All Forum Posts by: Myles Wisdom

Happy Friday All! 

I am a HUGE fan of technology and its ability to increase our productivity by making things just work better. I am wondering, what kinds of programs/apps etc. you all are using to make your business operate more efficiently? 

Hi Aubrianna,

I am a little late in posting to this thread but I hope that you may still find some value in my two cents :). In addition to some to the things that @Andrew Warner mentioned some things that investors will likely be interested in knowing are:

- Whether there are any major capital expenses that will need to be dealt with in the near future (ie. new roof, furnace etc.)

- Property tax amount 

- Proximity to amenities (ie. grocery stores, gyms)

- Whether or not the property will be rented upon purchase (some may like that and others may not depending on the specifics of the current rental agreement) 

Hope this helps! 

All of the responses that have been made on the question so far are excellent and I couldn't agree more. In case you want some deeper knowledge on this particular metric and many others that are used in valuation, what has been a key resource for me and you may want to look into is the book "Mastering Real Estate Investment" by Frank Gallinelli. He makes it easy to understand with lots of examples to practice with so you can get a firm grasp on valuation metrics for Real Estate.    

Although the book I am going to suggest is made specific to Canada (and most Biggerpockets users are American) I believe it still provides excellent insight on the key fundamentals that investors should pay attention to when assessing the direction/cycle the real estate market is headed. The book is called "Secrets of The Canadian Real Estate Cycle" by Don R. Campbell

@Jon Klaus  Hahaha I agree eliminating oneself does sound to be the best option

@Karen Margrave  Yes it is my last name but can be a difficult one to live up to at times :)

@Lynn McGeein   Your perspective is well taken! The more I think about the quote however, the greater the validity that I think it has. While I agree that fear and hesitation can be helpful in getting us to be more meticulous in our approach I think that humans can also end up falling into the trap of some other dangerous traits which do cause us to be our worst enemy. In particular what comes to mind as it relates to investors is Greed and Obsession. With greed comes the greater likelihood that we'll harm others and even ourselves in pursuit of whatever the objective is. With obsession we become more susceptible to hurting our profits as we quickly get caught up in the small market fluctuations that inevitably occur and end up in a day-trader type of thinking (and end up selling far too early). In addition, obsession can even cause us to get stuck in the "herd mentality" as we check every second to see what the news is saying and allow ourselves to believe all of the doomsday stories that are emerging about the state of the markets. 

Great discussion everyone. 

I was reading a short article today that said something that I found interesting: "an investor's greatest enemy is not really the markets or lack of resources, but really the investor himself". 

I do believe that those things (ie. lack of resources) can actually be real and serious reasons to impede progress but according to the quote, the bigger enemy is ourselves. I'm wondering what is it that makes us the biggest enemy? Is it simply fear or is there more to it than that?.. 

@Chris Duzan 

Hi Chris,

That's a great question! To be honest, to really have an excellent level of understanding of the environment you are investing it is in your best interest to conduct analysis at all those levels you mentioned (state, city, neighbourhood). Having that knowledge can allow you to react quickly to changes especially in hot markets and allows you to capitalize more on deals that others wouldn't because you have all of that information. The most important thing though is to become an expert in your particular city/neighbourhood as real estate is very local (don't get too caught up in national averages). There are many variables to consider in this evaluation process and in addition to the things that you listed to look for (crime rate, neighbourhood appearance) here are a few more variables I would consider when assessing the an area:

- Proximity to amenities (grocery stores, fitness centres)

- Distance to public transit (ie. terminals and bus stops) and other transportation improvements  

- Whether the neighbourhood as a whole is in transition to increase or decrease in quality 

- Building of new infrastructure 

- Moving in of a major employer 

One other tidbit of advice I heard recently which I thought was great is to follow the big box stores (ie. walmart). Reason being, is for one thing they are job creators but even more than that, they sift through incredible amounts of data before they make the decision to place a store at a given location and so you can probably be sure that where those major players are headed, people and real estate demand is likely to follow. 

So I have been finishing up this excellent book on behavioural economics called 'Predictably Irrational' and I highly recommend it if you haven't read it yet as I believe it to have excellent application to investors!

One of the intriguing ideas it presented is called "Arbitrary Coherence" and it states that  once an initial price is set in our mind it shapes the prices we're willing to pay for not just that particular product BUT also similar products.

With that in mind I am wondering, have any of you have had any real experiences with this type of  behavior in your own investing careers? For example if you are invested in more than one market, think back to the first market that you did your first real estate deal. Looking at it as objectively as possible, do you find that your first deal has shaped or set an anchor point on what it is you are willing to pay for properties in other markets? Or if you have paid a contractor to do a job in one situation has that set a maximum amount you would be willing to pay for that type of work? 

I'm interested in hearing if you believe this to be true and what experiences you may have had with this idea. 

Wayne Brooks Okay thats a good little tidbit of information. Are there any other key costs that I should have before arriving at final numbers?