I am sure that very few of you are reading this blog considering that it is Derby week and people are, well.......off to the races. If this does catch your eye I thought I would share a few thoughts on win, place, and show in real estate investment.
Purchasing property to make an income is a lot like betting. When you place that $2 show bet on the favorite you're almost positive you'll make your money back and maybe even a little more. This is like buying a newly renovated 4-plex in the highlands. Easy, neat, and convenient. You'll likely make back your investment but the gains will be slow if any at all.
Betting on the longshot? Now, that's a risk. Maybe the unit is run down and needs some work. But the location is great and it's had steady renters for years (let's call this one....Mine That Bird-2009.) How can you know if it's a safe bet? How can you make a fast return on investment?
If you talk to any real estate investor they will tell you that they didn't show up to the track in their fancy cars, wearing their fancy clothes, and betting away all their money while they ate and drank like kings. They didn't buy the nicest, easiest houses and add a coat of paint and selling it for twice it's worth. Or, if they did, it wasn't luck but hard work the led them to that deal.
Instead, they were likely spending their time in the infield wading through trash and dodging craziness right and left. They were going into foreclosures and climbing fences to see in the windows before they put their last dime up to buy it (having never seen the inside). They are putting their money on the longshots and betting that they will win. They are having faith in the market, and the people, and the community around the home in hopes to bring it back to it's best.
Real estate investing is a risky business and not everyone is up to the challenge. There are wins and losses and highs and lows. However, at the end of the day they can say that they are really betting on themselves and their skills and only they can control how much or little they will make.
Who will you bet on this year?