Real Estate Paradigm Shifts...

[Clayton Swansen]

Hi everyone. This is just a question I have that I am hoping to spur some colorful discussion on. I wasn't sure where to stick this post, so into the general pot it goes! 

I was reading a book recently on economic history. It discussed the fact that throughout history there have been a handful of sudden economic paradigm shifts. What happened in these instances was that the majority of a given society believed that they understood their system completely, that there were no more surprises to be found within it... Then, suddenly their whole world changed, and they were struck rather violently with the realization that all of the things these people thought they knew, were not actually so. 

This got me thinking about what I don't know about real estate investing, and the real estate world in general (which I freely admit is pretty much everything). I have come to believe that bought right, multi-family investing is about as safe of an investment as there is. I can use a little bit of money to secure a large asset, do some improvements, boost the rents, and then I have a cash-flowing property that the tenants pay for. Again, I have come to believe that bought at the right price, in the right area, and rented at the right price, I will have a secure asset even in the event of an economic downturn. This is freakin' amazing. But in a fairly solid economy like we have at the moment, it's easy to talk up real estate investing. On BP, I get a pretty rosy picture of REI, but there must be pitfalls outside of just buying a bad deal.

I'm a believer that if you are dilligent in the study of your craft, that you may not be able to foresee the future, but you can be well-prepared to not only weather the storms, but to take advantage of them. This is what I want to do with my investing. I want to make it bulletproof... or close to it, anyway.

So, what am I missing? What are the pitfalls here that I have not thought of??? 

[Ryan Cameron]

@Clayton Swansen Great topic. "Diligent in the study of your craft" are an excellent way to word it. Continue to learn and you'll begin to notice trends in either direction. Though even in major crisis (Like 2008-2014) there was loads of deals to be had in specific markets. Philly was a great example of that. There were pockets of the city that doubled and tripled in value during the crisis. The beneficiaries of that, were the investors who noticed and took advantage.

I think some of the pitfalls besides a bad deal could be poor management (Either by you or your hired property managers). Also complacency, some investors tend to get "comfortable". As the landscape of the business changes, they don't keep up or adapt