Real Estate Is a Game Of Years Not Months
One of my favorite quotes is by Bill Gates "People overestimate what they can do in a year and underestimate what they can do in ten". No where is this MORE true then with real estate, a lot of people think this is a get rich quick scheme or a quick financial product. This mindset comes from media articles portraying real estate developers making HUGE profits quickly on a deal. What the media doesn't tell you is how many years that developer was working in the business, all the work to cultivate the information of that area, the constant networking with the owner of the property, the correct circumstances that took years to arise and the knowledge of the parties he flipped it to. It is years of work made to look like a quick two weeks of work. This is often NEVER the case in real estate and the true money makers in real estate are always in it for the long haul.
When investing in real estate whether you are experienced or just getting into it for the first time its always best to invest in your own backyard for the long haul. Even at the institutional level this can be the norm, for example Vornado REIT mostly invests in core retail assets in high traffic areas of Manhattan. It is where Steve Roth the CEO lives, works and sees the long term value he can create there. When you invest in your backyard you are able to see what the demands, weaknesses and strengths of the area are that you can take advantage of long term. It allows you to act more quickly then competitors or owners who are hands off. (Another misconception of real estate is that it is "passive income". Real estate is not passive it is hard work and dealing with people day in and day out. If you want passive investments, see mutual funds).
When your in your backyard for the long haul and have the ability to invest in the long term and improve an area you know with YOUR vision. This is the beauty of real estate is that you get to transform what is there, see it and benefit from it. If you see a demand for gyms in your area you can create that space AND benefit from it because you will have a place you can go to. This falls into every vertical from coffee, restaurants, bars or clubs. You get to be the focal point that inspires that change in the area. You also are the one living there and benefit in the short term and long term from the change. This change is hard work and a daily ritual. The pay off though in the long term is drastic and at the end of the day is the reason why people get into real estate. It is one of the few true growers of wealth no matter the economic climate in all of human history. The reason is because with hard work you get to have others pay your debts, no other industry really offers that.
So cultivating this wealth over the long term is where the real value in real estate is. It is when you see a vision and make it happen day in and day out for years. It can be fulfilling and lucrative you just have to see it, be creative and roll up your sleeves. That is where the value is, long term.
Crushing it is an excellent guide to long term value add investment, the way it should be done.