You know, you simply gotta love real estate...I mean really, let me explain....

3 Years ago, I began an in-depth study on real estate located within the 610 loop, and I mean in-depth for real, for real...to the degree, that in many neighborhoods I literally drove every street to see exactly what was going on in every square inch of these areas. You see it finally begin to sink in my head that you have to become an expert in a given discipline, or since we are talking real estate, a particular area or region to really understand everything that is going on.

Many people have a very scattered approach and they try and do everything and buy in every area, however I have found that being an expert in an area has tremendous advantages. For one, if you focus in on an area you will quickly become a living inventory that intimately knows that market, so that you can instantly look at a property and know the right price to pay.

Well as I was driving in a neighborhood where I plan to build and develop several affordable houses and rental units and I came across the lot you see above in the photo and it was listed for $9500. In an instant, I knew this was a deal, without having to go home and look it up on the internet or consulting anyone, simply because over a period of time I had become a real expert on land prices in the area. Well, I immediately phoned the agent, and began to identify the motivation level of the seller and without insulting the agent or her client I negotiated to buy this lot for $8500.

Knowing that I had found a good one, I eagerly ran home and shared the good news with my wife who oddly enough didn't seem to share my excitement; though she had good reason, but we will save that for another post...

After checking with the city of Houston and looking at the title to verify that there were no weird restrictions or title issues, we closed in June 2005. Now because of the amount of research I had done, I felt very comfortable that this would prove to be a good purchase, however at the time I didn't think it was going to get as good as it eventually did...

Fast-forward 12 months later and I find myself in quietly one of the hottest markets in the city and my little ole' lot is now worth at least double what I paid for it. That's right, my $8500 investment, in 12 months or so had turned into $17000 without my ever lifting a finger. Let me explain a few things; with most investment properties if it is a rental property then you will have repairs to get fixed, tenants to manage (an occassional eviction), mortgage payments to make and a host of other nuances that are all part of the real estate investor equation. Well the beauty in this investment was that it was a vacant lot so I had NO TENANTS, NO EVICTIONS, NO REPAIRS, NO MORTGAGE heck, I didn't even have to pay for insurance. And if you look real closely you will see that I have never even cut the grass...

This is AMAZING... I had a 100% unrealized gain without having to do any work whatsoever after having purchased the lot and this was a true EYE OPENER. I knew that I was on to something.

Now what does this mean for you, the average investor reading this... one primary thing

#1 - Focus your efforts in area or niche so that you become an expert

This property had been for sale for some time when I found it and I am sure that countless investors simply overlooked it or didn't know the potential that land in this area possessed. Becoming an expert in an area or particular type of investing will pay HUGE dividends and create substantial short and long term wealth for the savvy investor.

There are so many ways to make money investing in real estate that it is real easy to get caught up trying to do everything that you see but I suggest you focus on an area or niche market that you can master and become the expert. Don't be swayed by others, but stay in your lane and as you do this over a period of time you will easily begin to identify great deals that other investors will simply overlook because they won't understand or possess the insight you will have in that area.

Today I have planned to build the home you see below on this lot and I expect to start construction on this unit mid to late January. I have been tempted to sell this lot and take my money and run however the initial goal was to build on this lot, so in late January I expect construction to start.

This is yet another examply of low-risk real estate investing because the more you know about a particular thing the better equipped you are and you increase your ability to be successful with the investment. So if you would like to earn 100% or better returns, start with focusing on an area and do extensive research and lastly when you come across a deal, ACT.

Until our next installment, I wish you much success in all that you do and I trust that you only invest in low risk deals; and this deal is evidence that low risk does not mean low-profits. Oh, last thing, once I complete the construction and sale of this property, my overall return will be somewhere in the range of a 350% return... Believe it or not....

SEE YOU AT THE TOP

Tyron C. McDaniel, Real Estate Developer & Investor

RE/MAX

In today's post I want to continue educating you on exactly what low-risk real estate investing is all about and it's importance to your having a long-lasting real estate investing career that is profitable!

Contrary to what you see on the reality tv shows on real estate investing like "Flip this House" and "Property Ladder" - I love those shows by the way - the business of real estate is a little more complex than what is conveyed on these shows! For starters, it is funny to me that many of the people do not follow the advice of their real estate agent, and in more cases than not this ends up being a HUGE mistake almost every time! One of the major tenets of Low-Risk Real Estate Investing is leveraging the knowledge and expertise of mentors or seasoned professionals to insure your success and to mitigate and/or eliminate your risk! In real estate, a hard head, eventually equals a failed deal in many cases....

For example, the BIGGEST MISTAKE I see commonly made by new & experienced investors is having a sales price that is too high and their logic is we can always negotiate and/or lower the price when people inquire! What they don't realize is that 79% of all people who buy a home start their search on the internet and when they are viewing properties many get eliminated by price before they even view the details of the property! So that means that even though you have the nicest floorplan on the market, a huge master bedroom ya-da ya-da ya-da.... they never even see this stuff because they eliminated or didn't look at your property because the price was above what the market says it should be! The bottom line when you are selling ANYTHING is that price is usually the most dominant factor and if you get that wrong you may be doomed from the start!

The other aspect of pricing the property wrong, is that many people wait far too long before lowering the price which costs them time and plenty of money in holding costs (interest payments to the bank!) only to lower the price anyway and in many cases they end up with a sales price much lower than what they could have sold the property for had they initially priced the property right from the start. My philosophy on pricing is simple, don't ever be the highest or the lowest but instead you want to price yourself right in the medium range of where most of the homes in the area are selling! ANYTHING WILL SELL FOR THE RIGHT PRICE!

Well this concludes part 2 of What is Low Risk Real Estate Investing and I trust that you will have a safe and warm weekend. Be profitable in all that you do!

Another tenet of Low Risk Real Estate Investing is knowing when to bring in cash partners to properly finance your deal! I can recall a few deals that I did, where if I would have brought on cash partners it would have actually enhanced my profit, eliminated some head-ache and allowed me to finish the deal much faster. In many cases, the reason people don't do this is because they are being greedy and do not want to share the proceeds of the deal however that kind of thinking can prove to be fatal to your investing career! Always, make sure you have access to more than enough money to complete your deal!

For many of you, these may seem to be very elementary topics however I can assure you that it is the application of this type of simple wisdom that seperates the really successful investors from those who are mediocre! In fact, when I think of some of the most successful investors I know, they were all very simple people who had 1 or 2 basic strategies that they employed and they did the same thing over and over again. Ever heard of the KISS system? Keep It Simple Stupid! I can assure you that if you follow and employ the KISS system in your investing business it will reap huge long term rewards for you.

Another aspect of Low Risk Real Estate Investing is taking the time to create a plan based on what your goals are for your investments in real estate! In every book that any of us have read on self improvement, they all say to have a written goal and plan to make that goal come to pass, however most of us (including myself) forsake this principle! Maybe your goal is to pay for your kids retirement via real estate or possibly you want to retire in the next 5 years; whatever it is, write it down and make it a conservative goal for now! As you consult with your mentor they can assist you with crafting a plan to make that goal a reality.