Ever heard the expression: “When you invest in real estate you make money when you buy”?
The idea is that the quality of your investment depends on how good a deal you get up front and it’s what I call Property-centric real estate investing.
This method may work well for you if you aspire to make real life estate investing your full time career. But it won’t serve you as well if you’re looking to invest in real estate long term to create an income stream.
Here’s why. The flaw in choosing a property centric approach for long term investing is that there might be a mismatch between the property you got a great deal on and the type of Tenants you want to get. And when you put together a real estate portfolio with multiple properties, Tenant issues compound and become your nightmares.
There’s a better way and I call it Tenant-centric investing. When you invest in a long term investment property, what you’re really buying is Tenant relationships over the period you’re holding the property.
So instead of focusing on price alone, we focus on the type of Tenant we want to have. Then we ask: what type of property are those Tenants looking for? What’s making them rent here vs there? And we buy a property that can provide those things while also providing a commensurate ROI for us.
You know I’m surprised Erion doesn’t get more traction with his philosophy. I wish someone had taught me this 20 years ago when I started. It took me most of that time to figure this out myself. Instead I listened to all the guru’s who worshiped at the altar of cash flow and bought class C properties with sub-par tenants.
You’re far too kind. Bull markets have a tendency to paper over a lot of cracks in strategy and we’re in a furious one now.