Always Be Selling
Everything Is for Sale
By: Hassan Omar
Atlanta Investing
If investors really want to be profitable in the real estate game, they’ll need to know a couple of extremely important rules before they can truly be successful. This means unlearning one of the most harmful beliefs that many possess towards real estate investing; the idea that solely having a long-term Buy & Hold real estate investing plan will automatically protect them from long-term changes in the market. It also means embracing the fact that property owners should always have the mindset that everything, including their newest or favorite purchases, is for sale.
Relying solely on a long-term real estate buying & holding plan is not a solid strategy; it’s a bad theory, a rumor, a myth. At its core, the idea is based on the premise that if you buy a property and hang onto it for long enough, you’ll eventually be able to weather all of life’s storms and still make money. This myth is the security blanket that many investors cling to for the times when property values drop or when they don’t know what to do. During these uncertain times, many have been conditioned by the media and more experienced investors (usually the ones that sold them a raw deal) to think something like “I know that property values are down right now, but because of my buy and hold plan, I know that the market will eventually bounce back and the property will be worth far more than what it was when I originally bought it… if I can just hold on a little longer…” Bad idea; usually, they won’t.
In my opinion, unless a person has buckets of money just sitting around waiting to be thrown away, relying solely on a long term buy & hold real estate investing plan is one of the worst things any investor can do; here’s why.
Yes, on a historical basis and on average property values do rise. Unfortunately for many long-term buy & hold properties those values usually don’t rise fast enough to recoup the expenses and losses in value that affect single-family homes over the long run. This is due to the fact that as houses wear out and become obsolete, they become increasingly less desirable and unmarketable. Just ask your self how much demand there is right now in your market for 800 square foot, 2 bedroom - 1bath homes, built in the year 1910? Not much, if any. Yes there are plenty of them still hanging around out there and many that may look like a deal. But do you really want to go through the expense and headache to owning and maintaining one of them? Hopefully your answer to that question is an emphatic ‘No’!
If you owned one of those functionally obsolete properties, not only would you have to deal with the fact that its probably in one of the least desirable parts of town, but also with the fact that as time marches on, personal housing tastes and expectations roll right along with it. This being the case, do you really think that it makes any sense to solely have a long term buy & hold strategy for old real estate? Here’s a hint;
No, it doesn’t...........You have to evaluate, sell and replace your property on a regular basis or you will quickly be done!
The fallacy and risk relying solely on a long-term buy-and-hold real estate investing strategy lies in the fact that it pacifies many investors, encouraging them to be lazy and unresponsive to changes in their markets. This is an extremely dangerous way of doing business, which lulls many investors into the false sense of knowing that they don’t have to do any more buying or market research, severely impairing their ability to react to changes in housing demands. In many cases it is not until well after the market has take a turn for the worst that investors realize how bad the extent of their situations are and how limited the options for recovery really are. It is only when they come to this realization that the flop around trying to figure out what to do.
Please note that I am not advocating that any real estate investor dump all of their holdings, nor I am suggesting that none of your properties be long term holds. All I am saying is that to be a successful real estate investor you have to have the mentality of a professional stock trader, to always be selling, and know that everything is for sell!
The best way that you can do this is to continuously do your research and homework so that you are never caught off guard. Professional stock traders take everything into consideration when buying, holding and selling publicly traded stocks, as should the serious real estate investor. They are always looking one, five or ten years down the road for signs of any threats to the companies that they invest in; and at the slightest hint that there is a major issue that the company can’t overcome, they unload the stock. That is how you have to view your real estate investments, like stocks, always for sale.
Don’t feel bad if you’ve been practicing a buy-and-hold plan and it hasn’t been working. It’s not your fault – unfortunately many of us have been misinformed. When I first got started investing in real estate, I too believed in the conventional long-term buy & hold model as well. Everybody who’s new to the game (including a lot of old folks) believes in this theory. And why wouldn’t they? All their lives they’ve been taught this model and for some people it works; unfortunately for most investors it won’t.
When times get tough, many seasoned investors tell other less experienced ones this myth as a ruse to get them to buy the properties that they want to dump, providing a logical reason not to complain when things don’t work out as expected (they really buy into it too). This is how most first time investors get caught up with lemons and ruined credit; in the end wondering why and how they ended up going broke. Don’t fall for it.
You must be in the mindset that you should always be selling and that everything is for sale. Having this mindset should also direct your approach to buying houses. This means that you don’t go in looking solely for long-term appreciation, but also for equity, cash flow and the most desired amenities that consumers want that are already there. Don’t buy any property for more than 80 percent of its market value, don’t buy one that’s too small or unmarketable; and for God’s sake don’t buy any that won’t give positive cash flow.
This means that you will have to become and stay aware of all of the trends and conditions in your market; ensuring that you’ll always be in the position to dump properties that are no longer in demand. Those trends include changes in the local job market, the school systems and in crime rates, as well as the amenities that buyers and renters in your market expect to see when it comes to their housing, such as number of bed rooms and baths.
Staying aware of your market and the trends in it of course means that you will always have to do your own research and homework. This includes analyzing the financials on a property before and after you buy with TBD Investing company's real estate investing tools, reading all the information available about your market, frequently comparing amenities that consumers in your market expect to what you have, and constantly adjusting your property inventory mix. So if you see a trend where the majority of the buyers and renters in your market prefer or want 4 bedroom - 3 bath homes in areas with great schools, then those are the types of houses that you must provide; selling those that don’t provide that, fast! Only in this way will you be assured of not having $1 million dollars worth of obsolete homes that you couldn’t pay anybody to take off your hands.
Having the always be selling mindset also means that you really must learn to master the art of how to sell homes, not houses. You have to learn and become an expert on each and every step of the marketing process. This includes knowing what it takes to create and broadcast messages that catches buyer’s attention, how to visually touch their emotions by professionally remodeling and staging your homes, how to qualify those people that fall in love with your homes and finally, how to close the deal. A great set of tools to use in learning this process is available online on the products page at TBD Investing.
Many investors don’t take the time to perfect or understand these concepts, and as a result set themselves up to lose tons of money over the long run. Professional investors ‘get this’ and are always looking for new ways to make money and to close deals. Historically, it has been proven time and time again that they will earn significantly more profits than lazy investors that sit tight holding on to their properties ever will.
Yes, people have always needed a place to call home and forever will. However properties that made sense 70 years ago usually don’t make sense to place in a buy and hold model now, and probably never will. That being the case, for the serious real estate investor to succeed in this business, he or she must act like a professional; to always be on the hunt for newer properties, to constantly update their information; to never get emotionally attached to any property, to buy right, and to know that everything is always for sale.
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Hassan Omar is a seasoned real estate investor that has personally been involved in commercial and residential real estate investing since 2000. Over that period he has successfully analyzed, purchased, remodeled, marketed, managed and sold several million dollars worth of properties nationwide and in the Atlanta market. He is the President and General Manager of the Atlanta based real estate wholesaling company known as TBD Investing Company and it’s retail home selling alter ego, Our Home Is Calling, Ltd, and the mortgage lending site at vpfc.
For more information on our investor training products, coaching, houses for sale and other services, please visit TBD Investing company today.
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Hassan Omar is the President and Managing Director of TBD Investing Company LLC, an Atlanta Georgia based real estate investment Company that specializes in providing quality investment properties and professionally remodeled homes to qualified buyers in the Atlanta Area.
A professional Investor, Hassan has been active the National and Atlanta real estate market since 2000, and has analyzed, purchased, rehabbed, marketed, managed and sold millions of dollars worth of commercial and residential properties over that period.
He is the author of acclaimed e-book, The Complete Property Locators Guide, available at www.tbdinvesting.com
Prior to forming TBD Investing Company, LLC, Hassan was worked as a finance manager for the Coca Cola Company; as a financial analyst for a multinational commercial real estate management company; as an auditor for the State of Georgia; and served as a logistics officer in the US Army.
Hassan holds an MBA in the Management Of Information Systems from Mercer University, and a Bachelors degree in Accounting from Georgia Southern University.
He is a member of the Georgia Real Estate Investors Association (GAREIA), and the Greater Atlanta Home Builders Association. For more information on our properties, products or coaching, please visit www.tbdinvesting.com, email flips@tbdinvesting.com, or call 678.683.0646.
