What is the most important 20% of Real Estate Investing?

[Oliver Beirne]

I want to hear your personal opinions on what you think the most important 20% of Real Estate investing is. I know there is lots of important ideas and things to know but if you could personally pinpoint it what would it be.

[Michael Boyer]

Neat topic. I think there is some truth in the 80/20 rule (how 80% of your gains or output come from 20% of your efforts or inputs) and its applicability to real estate. 

The generality makes sense (you do a lot of "stuff" but when does it really pay off) and specifics can be trickier to list, though....

To pinpoint a few in the buy and hold rental context....

1) You make money when you buy. I think this one cannot be overemphasized. The location, condition and what you pay will be the one set of real estate clothes you wear every day. You are stuck with these....Get a defective property, bad location or overpay-- it can be uncomfortable and make you feel bad everyday (and lose you money). But, on the other side of the coin, a great property in the right place almost rents itself. And if it is well built and in good condition, just regular maintenance can keep it on course. Plus, the right locations and properties get the best appreciation. So whatever time, energy, and effort you put in during the purchase process pays off many fold.

2) Get the right renters. While it may not be 100% foolproof, many (or almost all) of the tenant travails, travesties, and disasters that you read about can be prevented with proper tenant selection. The 20% of time you spend on selection can pay dividends for years--many fold. Less wear and tear, less stress, less vacancies, fewer people and property problems... It keeps you in the game--not scrambling for the exit...

3) Fix it right (the first time). Most of the time, I find the "cheap" band aid fixes just keep you coming back for multiple calls and repairs. So in your turn-arounds and in any repair fixes, make sure you or your contractor use top quality (not always most expensive) components and quality service (by you or someone else). Otherwise, later squeeks, leaks, and do overs just burn you out and burn up more money. Also, you can even fix it "before" it fails in some cases, like water heaters or appliances that are clearly on their last leg or at the end of their useful life in terms of years. So the time you spend planning or scheduling maintenance can add big dividends down the road and prevent larger repairs.

Best of luck