After listening to many GURU's How do you know which STRATEGY to EMPLOY?

Question

After going and listening to GURU's, purchasing many different strategies.  What determines or How do you determine which strategy is better than the other in your REI?  Some spend thousands of dollars and NEVER use any strategy.  Some spend NO money and get results.  So what is it that makes the difference?  Is it the DRIVE of the individual or the location or just the LUCK of the IRISH?  Please tell me how you determine what strategy is BEST for BUSINESS.

Don Konipol · Answer

Many of these so called strategies are in actuality non workable or marginally workable methods of acquiring, disposing or controlling assets.  Even strategies that are workable are by themselves useless.

Gurus love to sell "strategies" because they are unincumbered by reality, i.e. the necessity of having money, time, knowledge and experience added to the equation.

When I began to study and learn about real estate investing, there were no gurus.  With the exception of Bill Nickerson's classic book, all books relating to real estate investing were college text books.  One understood that a time consuming learning curve was necessary for success in this field, that there were no shortcuts or instant riches.

You need to start with the basics; real estate investing is only profitable in one of two ways, either you buy a property for less than it eventually is worth or the property you buy has a positive net income generated.  If you cut out the fancy names, use of exotic legal forms, and salesman's promises, you more clearly see what is really required.

Many guru "strategies" are not strategies at all.  For example, "subject to" is not a strategy, it is a method of acquiring a property.  "Foreclosures" is not a strategy, it is acquiring a property through a specific legal process.

The point is that the basic underlying success is through profit, either selling a property for more than it is worth or obtaining a positive net income generated by ownership of the property.

It does not matter to me how I obtain ownership, lease option, subject to, nothing down, foreclosure investing, wholesaling; throughout my career I have done them all.  I never set out to specifically use any of these methods of acquiring property; I was merely looking for profitable deals and these tools were the obvious choices at the time.

While on the topic, let's talk about price.  Obviously, the lower the purchase price the greater the profit (or less the loss!) on any property purchase.  The reality is that the best price is obtained by paying all cash.  If a seller needs or wants to sell badly, the prospect of quick, no hassle fast cash will bring him to his lowest price.

So, if you go into real estate investing with little or no capital, you will be competing with all cash investors, such as myself. As a result you will in all likely hood not be competitive in trying to buy the most attractive bargain priced properties.

In this case you can still obtain good quality properties by working harder, longer and obtaining more knowledge than the next guy.

One final note, imo, many of the real estate investing "strategies" taught by gurus are not real estate investing, they are at best a real estate business, or more likely a real estate job.  Take for instance wholesaling; where is the investing aspect?  You identify properties undervalued, tie them up in some way, then sell them to an investor or another wholesaler at a profit.  This is a business, not an investment, the same as being a real estate broker.  Can it be profitable?, very much so. But so can many businesses.

So maybe the first thing you need to decide is whether you want to invest in real estate, or you want a real estate business.  This will point you in the right direction.

William McGowen · Answer

I spent 20 years sitting on the sidelines with real estate.  I kept reading up on it, but never took the plunge.

I watched the "Gurus" on television, yet there was always something I disliked about most of them.

I finally found a group that made sense.  Some here think they are like the Gurus you see on television, and others are members who support them, and a few with complaints.

But through them I found this group, and then joined to local clubs.

One of the interesting facts is that people who act without thinking are more likely to become successful then the ones who think before acting.  I am the latter, and as you see it took me over 20 years to get in to real estate.  (Just days from my first deal.)

The reason the others are more successful is that they jump in, fail, learn from that failure, and jump again, until they do succeed, while others just sit on the sidelines watching.

Naturally it is best to think before acting, but make sure you don't think too long, otherwise it turns into analysis paralysis.

Bigger Pockets posted a list of books that came highly recommended.  I think that's a great place to start.

Oh and I believe in teachers, not gurus.  Learn from them, then think for yourself.

Also the plan is to learn, act, learn from your results, adjust, act again, and repeat.