing...... but we also know that every approach has two sides: Nothing is perfect.
If you want unbiased ("No Bull") facts of who is making money, how are they doing it, and where do they get their knowledge, then you don't want to miss joining the NoBullRE Club
IT'S FREE (FOR NOW)
SECURE & CONFIDENTIAL
Your info will never be shared
CONFIDENTIALITY GUARANTEED
How refreshing Chris. Your a man after my own heart brother. It burns me to blazes when these hucksters feed folks a line of bull in order to get their money. They don’t care that they are potentially helping to ruin new investors lives. New investors need mentors who care and are not out to get their money, they should be interested in helping them make it first! How short sighted they are.
Keep this up, it is what needs to be made public and made to as much as the public as possible!
Feel free to post this at my site at http://www.magicbullets.com in the forum Chris, I second your emotions!
Dan Auito