Shiny Object Syndrome

Sanford Myers · 2022-03-20T08:41:30-07:00

I am a new investor looking to get started. I live in the Upstate of South Carolina between Greenville and Clemson. I am minutes away from three Universities (Clemson, Furman, and Anderson) with opportunities for student housing. I am minutes away from the Appalachian mountains and three large freshwater lakes (Hartwell, Keowee, and Jocassee) with many more small lakes and recreational areas nearby, giving me opportunities for short-term rentals. This area is experiencing huge growth with industry and population, giving good opportunities for single family rentals or small multi-family rentals. There are also a lot of small mobile home parks in the area that are either for sale or have homes that could be repaired and flipped or rented. My son-in-law and daughter also want to get involved in real estate investing, but don’t have a lot of investment capital yet, so they would like to do some flips with me to get some traction. As you can tell, I have shiny object syndrome and can’t seem to focus on one thing to get my laser focus and begin making traction in one direction. My ultimate goal is to build a portfolio that will provide income to my wife and myself for the rest of our lives while providing the same for our two daughters and their families even after we are gone. So...what suggestions do you have for narrowing my focus to one area and quit being distracted by everything else out there?

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

4y

First suggestion is,....don't narrow your focus...just expand your knowledge base into that width of your focus, and beyond. The first mistake many REI make is to think they should focus on one type of strategy, then become an expert in that strategy. Foolish. You'd be missing all the opportunities open to you from the other strategies, and you'd be forcing your strategy on properties that should be kept as far away as possible from that strategy.

The more you know, the more opportunities you can take advantage of, and the less you get lost following those "shiny objects of distraction".

1 Reply

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

4y

Understand all strategies, but narrow your focus and niche to one or two strategies. You would need multiple teams to effectively pursue every opportunity in real estate, STR, flips, multifamily, and commercial. Choose the strategy that fits in to your lifestyle and personality type and go head first in my opinion. Don't be the master of none

2 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

4y

Quote from @Eliott Elias:

Understand all strategies, but narrow your focus and niche to one or two strategies. You would need multiple teams to effectively pursue every opportunity in real estate, STR, flips, multifamily, and commercial. Choose the strategy that fits in to your lifestyle and personality type and go head first in my opinion. Don't be the master of none

Not so. First, STR, flips, multi, and commercial are NOT strategies...they are types of properties. How you make deals out of them are the strategies...and the more you know, the more opportunities exist.

REI's should never limit themselves to being a master of a few, be a Master of none ... they should be a Master of them all. If an investor thinks they can't do this, they are only penalizing themselves,...and probably lazy. Note I'm not calling you lazy, because I have no doubt that you couldn't be a master of an unlimited number of strategies. It's not that hard...it's just basic math, and an application of that math to make deals happen.

1 Reply

Mike Davis

Lender · Annapolis, MD · Member since 2022 · 154 posts · 70 votes

4y

@Sanford Myers if you are looking to team with the family set up your LLC, everyone as partners. Make sure to explain every role and contribution. Start off with a SFR fix and flip project to get everyone some experience and to learn the process. The more projects you get under your belt, the better terms you will get. This will be helpful as your projects get larger. Never narrow your focus, deal are everywhere.

1 Reply

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

4y

Quote from @Joe Villeneuve:

Quote from @Eliott Elias:

Understand all strategies, but narrow your focus and niche to one or two strategies. You would need multiple teams to effectively pursue every opportunity in real estate, STR, flips, multifamily, and commercial. Choose the strategy that fits in to your lifestyle and personality type and go head first in my opinion. Don't be the master of none

Not so. First, STR, flips, multi, and commercial are NOT strategies...they are types of properties. How you make deals out of them are the strategies...and the more you know, the more opportunities exist.

REI's should never limit themselves to being a master of a few, be a Master of none ... they should be a Master of them all. If an investor thinks they can't do this, they are only penalizing themselves,...and probably lazy. Note I'm not calling you lazy, because I have no doubt that you couldn't be a master of an unlimited number of strategies. It's not that hard...it's just basic math, and an application of that math to make deals happen.

In my experience shiny object syndrome has caused more confusion that clarity for new investors. When they know what they want, educate themselves on it, and attack it they have more confidence a much higher success rate. This may not be the case for the seasoned investor, who is able to master many different strategies. Experience and time will allow you to be a master of them all. Respectfully

2 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

4y

Attacking something with everything they have is an example of shiny object syndrome. Just because you want it, doesn't mean you should get it. Sometimes the best deals you make, are the ones you don't. Focusing on one type of deal, no matter how well you know it, and having that type of deal the only one you understand, no matter how well you understand it, doesn't make it a good deal...and more often than not, will lead to a bad deal...chasing that object that shines...because it's the only one you can see.

1 Reply

David Lilley

Rental Property Investor · Dallas, TX · Member since 2016 · 261 posts · 170 votes

4y

If you are going to be active in the investment versus investing passively with an experienced sponsor, you need to pick a property type and class, and focus your resources on learning everything you can about it. For me, I decided quickly that my focus would be value-add multifamily investments, and more specifically, 70s-80s built product. I believe this property type within the residential sector is superior because of the economies of scale that exists and its greater potential for appreciation.

If you are going to invest with an experienced sponsor, I would say you still need to determine the above, but your focus should be determined based upon your belief that that property type will produce the greatest returns for you.

1 Reply

Cole Oraham

Real Estate Agent · Clemson, SC · Member since 2015 · 56 posts · 35 votes

4y

@Sanford Myers I am in a similar boat. I love 5-16 unit multis, but it is so hard to find a deal that makes sense right now. I really want to go the STR route, but I keep talking myself out of it because it is more demanding than conventional rentals. In my opinion, the best way to narrow down is to look at which investment type is most conducive to your lifestyle. Flipping is a lot of managing the rehab. STR is a lot more hospitality. MHPs in our area can often be a much lower class tenant which requires more turnover/a harder time collecting rents and upkeep of the property. Each of the above mentioned things are why there is money to be made in the different investing methods! It's a matter of finding the problems that best suit your skillset.

I'm an agent in Clemson. I'd love to connect with you!

2 Reply

Ian WalshBusiness Member

Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

4y

Figure out your end goals and work backwards. I found that finding the investment strategy that best fits my personality is what was best for me.

2 Reply

Sanford Myers

OP

Member since 2019 · 20 posts · 14 votes

4y

@Cole Oraham Thanks for the input. It’s nice to hear from someone who knows our area with all of its benefits and challenges.

0 Reply

Colton Hahn

Specialist · Member since 2021 · 322 posts · 273 votes

4y

Quote from @David Lilley:

If you are going to be active in the investment versus investing passively with an experienced sponsor, you need to pick a property type and class, and focus your resources on learning everything you can about it. For me, I decided quickly that my focus would be value-add multifamily investments, and more specifically, 70s-80s built product. I believe this property type within the residential sector is superior because of the economies of scale that exists and its greater potential for appreciation.

If you are going to invest with an experienced sponsor, I would say you still need to determine the above, but your focus should be determined based upon your belief that that property type will produce the greatest returns for you.

David hit the nail on the head with the approach, find out what type/class of properties you think fits your goals. Once you figure that out, find syndicators who acquire those kinds of properties and vet those companies out. Once you do that, you can start investing in real estate passively!

1 Reply

John Hovanec

Flipper/Rehabber · Piedmont, SC · Member since 2018 · 119 posts · 50 votes

4y

Quote from @Sanford Myers:

@Cole Oraham Thanks for the input. It’s nice to hear from someone who knows our area with all of its benefits and challenges.

@Sanford Myers I also live in the upstate there are a lot of opportunities in our area. It’s hard to pick one lane. I have done some flips, have a small mobile home park, duplex and some sf rentals. I would suggest to pick a short term goal, 3-6 months . Which lane will get u to that goal in ur time frame. U can figure out whichever lane u start in. U can switch lanes later. The only important thing is to start. Feel free to reach out to me if you have any questions or just want to talk real estate. Have a great day

1 Reply

Bonnie LowPro Member

Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes

4y

Just pick one. Prioritize. Sounds like your top priority would be generating cash flow for yourself and your wife so go with the option that gets you on your way to cash flow quickly. That would probably be short term rentals in your college towns or vacation locations you mentioned.They tend to drive higher cash flow than LTRs, especially single family homes. Also consider the tax structure. Are you currently high W2 earners? If so, you might pay more in taxes on properties you flip because flipping profit is taxed like ordinary income. But no matter what you choose, just get started. It's not like you have one and only one chance. Do one, then the next and the next. Many investors make several purchases just in their first year so it's plausible (depending on your capital) that you could buy more than one asset class. That being the case, does it really matter that much which one you do first? I will say that not being focused is going to put you in analysis paralysis because you'll be analyzing SO many different deals. So pick something, run your numbers and pull the trigger. It doesn't matter what it is. You can try something else next time.

[email protected]

1 Reply

Paul MoorePro Member

Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes

4y

@Sanford Myers you got some interesting feedback from two very different perspectives above. I would say this: some people can multitask and do lots of things well. I’m guessing Joe is one of those people in my hat is off to him. Other people, like me, were virtually ruined by shiny object syndrome.

As @David Lilley said so well above, I found that the best way to invest in lots of different arenas is to stay passive. Passive investors have the luxury of doing a few things very well: choosing the right asset types and syndicators.

I have found that actively investing requires an obsessive focus on one thing and doing it very well. At least for me.

My first advice would be to read The One Thing by Gary Keller and Jay Papasan. This helped me immensely in clarifying these issues.

My second piece of advice would be to find an asset type that has a lot of fragmentation in the ownership base. I mean a lot of mom and pop owners. These good folks often don’t have the desire, knowledge, or resources to upgrade their properties, increase income, and maximize the value for investors. The intrinsic value of these properties is often much higher than the sale price. Which can leave you a lot of upside potential and margin of safety for are you coming downtown, whenever that is.

I found mobile home parks, RV parks, and some self storage properties offer this better than most commercial asset types.

Good luck!

Podcast Guest on Show #533

2 Reply

Sanford Myers

OP

Member since 2019 · 20 posts · 14 votes

4y

@Paul Moore thanks for the great input. “The One Thing” has been on my list to read for a while now. I guess now is as good a time as any.

0 Reply

Corbin Loveless

Real Estate Agent · Knoxville, TN · Member since 2020 · 54 posts · 42 votes

4y

Sanford- First of all, we've all been there. Every time I listen to a podcast and hear about another investor's success, I'm tempted to jump in feet first to a new strategy.

My recommendation is to begin with the end in mind. Your words on your ultimate goal- "My ultimate goal is to build a portfolio that will provide income to my wife and myself for the rest of our lives while providing the same for our two daughters and their families even after we are gone."

If it were me, I would use short-term rentals to supercharge my cash flow with my first several investments (I personally would buy STR cabins in the Smokies). Then I would balance my portfolio with another type of real estate investing like multi-family or single-family homes as long-term rentals. If you want to involve your son-in-law and daughter, I recommend helping them purchase a single-family home to live in that can be rented as a long-term rental once they move out. If your son-in-law and daughter purchase a new home each year at 5% down (minimal cash needed), your family will have a portfolio of 10 long-term rentals and several of your short-term rental investments. You'll have a balanced portfolio to leave behind for your daughters and their families.

The good news is, that real estate is forgiving. Everyone who has started investing in the past 3-5 years has benefited from massive appreciation and rental income growth. The most important step is getting started- take action! The best time to buy real estate was yesterday!

All of this is just my opinion. I'm a real estate agent in TN, not a lender or financial advisor. Feel free to direct message me if you want to talk strategy, I never get tired of talking real estate!

3 Reply

Shiny Object Syndrome

Shiny Object Syndrome

Most Popular Reply

16 Replies