Identify The Market
Getting Comfortable
It starts with the idea of what type of real estate investing you're comfortable with. Do you prefer to have long term, commercial, or short term rentals. Each type has it’s own advantages and disadvantages, but being clear from the start will help you focus on the goal at hand.
The idea that you will create immense wealth and be flying around in private jets within the year is completely unrealistic. I would say it takes at least 3 to 6 months to determine your best course of action, and build a game plan for how to move forward. You want to determine the properties you're interested in, and then take time to determine their cash flow potential. Doing research through sites such as Airbnb, Booking.com, and Loopnet (for commercial properties) will help you distinguish the profit potential.
Part of my strategy involves being just close enough to the action, but not immersed in it enough to be subject to heavy local restrictions and regulations. Even in the commercial market, when you play in the deep end of the pool you can drown. Large cap markets like city centers and hot down town areas have all the glitz and glam people want and strive for. If money is not an issue and you can afford to play with the big boys and pay your way through problems then there is certainly money to be made. For the introductory level investor it is better to be just close enough to see the action, but not get caught up in potential red tape.
Research, research, research. Check every available outlet you can. Don’t restrict yourself to your local area, simply because it’s familiar and comfortable. Go where the market allows, and where you can turn a profit. If there is a choice market, and you have done all the research and feel the market is ripe for investment, pick it and go all in. Don’t hesitate in thinking there is always something better just over the horizon. There are endless opportunities and available markets for investment. Knowing the market is the important part. If you get a doctorate in biology in Washington state, that doesn’t mean you aren’t able to advise people on biology in Pennsylvania. Knowledge doesn’t have a radius, and just because you live somewhere shouldn’t mean that is the only place you can shop.
Some strategies I implement are looking at destinations that are enduring. National parks, incredible restaurant cities, and sites of historical significance are all places people want to visit. Think about it, people love to vacation in those places, and with the recent shift to remote working models, people love to work near these things too. My thoughts, and certianly my opinion, are that post-Covid people are not relying on the heart of a city to put up shop. Prices are, and will always be, high. Getting into the market is tough without the proper capital. Now, if you are 25 minutes away from downtown you can have all the benefits of the metropolitan market, but not pull your hair out when coming home or looking for a parking space. The concept isn’t new, but applying it takes a little finesse. It’s easy to buy a short term rental in the perfect downtown neighborhood of LA. But it takes a lot more research to find a spot in a nice town with direct access to the city, all while still meeting the needs of your clients or guests with prices reasonable enough to get into the market.
Taking a recent purchase as an example. Everyone knows what’s impressive about Asheville, North Carolina. But what town surrounding that incredible mountain city, with an emerging art scene and world class dining, has everything you need to thrive and at a reasonable distance and price?