Skepticism and Real Estate Investing

It seems the real estate industry has caused some problems for itself with it’s non-stop touting of real estate investing, er speculating, these last few years.

First, you need to know what real estate investing is. It is the acquisition of property based on sound financial analysis with a target return in mind. Usually I recommend a cumulative return (from the 4 Benefits found in the right side bar) of somewhere in the 22%-26% range. If you have a sound criteria and the property does not fit, don’t buy.

Real estate speculating, on the other hand, is buying property banking on the fact that it will appreciate high enough and quickly enough that it will exceed your poor decision making. (Sorry, do I sound negative?) This is what was going on when people were purchasing condos off the plan, selling them 3 months later, and in turn those people would sell them 3 months later and so on until there was no way left for people to be able to justify the expense of personal living or the returns it would make as a Buy & Hold property.

I bring all this up because a blogger here in Kansas City linked to one of my blogs and turned the title into a negative. I left his link there. And it should be said that I read the blogger on occasion. And I’m really not even mad at him. To an extent, his perception of real estate investing is based on what the TLC and Home & Garden channels, the National Association of REALTORS and a whole lot of real estate “gurus” and agents have been saying and doing.

By way of his comments section I have invited him to debate the issue. There is an education process that needs to take place across Kansas City and this country about what real estate investing is all about, when it’s appropriate and when it’s not. I welcome the debate with any of my readers. (As long as it’s based on merit, not emotion.) Heck, Kansas City has been considered a “city of concern” by the FBI because of all the fraudulent real estate transactions that have taken place here. Even by city councilwomen and men running for congress.

This blog is set up to be a real estate discussion. And your input is always appreciated. Hope to hear from you.

2 Comments

Filed under Kansas City Real Estate, Real Estate Investing

2 responses to “Skepticism and Real Estate Investing

  1. Glenone

    Dear Chris,
    We spoke on the phone today and I’m visiting the blogs. How do we sort through all the misinformation that’s out there concerning real estate investing?
    Glen Averill

  2. Chris Lengquist

    Great question.

    I believe what you are doing has to fit/pass:

    1. Your moral code.
    2. The common sense factor.
    3. Proof is in the pudding test.

    Finally, a pencil, paper and a calculator ought to do the trick. Real estate investing is not rocket science. It is using time tested valuations for expenses and returns.

    You need to know what the expenses and returns will be BEFORE you buy. Use a guide to show you.

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