Being a Specialist is just Smart!
One type of property/deal in a certain designated location.
I have worked with many people over the past 16 years and the ones that stood out and really excelled were the ones that had a specialty in their certain investing. I really think it boils down to the principle of “Focus”. Who would you rather have change out your furnace…. The handyman fellow you found on Kajiji or the guy who has been in the furnace business and only has been doing that line of work for 20 years? I am not saying that both people can not do the job. But what I am saying is that there are huge quality and speed benefits that come along with someone who only does this one line of work. Think about it, having all of the specific specialized tools to do the job, knowing all of the various products and their manufacturers by name. As well knowing the pros and cons for each choice.
I suppose the same could be said about my finance specialty. Most Mortgage Broker’s will answer Yes I deal with investors for sure. A common answer might be that two of their last ten deals may have been an investor mortgage deal. My answer is simply nine out of my last ten deals were investor clients. The knowledge, experience and contacts would just naturally go along with this much focus. (A small plug I know :P)
I really think it just makes sense.
Now let’s look at the benefits this will have for a person looking to grow their investment portfolio. If a person was so clear about their investment strategy so much that they could answer these questions. “What type of property will you buy?”, “What location will you buy them?”, “What price point would you consider?”, “What type of deal will this be?” Eg. flip/rehab deal versus long term Hold. When I am working with folks I even request for further clarity by asking… “How many of these deals do you need in order to hit your financial freedom goal over the next ten years?” I can tell you that every person that I have worked with over the years that has become financially independent through real estate had these questions very clear from the get go. This one lesson I had to learn the expensive way! I think over the past twenty years I have owned real estate in at least ten different markets. Yikes.
Lets look at some of the benefits that come along with being specialized. Let’s say two people are looking at a certain property that just hit the market and appears to be a good deal. Well while person number one is doing their trained due diligence the second person because of their specialty already has the property under contract and locked up. It takes time to figure out what other houses in the area are renting for and what they are selling for with what features etc. As well if you already know what the long term growth expectation is for that certain area along with any new enhancements like that new highway for example then you would be miles ahead of the next person that didn’t necessarily have this information readily available.
Another benefit to being a specialist is having your success team already set up and ready to take on that next piece of real estate you are bringing online. Just imagine if a new realtor, property manager and repair person had to be found and trained the way you like to do business. Then you had to do it all over again next month because you found a great deal 3 hours away from your last one. In addition let’s say you only really spoke to that certain team a couple times a year because of the limited number of deals you did in that certain area. Ask me how I know this isn’t the necessarily the best way! I recall getting a call from one of my tenants saying the hot water tank burst and there was water leaking. I did what any responsible owner would do and pull out the yellow pages and started making phone calls. Well let’s just say the contractor could sense my desperation and need to get this issue handled and fast. I ended up paying twice the price I would pay here locally just because the guy knew I was a distant landlord in need. I hate to say it but these types of things happen.
What about buying huge bulk supplies like carpet and paint and linoleum, for huge discounts and savings because all of your properties have the same interior finishings. Think of the efficiency and savings if all of your renovation team knows exactly what you expect without you having to even be there? Chasing that amazing cashflow “shiny” deal not in your area that doesn’t fit your system just never happens any more once you choose your area of focus. This alone has massive savings. It is like having a compass for your business plan. Keeping you on track for your goals and not wasting time and money getting things set up in many different locations. This just makes investment sense. From my experience anyhow.
One good idea is worth “thousands” I say.
All the best!