Often, we’re asked why we chose Tampa, Florida to start our real estate investment business, and the truth is that we didn’t “choose” Tampa – It was our only option.
First, we moved here years ago because of the great climate and the cheap housing. Then, when we got some money, we just bought some cheap houses. You see, when we we had very little capital and couldn’t afford too much risk, Tampa was the only place to start.
Past vs Present
The real estate market started climbing in 2001, but we didn’t even get started until 2006, when the market was nearing it’s peak. We didn’t know anything about anything and just jumped into the fray with everyone else. When the market peaked in 06/07, we were left holding some pretty expensive real estate that was quickly losing value.
We panicked, then cried. Then we thought, “Since we can’t sell it, we’ll rent it out ’til the market picks back up.”
The rental plan turned out to be our smartest move. Since we weren’t used to having much anyway, it was easy to be patient and wait for the market to catch up with us. What we also learned was that many so called “investors” weren’t nearly as patient as we were and were defaulting right and left. That opened up another opportunity for us, and resulted in our taking some Warren Buffett advice, which basically states “Buy when everyone is selling.”
We started buying.
We started picking up castoffs from other investors who were left holding the bag, like us. Of course, we weren’t the only ones doing this, and our combined activity created another, smaller bubble in the market.
In fact, we’ve learned that the real estate market is really just one continuous roller coaster ride of peaks and valleys, and as long as you don’t panic during the low parts, you will NEVER lose money in real estate.
Don’t be Desperate
An interesting fact that never changes is that most investors LOSE MONEY their first time out.
Whether it be equities, real estate, collectibles, precious metals & stones or currencies, new investors end up paying for their education in capital loss by pulling out too soon. When it’s happening, the thought is capital preservation, but of course, they continuously look back at the asset after they’ve sold it, only to see it rebound and surpass the value at which they initially bought. Hopefully, that’s all they lose, but sometimes it takes doing it a couple of times to learn the cycles of the market – ANY market. They all have cycles.
In a nutshell, the secret to becoming fabulously wealthy and never losing money in real estate is to NEVER PANIC. If values are climbing when you buy: be prepared to sell. If values are dropping after you’ve bought in: Hold and rent it out til the market finishes it’s cycle and starts the climb back.
If you aren’t prepared to buy and hold, then you aren’t prepared to invest in the first place.
"This holiday season, give the gift of beat-up real estate."
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