Numbers Do Not Tell the Whole Story

[Tom Goans]

Numbers Do Not Tell the Whole Story

Simply relying on “the numbers” can get you in a lot of trouble. There is always much more to the whole story. Do not neglect target market, neighborhood, and local employment/employer considerations. While national and world considerations do contribute to the whole picture, local considerations rule. Does your state allow medical marijuana sales? If so, what happens if a store pops up in the neighborhood where your investment property is located?

Another example, consider some of Donald Trump’s real estate ventures. I am not picking on The Donald or passing judgment. He is a well-known person whom you may have heard. The Donald has had numerous prominent business failures. In order to obtain financing and support for the real estate ventures, I am sure there is a huge stack of numbers for each failed project. I am sure his team has done far more number crunching than most real estate investors have. And, yet ...

There is more to successful and enduring real estate investing than just the numbers. As one of my mentors repeated numerous times, you can make numbers say anything you want.

Your comments are encouraged and welcomed. This is how we all learn.

[Bryan L.]

One could still make the case that it all comes down to the numbers. The numbers get changed (are different) based on local situations. An $80,000 house on the north side of town may be worth $120,000 on the south side. High unemployment effects the market by reducing the number of qualified buyers, which in turn reduces the ARV. A pot store moving into a neighborhood might increase or decrease your ARV or your market rent (the numbers). So, looking at it from this perspective it is still about the numbers. But when working the numbers, one has to be careful to include ALL items/issues that will effect the numbers. And one has to know that the numbers can (and do) change. And often they change due to factors that are beyond the control of the investor. Just my opinion.