At least once a day I get a call from an “investor” who doesn’t really have a criteria but would like for me to send them a “deal”. Naturally my response is to ask them “What is a deal to you, what type of return do you need, do you follow a specific cap rate or Cash-on-Cash return requirement, if so what are you basing that on, what type of property are you looking for, what amount of capital do you have to invest, does your lender (or funding partner) have a criteria, how long do you intend to hold it,……..
As you can see there is a lot more to consider when looking for a “deal”. Most people are really what I call Speculators. They fill up on HGTV Flip shows, slug beer and dream of riches with their friend (who exaggerates second hand information) and seemingly hopes to succeed for the most part on gut feelings. This is a recipe for disaster. A disaster that we all experienced in the collapse of 2008. Rather than play the innocent victim I looked around the crowd of people and picked out the folks that not only survived the market but thrived. It was in those individuals that I learned that success is not by chance. Successful people do specific things.
Gary Keller, co-founder of Keller Williams and writer of one of my favorite books~The Millionaire Real Estate Investor~defined a Speculator in the best way. “Speculators aren’t afraid to take action; in fact, they love action to a fault. These are the high rollers, the thrill seekers, the lottery lovers, the gamblers. They confuse risk taking with investing, and their risk tolerance may border on risk numbness as they pursue their dream of a big, fast payday. The trouble is that speculation is by definition a matter of taking above-average risks in the hope of achieving above-average returns. It’s buying something on the basis of its potential selling price rather than its actual value. Look it up—Speculators bet on the come.”
Don’t be “That Guy”. Stop being a Speculator….become an Investor!