Claims of grandeur or fast growth.
Here’s a story for you…. Not too long ago we were at an awards ceremony for real estate investors. When the award for Newbie Achievement came up one of the veteran investors at our table commented that “ugh, I hate this award! It usually goes to new Investors who grow to big too fast and then they crash and burn and lose everything” Unfortunately for the veteran investor there was one person who none of us knew sitting at the table and he was sitting directly next to the veteran investor. When the winner was announced, he stood up, went to the stage and collected his Newbie Achievement award. Oops. But it shows how being in the game long term can completely change your perspective of fast growth. Sad to say but we’ve seen it too often turn to Crash and Burn.
What the veteran investor said was not unrealistic, for those who have been in the industry investing for many years, they have seen many newbie, hotshot, bigger than life investors come and most of them go down hard. Afterall, what pitfalls, lawsuits, heart aches, JV’s gone bad, JV’s gone good and losses has someone with only a couple of years experience had? Would you take marriage advice from a young couple met, dated and got married within a few weeks – then presented themselves as experts because they “were in the game?” Hopefully not.
We’re sure you have heard many times that real estate is really built on relationships. Relationships with your realtor, mortgage broker, bank, property manager, tenants, JV partners etc. Before going into a relationship with someone in real estate, ask around about them.
Whats their reputation? Industry leaders and long time investors have seen so many investors come and go and thank goodness, this is a small enough space that those not playing fair usually get exposed pretty quickly. An easy way to do this is to ask them if they would invest with said person, and why or why not. It won’t take much asking for you to get your answer.
Written by Leticia Casanova for Investor Life Inc.