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Evolution of a Real Estate Investor

Evolve (v.) – 1. To develop, or cause to develop gradually; 2. To adapt to a constantly changing environment.

What does the definition of evolve have to do with real estate investors? Everything! In fact, this article will show you why you must embrace both meanings of the word in order to succeed and thrive as an investor.

The relationship between being an investor and evolving has two separate meanings:

  1. Most real estate investors undergo a change and their business grows over a period of time.
  2. Investors must be able to adapt to constantly changing market conditions in order to be successful.

Real Estate Investors Evolve In Their Business

The first meaning of evolving as an investor refers to undergoing a metamorphosis during your investing career. What we are speaking of here is that they generally will not be doing the same kinds of deals when they are more advanced in their investing as they were in the beginning.

If you think about any skill, vocation, or hobby that you have done for a period of time, you learned it in stages and there was a progression from one skill to the next. Real estate investing is no different. You are going to go from one level of investing to another. Although every investor’s progression is a little different, there is a similar path.

Rich Dad teaches that one of the great things about real estate is that you can use the power of leverage and control the asset (the house) with very little or no money of your own in the deal. The concept here is that if you cannot make money without money, how are you going to make money with money? That is a concept that is hard for people to understand at first, so let’s go deeper and show how this evolution process happens.

Many new investors get started with very little capital and resources. This is not a problem, it just means that there are certain kinds of deals that they will likely focus on. Since a traditional lender is going to require a down payment and good credit, new investors will usually focus on deals that do not require getting financing.

The beginning steps for most investors involve focusing on deals that involve wholesaling, lease options, or seller financing. With these kinds of transactions, financing will not be required and it is a very common way for investors to get started. These transactions will generate some immediate capital-creating opportunity to branch out into other kinds of deals.

From there, the investor may begin to focus on rehabbing properties. When they are reselling properties, it will generate lump sums of money that will continue to enable them to get into larger and more different types of deals.

Once the investor has generated enough cash to get into other deals, they will then tend to shift their investing focus. From there, many investors will then focus on building up a portfolio of properties that will generate income. It could be that they go after single-family rentals, duplexes, or smaller commercial properties (5 units or more).

When this transition to income properties begins, they are looking for financial freedom (when passive income from investments surpasses their expenses). It is normal for investors to begin to grow into larger investment deals like mobile home parks, storage units, commercial buildings, or apartment complexes.

Does this path of progression mean that you cannot go straight to a larger deal? No, however jumping to a deal further down the progression path will stretch you and cause you to become a much more skilled investor than you currently are. How does this push you as an investor? Because you will need to learn new skills and new terminology, build new relationships for your Power Team, and view the investment from a different point of view. Although it can be done, it will require you to become more, which is part of this evolutionary process.

Real Estate Investors Adapt To Changing Market Conditions

The second part of evolving as an investor is to change with the market conditions.

As we have seen over the last several years, the real estate market has changed dramatically. Property values have gone down in many parts of the country. However, rent rates have also increased significantly during this time.

The lesson that investors need to learn from this is that if they can adapt their investing strategy to the constantly changing environment around them, they will have much more profitable investments.

An example of how this works is to identify trends happening in your local market. What if you see a large company coming into your area and there is not enough housing for the employees that will be coming in? This would be a good opportunity to get involved in buying some land and developing a neighborhood that would be suited for these newcomers, not only in location, but affordable based on the kinds of jobs coming in.

If you couldn’t put together a deal to develop a neighborhood, what about buying some existing housing, or even buying a spec home? If you keep your eyes and ears open, you will come across opportunities that most people will never know about.

Many investors only find one way to invest (such as rentals, rehabbing, etc.) and they stick with that one strategy. It may work for a while but eventually, the market is going to change. When it changes, if they are unable to adapt their strategy, their investments will start losing money and they will get hurt by the change in the market.

There were a lot of investors that lost money in the last market change because they were using the wrong strategy for that market. They did not evolve to the changed conditions and got hurt as a result. Real estate was not the problem. It was their strategy that was the problem.

Now we are in another market change and Robert Kiyosaki is predicting that this will be one of the greatest exchanges of wealth to happen in our lifetimes. You can learn the lesson from the past and use it to profit now.

The more you educate yourself about investing and real estate, the better position you will be in to evolve your strategy to what is working in your market.

The beauty of investing in real estate is that there is always something that is going to be profitable. If the residential sector is doing poorly, you could switch to commercial or even industrial. The point is that you can evolve as an investor to the changing markets and thrive when others are struggling. It all has to do with your financial education and your vision.

The lesson of this article is that you will undergo a process of evolution as an investor. It will help you become what you need to become as well as help you thrive in any market condition.


15 responses to “Evolution of a Real Estate Investor

  1. wyona magee November 30, 2012 at 12:01 am

    I own 11 rental properties, plus 3 that I use for personal use. Nine properties are mortgage free so I did not take advantate of leverage, but I love my cash flow. I was able to buy these properties over the years by living below my means and borrowing from my own pension and taping into equity to pay cash for new properties. I love real estate. For me it’s a labor of love. In recent years, I’ve partnered with a property management company (I’ve been through 3 and presently, this one is working out well). By the time I read Rich Dad Poor Dad (and Robert’s subsequent books), I was established in Real Estate. I give God the glory for that. The Bible says, It is God who gives us the ability to create wealth and in another passage, to whom much is given, much is required. Real Estate has enabled me to bless others and to give generously to Christian ministries and to spreading the Gospel. Robert’s books helped me to understand what I was doing and to be able to share that knowledge with others. Thank you.

    • Alicja November 30, 2012 at 9:03 am

      Dear Fiona: thank you for sharing your story here, I appreciate reading it, especially becomes it comes from a woman. (I am a woman too and has always admired financially free women). I just attended my first free seminar and signed up for R. Kiyosaki Real Estate 3 days initial training on real state. Anything you can recommend to me, a total beginner, who wants to learn and do real estate investing for positive cash flow? I am starting on this path now…thank you. Alicja

      • wyona magee November 30, 2012 at 12:54 pm

        Thank you for your comment. I think that if you stick with Robert’s training, you should be fine. You may also want to start looking at properties in your area to give yourself a feel for what’s available.

    • Janice Jackson November 30, 2012 at 10:41 am

      Amen! Thank you for sharing. I can echo your response.

    • Randy Foltz November 30, 2012 at 10:49 am

      Wyona, I could not agree with you more. I also give God the glory for leading me to Robert Kiyosaki and his education. We are late starters and jumped into multi-family immediaely, quads at first. Now we are looking at 15-25 unit apartments for our next purchase. We recently sold a condo that we were renting out locally and used a 1031 Exchange for the sale. We now have sufficient capital to re-investment in larger multi-family properties. Investing is a team sport, and through the education we received, we found a great team to work with. PTL!

    • Francia Polanco-Moya November 30, 2012 at 11:18 am

      Francia Polanco-Mopya
      Dear Wyona,
      Thank you for sharing. I love your story and give me hope to continuing learning. I’m just starting and I’m not sure where to begining but I’m sure while came,as you said God Gives the Ability. Keep doing what you are doing!

    • Estrella December 2, 2012 at 8:26 am

      I like what you said about God. Do you have more passages on the bible?

      • wyona magee December 4, 2012 at 11:38 am

        Yes, I do. Please locate these passages and read them. Ask God to give you His understanding before you read them. John chapter 3 vs16, Romans 3:23, Romans 6:23, & 5:8, & Romans 10:13. God bless you.

  2. Juliette wooden December 1, 2012 at 10:07 am

    Thanks for the great info, was not thinking like that thanks

  3. Wendy December 1, 2012 at 12:32 pm

    Education is key. But you should start immediately by starting a buyers list so that when you find a good deal and wish to wholesale it to another investor, you will have a ready list to offer it to. Any time you see one of those “I Buy Houses” signs, take down the number and call them. As them what they are looking for. They will usually give you a price range and want 3 bedroom 2 bath single family homes. Ask them what their typical Bird Dog fee is. Then when you see a vacant home or hear that someone has to move, give them the information. You are paid this fee only if and after the investor closes on the deal. But how many of these deals can you do? Countless. The fee you get paid would varry from place to place but we pay $500.

    • Estrella December 2, 2012 at 8:42 am

      Hi Wendi. I would like more info about the topic. Becouse I see like three of thouse signs close to my house.”I buy houses” do I just to call them?

      • wyona magee December 4, 2012 at 11:44 am

        Hello, I’m not sure I understand your question but I’ll try to answer what I think it is. If you see properties w/a sign on them. I would call them just to see the asking price. That will help you to know what homes are going for in that area.

  4. Wayne @ Swift December 2, 2012 at 6:16 am

    Excellent article! How are the best ways to bypass the middleman when it comes to acquiring properties, and generally speaking, how far along in the “chain” is too far, as in after a realtor is involved is it better to look elsewhere? I have purchased many a car that had it been after it went to a car lot, I would have paid a premium. Thanks again for the thought provoking article. Wayne

  5. gretma December 2, 2012 at 8:58 pm

    The Bible and God have nothing to do with real estate transactions.

  6. Bill December 5, 2012 at 10:56 pm

    We went to the intro seminar last week. I then started reading the books and decided to go and talk to my local bank. They told me that they were a commercial bank that would require 20-30% down. I asked him if he knew of an asset investment bank. He said that he didn’t. Does anyone know of a bank in Northern Oregon that will lend on the asset?

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