Foreclosures are gaining momentum in some states and inventories are swelling to historic levels. Investing in a down market can be profitable and it can lead to the demise of the well-intentioned.
Everyone is still wondering what's going to happen. The talking heads are still forecasting doom & gloom. Gurus are still telling you their techniques work in any market and you're told to rely more on your team. So is this good advice?
"Part 1 - Rely more on your team"
Often this is a mistake of the less experienced. By relying 'more' on your team, you are passing responsibility onto others and creating a scapegoat when the deal goes bad. Your team is usually made up of professionals including a Realtor, CPA, Attorney, Home Inspector, Banker, Mortgage Broker, Contractor, and Insurance Broker.
How much should you rely on your team? Are Realtors great at analyzing deals and creating deals? Are Realtors able to forecast the risks, future market trends, and foresee your future financial situation?
When looking at a property, how many Realtors have ever said, "This is not a good investment" before you made a decision?
In all my years, only one. If I tell them, this isn't a good deal for me, then they'll agree but never before I make the decision. All I hear, "It's a good investment".
The Realtor's objective is to sell property. They have little concern if you can actually weather the slowing market and make the payments. And they shouldn't be concerned about it because it's your responsibility.
Yes, your team is valuable but only to compile information that enables you to make an informed decision. Beyond that do not rely on them to keep you out of trouble.
You must know what to ask for, how to read & analyze the data and come to a decision. Avoid asking them, "What would you do?".
This is one of the most useless questions asked by newbies and people that should not be entrepreneurs. Don't even ask me, 'what would you do?'. Because you and I are not in the same market. We don't have the same objectives. And we have different bank balances.
While I may accept negative cashflow on a deal for two years, it doesn't mean that's a good deal for another investor. New or cash strapped investors will scoff at a deal that require them to come out of pocket $1100 a month.
Step up and use your team but don't depend on them to make financial decisions for your future.
--- Make sure you read Part 2 which includes extra tips evaluating deals in this market.
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