In essence the real estate market is very simple, buy a property at an attractive price, earn rental income and then sell for a profit. This is obviously a much simplified version of investing in real estate but when you strip everything away it is exactly what we are all trying to do. However, many real estate investors have a creative side and an ability to think outside the box. Is there room for creative thinking in the real estate market?
Spotting an opportunity
There are many real estate investors today who took a chance in years gone by which literally changed their lives. Richard Branson is one example having acquired Necker Island back in the 1970s at a price of $180,000. He went on to invest a further $10 million to create his very own private island resort which is rented out to the rich and famous on a regular basis. So, how much is Necker Island worth today?
While it is difficult to put a value on Necker Island if we were to say you would need to start at $200 million, is that not one of the most successful real estate investments of all time?
Separate yourself from the herd
All investment markets have a herd mentality with the leaders taking followers to the “promised land” where they are very often the first investors to buy and the first to sell. We have seen this herd mentality in stock markets, property markets and pretty much any other investment market you can think of. However, it is those who have the ability to separate themselves from the herd and think differently who give themselves the greatest opportunity to create significant wealth.
Research, research, research
While entrepreneurs and “blue sky thinkers” will have an array of different and innovative ideas during their investment careers, it is only a small number which actually make it to their portfolios. It is all good and well having an innovative property idea but there needs to be research to back this up and ultimately an exit route to crystallise any profit. The Internet has changed the way real estate investors research ideas and acquisitions for the future. The information you need is to hand 24 hours a day seven days a week and the ability to crunch numbers using firmly based research can be a game changer.
Lead and the rest will follow
Over the years we have seen a number of property investors develop a raft of loyal followers who literally hang on their every word and follow them regardless. While many modern day real estate investors will come and go, it is very often the words of the more experienced that stay in the mind. If we look at Lord Rothschild, a billionaire investor, he suggested that “the reason I am so rich is because I always sold too early”.
Then we have the likes of Lord Sugar advising entrepreneurs to “do business for fun and make real money investing in property”. This is a man who made his millions in the computer industry and while still seen by many as the man who brought the personal computer to the masses, he has built a £1 billion portfolio dominated by property.
Those who suggest that innovative and blue sky thinking investors have had their day are obviously not of that ilk. There will always be a place for those willing to go out on a limb, investing in heavily researched opportunities and separating themselves from the herd.