Opportunistic VS Strategic Real Estate Investing

As I continue to consult with individuals who want to invest in investment real estate, I find that most novice investors and even some seasoned investors really don’t have specific objectives in mind when they are investing. Some want to just diversify their overall investment portfolio, others want to just earn more money and others want to get out of the 9-5 rate race. These are all great objectives on the surface and real estate investing can provide you all of these benefits. However, you must go much deeper into your approach if you truly want to be successful. These investors are what I call opportunistic investors. They purchase investment property on the premise that the property is a great opportunity. They end up purchasing properties here and there and have no real plan in place on what to do with them, how to efficiently manage them or what the best exit strategy is. They do not take into consideration how the investment property fits into their overall strategy. The investment property may very well be a great opportunity, the more important question to answer though is this; “Does the property fit into your overall strategic plan?” That question is a totally different perspective than answering if the property is just a great investment opportunity. It requires that there be a purpose and direction in your over all investing approach. An opportunistic investor really demonstrates no direction. If you follow the really great investors, you will find that they have specific objectives they expect to achieve with their investments and that they have specific metrics in place to determine if they are on course. If you want to be a successful real estate investor, you must learn to become more strategic in your approach than opportunistic. This doesn’t mean you ignore great investment opportunities. What it means is that you evaluate every potential investment against your overall strategic plan. If the deal fits your strategic plan, then by all means take advantage of it. If it doesn’t, you can still benefit by referring the deal to another investor whose plan it would fit. This can be done through an assignment fee or a referral fee. Either way, it can be a win-win scenario for you. The point to take away is to know the difference between being an opportunistic real estate investor and being a strategic real estate investor. The really successful real estate investors are strategic. I will share more on how to become strategic in the future. Let us know what you think. J Jay Redding