Who Should You Listen To, and Should You Believe Them?
by M. Jane Garvey
Real estate investing is a complex business with many moving parts. The intricacies of the various businesses under this umbrella description vary from state to state, town to town, subdivision to subdivision, and even building to building. The requirements change by the day as people in regulatory positions feel the need to add restrictions via laws and mandates. Yet, somehow, generic online advice is perceived by many to be all that is needed. We live in a world where you can access tons of advice online for free. And you can also pay a fortune for advice from self-declared experts that may or may not teach you what you need to know. With either one you can still end up in trouble.
Sometimes it blows my mind that the real estate rental business is a business that many feel they can handle with ease. They buy a home, handle a few repairs, and maybe were a tenant at some point – “how tough could this be?”. I have seen friends and neighbors dip their toes into the business without even considering that they are becoming investors by keeping their old residence as a rental when buying a new home. I have also seen contractors jump into the rehab business without understanding it. Some succeed, some don’t. The worst outcome of this blissfully ignorant approach to the business is harsh laws and horror stories that affect all of us.
As one of the gray haired “boomers” in the business, I marvel at how many new investors casually dismiss advice from anyone over 50 – as if we have little relevant advice to offer. They instead turn to anonymous strangers on the internet who will answer their question in a chat. Personally, I know that I have had many experiences and learned along the way. I wish I had listened and learned more from those that went before me. Just because a seasoned veteran is not as tech savvy as you and your friends, you should not casually dismiss their input. It is likely that they have experience in working with tenants, contractors, sellers and buyers that can be quite valuable and is not easily learned elsewhere.
Likewise, experienced investors might be quick to dismiss the ideas and advice of the newbie. This is not appropriate either. Many young people have a better understanding of tech and the future demands of society, and the pressures on the industry to change. Some come with a lot of experience as they may have grown up in the business. We can all benefit from keeping an open mind when it comes to learning from others.
So, who should you listen to? I give more credence to those who can tell me where to find the answer. I don’t want someone just telling me what they have heard, or what they have been doing, which may or may not be legal. Where did they get their information? Where can I look things up? If the rules are changing all the time, a one-time answer is not going to be good enough. I may accept that answer, but I will need to know how to update it.
We should all develop relationships with appropriate competent professionals who keep up to date on their fields (ie accountants, attorneys, Realtors, bankers, material providers, and even contractors). The best professionals often provide information to their clients that will keep you informed in a more general way, and then can customize their advice to your circumstances.
We should also develop relationships with people that have the wisdom which comes from age, personal experience, i.e. other investors who have and are doing the things we would like to do. These people have expertise that can supplement the advice provided by professional advisors. You also need a means of staying up to date on changes in the game – market shifts, new laws, etc. I think one of the best places to look for this is a legislatively active investors association. The best of these have like-minded individuals that keep up to date and share information. These relationships can help you be proactive rather than reactive.
Whatever advice you get, from any source needs to be run through your filters. Is this a source I know and trust? Is the topic within their range of expertise? Is the advice relevant? Will it be relevant later? Is it correct in general, and more importantly, is it correct for me? Your filters will get more discerning with time. Learn to fact-check. I am using this term with its original meaning. If you are told something that doesn’t fit with your understanding, ask more questions, and go do more research. Don’t just listen for the answer you want to hear, but get to today’s truth.
Advice comes at us from all directions. Over the years I have found very little correlation in price paid for advice to the accuracy of the advice. The world is full of self-proclaimed experts. Some have fancy websites and expensive packages, others have nothing more than a keyboard and a willingness to answer anyone about anything. Some good, some bad, all needs to be vetted.
The best advice I have received over the years has come from seasoned veterans in the business. They are friends and fellow investors with whom I have taken the time to build relationships and trust. Most of these “true experts” do not have websites, let alone fancy ones. Most do not expect to be paid, other than via a mutual sharing of information and ideas. They belong to associations so that they can stay informed and get ideas. In turbulent times, the shared expertise available is invaluable. It is usually hyper-local and hyper-focused and incredibly necessary. Your local investor association members are the fact-checkers for the information you gather from other sources.
Jane Garvey is President of the Chicago Creative Investors Association.