Real estate is a tricky business. There’s lots of info about buying a property and decent amount about buying the proper property. I have observed and worked for an awful lot of real estate investors some of whom are more successful than others.
Real Estate is a Two Part Business
When you have your cash out ready to do a deal you will be incredibly be popular. Everyone wants to know your name. This is the buying phase of the real estate game and finding, chasing and negotiating the purchase is one part of the business. Evaluating property and choosing how much to pay for it is an art. Some people are incredibly successful at this part of the business.
Managing tenants, increasing value, maintaining the building and keeping the income flowing into the coffers is the other part of the business. This part of the business is the ugly step child. This is the part that trips up most novice investors and with good reason. It’s the hardest part. Effort must be sustained over long periods of time. It’s not glamorous. You are dealing with people and people are very difficult and complex. You are dealing with the economic situation of the region you live in. You are dealing with damages. You are dealing with the effects of passage of time on your asset. All the skills required to manage a property are very separate and distinct from the ones that are required to find a great deal on a property.
I’ll use an analogy. Lets say you a buy a building and it houses a restaurant. You buy it because it’s a great deal. You have possibly learned a lot about what constitutes good value. It doesn’t matter. You close the deal. Then you realize you know absolutely not one single thing about running a restaurant. That is exactly the same situation most first time buyers of income property find themselves in. Yet this part of the business is so crucial to your success it isn’t even funny.
That’s the secret.Â The real estate business is comprised of two entirely separate and distinct businesses. Your success hinges on mastering both parts.