I’ve met with many individuals interested in real estate investing who read numerous posts/articles about what markets to invest in and what to buy. However, they get stuck in reading about others success and never pull together the macro vs. micro to get ahead. I believe success in real estate investing comes down to ‘Macro Patience vs. Micro Speed”.
When I started investing in real estate over 10 yrs ago, I took a long-term view of cash flow and appreciation to build wealth for my children vs. short-term flipping/speculation to build wealth for me. That’s not the only strategy/purpose, but that is my plan and why I do what I do. Whether your strategy is to invest for long-term cash flow or flipping for short term cash gain or buy/hold for 3-5 yrs for appreciation, you need to have a Macro vs. Micro strategy and plan.
From a “Macro Patience” perspective, I look at three key factors to long term market growth/real estate appreciation:
- Market Level – is the state pro-landlord or pro tenant?
- What is the current and future population/job growth of the market?
- Quality of Schools – strong school districts/education drive real estate appreciation and demand
When my wife and I started investing in 2006, we chose Texas and specifically the DFW area. From a State level perspective, Texas is pro-business/landlord and population/job growth is strong. More jobs have been created in Texas between 2007-2014 than the rest of the country combined. Where within that state is the growth occurring? We chose North Dallas where Frisco/McKinney is the 2nd fastest growing cities in America. If you choose a state with strong job/growth, then where are the best schools? We chose Collin County (North Dallas) that have the strongest schools in Texas. Regardless of the state/metro you choose as your target market, consider the state business environment, future population/growth, and schools as a few data points to help you identify the macro trends for long term growth. Again, at the macro level, it’s all about patience and taking a long-term view.
From a “Micro Speed” point of view, it takes a team on the ground that can execute faster than your competition (other investors/buyers). At the micro/deal level, it’s all about speed & execution. It doesn’t matter whether you are in a buyer or seller’s market. Speed wins 90% of the time. If your resources (financial and human) are ready to go, you can out execute your competition and win the deal with speed. As in investor, it comes down to the numbers and finding a good deal. Anyone can pay market value, but those that can identify a deal, will win with speed! I have pre-approvals and lenders who know me by name, a real estate broker/agents who I talk to weekly, and send me opportunities within the market often times before they are listed on MLS. Living in California and investing in Texas, I couldn’t execute with speed at micro level (in DFW) without a strong local team and financial resources to outpace the competition.
I believe in patience from a macro perspective, but win the deals with speed at the micro level by having a team to help out execute your competition. Back to my opening statement about getting ahead, my Macro vs. Micro caution to you is don’t get stuck in the Macro. As Mark Twain said best, “The secret to getting ahead is getting started.” Once you get started, your experience and team will improve over time and your ability to execute with greater speed will also improve. Speed and experience are a billion times more important than perfection. Get in the game and focus on speed, not perfection.
Just my thoughts on how I think about the macro vs. micro of real estate investing and welcome your thoughts.
Note: GaryVee’s blog about speed in business inspired me to share his thoughts about patience vs. speed to my experience in real estate investing